Research Reveals Big Price Differences Across Minnesota Hospitals
This featured finding describes research examining how much prices vary for common hospital procedures across Minnesota, between hospitals, and within the same hospital.
Price variation exposes patients to risk of burdensome cost sharing, makes budgeting more difficult, and can put upward pressure on health care spending. Knowing which high volume hospitalizations have pricing irregularities is a first step to taking action. Minnesotans (consumers, employees, patients) stand to benefit if purchasers can better negotiate with providers and reduce unwarranted price variation.
AcademyHealth member Chris Frenier, M.S., and colleagues from the Minnesota Department of Health’s Health Economics Program examined variation in the commercial case prices for four common, clinically uncomplicated inpatient procedures. They used claims data from the Minnesota All Payer Claims Database to calculate the total price, including facility and professional fees, of 2,719 hospitalizations during 2014 and 2015.
Key findings include:
- There was significant price variation for each procedure examined in this study across Minnesota, between hospitals, and within hospitals.
- A patient undergoing one of the four hospital procedures may pay two to almost seven times as much as another patient receiving the same procedure at the same hospital. This can translate to a price difference of about $7,000 to nearly $70,000.
- A substantial amount of the statewide variation in prices – about 36 percent – was related to differences within individual hospitals and was not explained by factors such as severity of illness, length of stay, patients’ age, and certain health benefit characteristics.
To learn more about price variation and other health policy topics in Minnesota, please visit the Minnesota All Payer Claims Database publications webpage. There, you will find links to this report, our first report on a different set of four hospital procedures, a supplemental FAQ, and information for employers. You can also find research from the Health Economics Program on other health policy topics in Minnesota.