Hospital services

Prices consumers pay for hospital services in North Dakota vary widely, study finds

Equally large cost variations were found for a colonoscopy, which ranged from $ 1,775 to $ 5,509, and for cesarean deliveries, which ranged from $ 5,058 to $ 31,000, according to the study.

The cost comparisons were part of an analysis of hospital costs in North Dakota presented to the North Dakota Legislature, which studies healthcare costs compared to other states.

Hospital officials argue that the fee figures cited in the study make little sense – what matters, they say, are the fees charged by insurance companies, which demand discounts that make the price retail largely irrelevant.

But North Dakota Insurance Commissioner Jon Godfread said patients did not have access to pricing information to enable them to be smart consumers of health care, a drawback that keeps hospitals running. without competitive pressures.

“I think consumers are at a great disadvantage when it comes to being able to price their health care,” he said. “It’s really hard for them to know if they’re getting a good deal.

“Obtaining this information was almost impossible. We had a very informed consumer who did this.

The fee comparison in the study, conducted for the state by consulting firm JWHammer, used a “secret client” who contacted each of the six hospitals to find out their rates for the three procedures.

The “client” called each of the hospitals, following a script so the investigations were consistent, and demanded a full fee for each procedure, said Jennifer Hammer, president of the consulting firm.

It took multiple calls, which in some cases only produced responses after hospitals mailed information, a process that took several weeks, she said.

The federal government requires hospitals to provide consumers with online access to the prices they charge for their services, but the tool is not easy to use as healthcare is often grouped into a variety of services, each with a separate code.

There is no consistent way to structure fees, said Martha Leclerc, senior vice president of Sanford Health. “Each hospital approaches it differently,” she said, with some bundling services into one charge and others billing separately.

Sanford, for example, does not separately bill for supplies that are commonly used for a procedure and cost less than $ 30, she said. The fees are structured differently, even between different hospitals in Sanford.

“We don’t have standardized fees in our system because the markets are all very different,” she said.

In addition, health care is very complex. There are a dozen billing codes for a normal delivery, including four codes without complications, which makes it extremely difficult to predict a cost before performing a procedure or providing comparative information, Leclerc said.

This complexity and uncertainty made it difficult to respond to the request for information about the “secret client” charges and helped explain the wide range of responses from hospitals, she said.

As a result, Leclerc said: “You are not looking at apples for apples.”

The prices consumers pay for hospital services vary widely as many factors go into the delivery of care, said Mary Muhlbradt of Trinity Health in Minot.

“The actual costs may depend on market factors such as the cost of living, the population of the region and the availability of providers or services,” she said.

These factors also include the availability of manpower, with many hospitals being forced to hire itinerant nurses, said Chelsey Kralicek of CHI St. Alexius in Bismarck.

“The costs of health systems vary widely depending on the number of contractors they use, the contracts negotiated with suppliers and the type / cost of equipment used,” she said.

For rural hospitals in particular, patient volumes are another key factor in determining pricing, said Katherine Ryan-Anderson of Jamestown Regional Medical Center.

The number of patients using a service like a 3D mammogram, equipment that costs $ 1.5 million or more, can vary widely depending on whether 50 or 500 mammograms are done in a month, she said.

As a result, critical access hospitals that serve rural areas, including Jamestown, are paid on the basis of their costs, an arrangement aimed at providing essential services to rural residents.

“Small town hospitals will close if they are paid the same as large systems,” Ryan-Anderson said. “Critical access hospitals are not looking to get rich. We’re just trying to cover the costs.

“In a good year, with high volumes, our profit margin is 2%,” she added, a typical return for rural hospitals.

Doug Arvin, chief financial officer of Altru Health System in Grand Forks, said the study fails to recognize the financial disadvantages faced by rural health providers.

“It is misleading to compare North Dakota to other states given the inherently higher cost of providing specialized care, such as heart surgery and kidney transplant services, with the same efficiency as more densely populated areas. populated, ”he said.

The study’s fees for the procedures at Trinity Health are inaccurate, Muhldbradt said. Trinity’s average cost is $ 4,442 for a colonoscopy, $ 10,315 for a normal delivery, and $ 17,557 for an uncomplicated Caesarean – all significantly higher than the numbers cited for the hospital in the study, but within the price bracket, she said.

“Although they are in the lower end of the range for North Dakota hospitals, the actual data does not even come close to the numbers described in the report, leaving a lot of suspicious assumptions and propositions,” Muhlbradt said.

Consumers should have better information at their fingertips starting next year, when federal regulations require hospitals and health insurers to publish hospital costs based on what’s covered by the plan. patient insurance.

That way, consumers should be able to know what their out-of-pocket cost will be, providing better cost transparency, Godfread said.

“I think there is help to come,” he said. Making hospital costs more easily accessible will make hospitals more accountable to those who pay the bills.

“This system has isolated our hospitals and providers from some of these discussions,” Godfread said. Even a consultant struggled to get cost comparison information.

“It was a difficult study to do,” he said. “We have to do something about it.”

It will require conversations between hospitals, insurers and lawmakers. That won’t happen in the current legislative session, but is expected to happen in the next session as lawmakers continue to study the issue, Godfread said.

A fee comparison that incorporates what a patient’s insurance plan covers will provide much better information to consumers, Leclerc agreed. “This is really what should be our goal,” she said.

Additionally, Leclerc said, public and private insurers essentially dictate what they will pay for services through contracts. “It’s not the hospitals that decide. These are the payers.

Even uninsured patients don’t always pay the full cost, Tara Ekren of Essentia Health told Fargo. They can pay fares that are lower than the total fees through discounts and financial aid policies.

Price transparency, according to the study, is a means to an end – a key incentive to promote competition, which drives innovation, lower prices and better quality.

“The alternative to competition is and should be increased government oversight,” the study said. “When entities act as a monopoly, it may be necessary for the government to regulate them as a monopoly. “

The study found that hospitals in North Dakota were resistant to change, many clinging to so-called “service charge” contracts, where hospitals bill for services. In recent years, public and private insurers have moved to so-called “managed care” or “value-based” contracts, which require providers to share the financial risk of providing care and pay accordingly. results.

Hospital officials bristled at the conclusion, saying hospitals in North Dakota have many managed care contracts with public and private payers.

Essentia Health has a “multitude” of value-based agreements with Medicare, Medicaid, and private payers accounting for 42% of fee-for-service income, Ekren said. The agreements require Essentia “to achieve the three-fold goal of reducing total costs of care, improving quality and strengthening patient engagement,” she said.

By meeting the quality and cost targets in 2019, Ekren said, Essentia saved Medicare $ 13.2 million.

While the study looked at how North Dakota’s hospital costs compare to those in other states, it did not explore the reasons for hospital costs.

This could be the subject of a follow-up study, Godfread said. Hammer agreed that a more in-depth study can help guide efforts to improve the quality and costs of health care.

“There is still a lot of work to be done,” she said. “It will be an ongoing effort to improve health care.”