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OHA Report Compares Hospital Procedure Prices

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OHA Report Compares Hospital Procedure Prices

Hospital news | Tuesday, July 12, 2016

Contact: Thomas Hottman

The Oregon Health Authority released its Oregon Hospital Payment Report this month, revealing Oregon hospitals' medical procedure prices — including Klamath Falls' Sky Lakes Medical Center.

The 90-page report details median payments from commercial insurers to hospitals for common inpatient and outpatient procedures that occurred in 2014.

This is the first study of its kind in Oregon, and kicks off what will be a yearly OHA report to make cost information more transparent to Oregon residents. This is the result of a bill passed in the 2015 legislative session mandating annual reports.

The study breaks down both the statewide and the median paid amount to the hospital, the number of procedures and the range of paid amounts.

"Sky Lakes was all over the board," Tom Hottman, Sky Lakes Medical Center spokesperson, said. "Some of the areas, we were well below the statewide median and in other cases we were spot on, but it's important to remember that these are the amounts paid just by commercial insurance."

Hottman added that commercial insurance makes up less than a quarter of Sky Lakes' business, the rest of it comes from medicare and medicaid.

Sky Lakes & report

The report shows Sky Lakes performs 33 of the common medical procedures. Twenty-two of the 33 are above the statewide median price, some of those range from a few dollars more than the statewide median to several thousand. Eleven of the Sky Lakes procedures were under the statewide median.

The highest difference between the statewide median and Sky Lakes was the inpatient knee replacement surgery, with Sky Lakes' procedure costing $14,682 less than the statewide median.

The biggest difference where Sky Lakes had a higher price than the statewide median was for the inpatient central venous catheter procedure, with a $12,267 price difference.

However, many of the procedure prices between Sky Lakes and the statewide median are within a $500 range.

"In some cases, it's only a couple of bucks, literally a couple of bucks and that's really cutting the hair pretty thin," Hottman said.

Sky Lakes has more similar median prices in comparison to Mercy Medical Center, a hospital with a similar number of licensed beds — both just above 170.

Sky Lakes and Mercy have 28 common procedures. Of those common procedures, Sky Lakes has 14 procedures with higher prices, making it a 50/50 split of who has the highest and lowest prices between the two hospitals.

Hottman said the report gives a good baseline of what to expect. He added that Sky Lakes has staff that provides patients with an estimate of their procedure, how much their insurance is going to cover and a financial assistance package.

"Overall I think Sky Lakes does a very good job in looking out for its customers and making sure that they don't over pay," Hottman said. "We've been very fortunate in that being a good steward of the resources, we are able to invest in technology and staff, so we can have access to those services to make sure the people get what they need."

Numbers explained

Geography plays a big role in the cost of healthcare, and the cost variation when doing business. The report states there may be lower availability of health care professionals in certain parts of the state, like rural areas, resulting in higher labor costs.

Other factors include the severity of the patient's health status and intensity of care, or contract arrangements between insurers and hospitals.

The number of patients who have the procedure also can vary the price outcome. The more procedures performed generally means a lower price.

Lastly, the report cites that patient satisfaction is not incorporated into the report, "making it difficult to derive any linkage of these variables to the paid amount."

"Setting prices is as much of an art as a science," Hottman said. "We try to be competitive in the prices, but because it's rural we also don't have the availability of the numbers of providers that a metro area might, and so that can affect it. The intensity of care might be different for those patients, we don't know, it requires a deeper dive to know all the reasons."

Reasons for price differences may vary from the number of beds available for patients, technology involved, the location of specialists or physicians able to provide it, to the cost of living.

Despite some variables, the study provides transparent information about the payments hospitals receive from commercial health plans, and is the first step of many to accessible health care information for the public said Robb Cowie, OHA communications director.

"This is not data that the average person should necessarily look to, to shop around for health care with," Cowie said. "It's not at that level of detail and it doesn't include all the co-pays, deductibles, co-insurance and what the consumer may be responsible for paying under their health plan, but it is an important first step in providing more transparent information about health care costs."

Long term

Cowie added health care prices have important ramifications for individual health, as well as the health of the economy, and that hospitals account for a large portion of overall healthcare costs.

"There's a whole lot in how those costs play out in different hospitals across regions and even in the same region so what we want to do is we want to give people a big-picture look at what hospitals are charging across the state," Cowie said. "We want to make sure that people understand there are a lot of specific reasons why a cost of a procedure may differ in one hospital versus another."

In the long-run, OHA will continue reporting this information, but also hopes to expand it, and report costs from other procedures and procedures performed in other settings, like ambulatory service centers or outpatient clinics.

OHA also plans to ultimately have the information on a website, in a database with public access.

"We are one of several states that has begun to put this information out or make it available online, not all states do it," Cowie said. "We are a step ahead of most other states."

'There's a whole lot in how those costs play out in different hospitals across regions and even in the same region so what we want to do is we want to give people a big-picture look at what hospitals are charging across the state. We want to make sure that people understand there are a lot of specific reasons why a cost of a procedure may differ in one hospital versus another.'

— Robb Cowie, OHA communications director

Related Document

Oregon Hospital Payment Report 2014

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