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Minnesota hospitals study reveals insane variation in cost of surgeries

One procedure may cost up to 7 times as much as the same procedure on a different patient.
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One patient having bowel surgery at a hospital in Minnesota was charged $14,500, while another patient having the exact same procedure at the exact same hospital was charged $68,800.

This example was one of several released by the Minnesota Department of Health to show the huge variation in prices levied by state hospitals for surgical procedures – the second in a series of reports planned by MDH.

The department studied the cost of four surgical procedures at hospitals across the state in 2014-15, and found that a patient will be charged between 2-7 times as much as another patient at the same hospital undergoing the same surgery.

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That price difference can range between $7,000 and $70,000.

As well as the bowel surgery example above, MDH found that a patient getting spinal fusion surgery at the most expensive hospital in the state will pay anything between $27,600 and $80,800.

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So what's the reason for this?

For patients at the same hospital, MDH says that factors explaining the variation of surgery costs can include severity of illness, the length of their hospital stay and the patient's age.

However, that doesn't explain how there was still a 36 percent variation in prices between different hospitals, when they carry out the same surgeries on patients with similar characteristics.

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This variation in prices, MDH said, "was related to differences within individual hospitals," and it cites national research that says this is "likely driven by how much market or pricing power health insurers and hospitals have."

In any case, health commissioner Jan Malcolm said that the figures show the health care market "lacks meaningful transparency and a consistent link between cost and prices."

"This undermines effective competition and rational pricing of health care services, and contributes to the cost pressure that families and businesses are experiencing," she said.

"Shedding light on prices is a step in the right direction toward a better functioning market where individuals and employers can play a stronger role as informed consumers."

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