Practice, not price, makes for perfect surgery

CNBC
Practice, not price, makes for perfect surgery
.

View photo

UIG | Getty Images

You often don't get what you pay for-at least when it comes to hip- or knee-replacement surgeries.

A new study of 2,750 hospitals across the U.S. found a staggering disparity between what the hospitals officially charge for hip- and knee-replacement surgeries before any insurance adjustments.

One low-volume hospital in California officially charges a whopping $223,373 for such surgeries, while a high-volume hospital in Akron charges just $15,465, according to a survey by the NerdWallet Health cost-comparison Web site.

And hospitals that performed more than 200 of those surgeries annually tended to have lower rates of patients readmitted for complications such as infections than hospitals that did fewer procedures, the survey found.

Those high-volume hospitals also tend to charge less for those surgeries than hospitals that did 25 or fewer per year.

Despite that, hospitals that do less than 25 of those surgeries per year officially charge 14 percent more than that ones that do 200 or more such procedures, the survey found.

And those low-volume hospitals are compensated by Medicare for those surgeries at a rate that is 9 percent higher than what Medicare pays the high-volume hospitals.

"The price doesn't really tell you a whole lot about the quality you're going to receive," said Christina LaMontagne, author of the NerdWallet Health report.

(Learn More: NerdWallet Health's Hospital Quality and Cost Comparison Tool)

She said that "if I were looking into surgery for my mom or dad, I would want them to go to a place that has a very high value," instead of relying on ones with a high-price tag.

And, she noted, "If you visit hospitals that perform more than 200 of these surgeries (annually) you are at less risk of serious infections, heart problems and complications like blood clots, pneumonia and death" following hip- and knee-replacement surgery. Just one in four hospitals perform that volume of surgeries.

Ceci Connolly, managing director of PwC's Health Research Institute, said that over many years, in many different procedures, "We have learned that practice makes perfect in medicine."

"And there have been a number of experts and medical societies and data that have really tried to send the message to patients that when you are thinking about where to go and get your care, that you should take a look at which doctors and which health systems have the most experience with those procedures," said Connolly, who was not involved in the NerdWallet research.

For NerdWallet's Health study, LaMontagne she mined government statistics provided by Centers for Medicaire & Medicaid Services. That data also was used to assemble a Hospital Quality and Cost Tool that NerdWallet has posted online, and which consumers can use to check official costs, number of operations done, number of complications at each hospital.

More than 30 percent of Americans are covered by the government's Medicare insurance program, and hip- and knee-replacement operations are the most commonly performed surgery for that population. They also are among the most common surgeries for all Americans.

(Read More: High medical bills drive US bankruptcies )

LaMontagne said that she was surprised to see that the official prices charged by hospitals for the surgery "are all over the map . . .and it just doesn't make sense when you're looking at one of the most commonly performed procedures in the United States."

The average official cost for such surgeries across the U.S. is $45,236, NerdWallet Health found. That so-called "hospital charges" price does not take into effect the amounts paid for people covered by insurance, Medicare, Medicaid, or for hospitals and state policies for charity cases.

At Monterey Park Hospital in Monterey Park, Calif., the hospital charge for one of the 15 such surgeries they do annually is $223,373-making it the most expensive hospital in nation, according to the study. Medicare reimburses that hospital at the rate of $21,795 for one of those surgeries. A Monterey Park spokeswoman did not return requests for comment.

Crystal Clinic Orthopaedic Center in Akron, Ohio, which does 512 such surgeries annually, with minimal complications, has an official cost of just $15,465, making it the least expensive of all U.S. hospitals in the study that perform more than 200 the procedures each year.

Medicare reimburses the hospital at a rate of $10,740 for such procedures-$11,000 less than the rate paid to Monterey Park.

"Our mission at Crystal Clinic Orthopaedic Center is to provide the highest quality care at a low cost to our patients," said Ronald Suntken, president and CEO of the center. "As a physician-owned hospital completely focused on orthopaedics, we work hard to make this possible."

The facility that does the most of these kinds of operations in the nation, by far, is the Hospital for Special Surgery in New York City, which performs about 3,400 of them each year. The Hospital for Special Surgery's official charge for such procedures is $53,114, close to the national average. The hospital's Medicare reimbursement rate is $19,024.

Last week, U.S. News and World Report named the Hospital for Special Surgery the top orthopaedic hospital in the nation. And in a 2011 review, the New York State Health Department found it had the lowest rate of surgical site infections in the state for hip replacement/revision surgeries.

(Watch: Surgery of the future? )

"We agree that there's a clear correlation between volume and quality," said Louis Shapiro, president of the Hospital for Special Surgery. "I see no correlation between price and quality."

But the hospital charge rates may not tell the full story. Sean Hopkins, vice president of the New Jersey Hospital Association, said very few patients in that state who undergo such surgeries are subject to the hospital charges cost.

Rebecca Harmon, a spokeswoman for Temple University Hospital, whose $172,393 hospital charge makes it the seventh most expensive in the nation for such surgeries, said, "The bottom line is, hospital charges are never used in relation to payments for patients who don't have insurance" at that facility. She said those patients are charged on a sliding scale based on federal poverty guidelines.

-By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan.



More From CNBC

Rates

View Comments (18)