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Birth costs bounce 10-fold as hospitals bill in random way

  • Bloomberg News
  • Published Thursday, Jan. 16, 2014, at 10:47 p.m.

— The cost of giving birth at a hospital can vary by tens of thousands of dollars, a price range that is “largely random” and unexplainable by market factors, a California study has found.

Charges for a non-complicated vaginal delivery in the most populated U.S. state ranged from $3,296 to $37,277, and $8,312 to $70,908 for a non-complicated cesarean section, according to researchers at the University of California at San Francisco. Institutional and market factors could only explain 35 percent to 36 percent of the variation in charges, according to the study, released online Thursday in the medical journal BMJ Open.

Health advocates nationwide are calling for more transparency in an industry where pricing variables are largely opaque. Data released by the U.S. Centers for Medicare and Medicaid Services in May showed hospital charges for the same medical procedures vary by thousands of dollars across the country, even within the same city.

“The market doesn’t work and the system doesn’t regulate it, so hospitals can charge what they want,” said Renee Hsia, lead author of the study and associate professor at the UCSF School of Medicine. “The scary thing is, as patients, you don’t have this information.”

Hsia said the wide swing in the charges for hospital births probably exists across the United States.

“I am certain that this variation is not isolated to California,” she said. “It’s 12 percent of the U.S. so for that reason it’s somewhat generalizable. The only place where this might be different is certain states where they’re starting to put caps on spending like in Massachusetts.”

Researchers studied about 100,000 births as well as three sets of variables that could affect costs: patient characteristics, such as the mother’s age and length of stay, hospital characteristics, such as profit or nonprofit status, and market factors including the wage index, which measures the cost of living. They determined these factors combined only explained about 35 percent of the variability in charge.

Anne McLeod, senior vice president of health policy for the California Hospital Association, said her organization doesn’t dispute that charges vary widely, though she considers the study to have “a major flaw” because the authors looked at costs before they are discounted by insurers.

The relevant numbers are the discount prices negotiated between insurers and hospitals, which aren’t public information, McLeod said.

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