Data Show Huge Range in Hospital Prices Across Oregon

A hospital billing database that’s been in development for years is beginning to shed light on the huge variation in the cost of medical care across Oregon.

The data show that insurance companies pay far more to rural and small hospitals than they pay for the same procedures in the Portland metro area or Salem.

At Santiam Hospital in Marion County, for example, insurance companies are charged a median price of $923 for a head and neck CT scan.  That compares with a median of $238 at Providence Portland Medical Center in Northeast Portland. Santiam’s median mammogram bill is $418, while Providence Portland’s is $162.

“Delivering care in rural areas is more expensive,” said Phil Schmidt, spokesman for the Oregon Association of Hospitals and Health Systems. Small and remote hospitals can’t get the same volume discounts available to urban chains, and when they perform fewer procedures, the cost per procedure is higher, he said.

That understanding is already reflected in Centers for Medicare and Medicaid payments to hospitals -- which give small and rural hospitals more than those in urban settings to reflect their higher costs.

Private-sector price differences have long been discussed anecdotally within the industry, but until this year the actual cost of private medical care has been nearly impossible to track down. Insurance companies keep the details of their contracts with doctors, labs and hospitals under wraps for competitive reasons.

The data, submitted by insurance companies to the Oregon Health Authority, show the median prices paid  per procedure for dozens of treatments at all hospitals in Oregon.

Tracking the cost of hospital care is important because it accounts for about a third of all health care spending in Oregon, according to a National Health Expenditure Accounts survey.

In reviewing the numbers, The Lund Report worked with Townson University economist Seth Gitter to rank Oregon’s hospitals from most to least expensive. Some of the state’s smallest hospitals do too few procedures to compare. For the rest, we looked at the median prices charged to insurance companies for 20 distinct procedures. They included bone studies, spinal MRIs, echocardiograms, chest X-rays and hernia repairs.  We developed an index to show how the different costs add up.

Each insurer negotiates separately with hospitals to set rates, and the amount paid per procedure varies depending on the complexity of a patient’s medical needs. This individual variation is not reflected in the aggregate data released by the state.  A renowned surgeon may be paid more than a medical resident, but that information is not in this data.

The data show that for the 20 procedures we analyzed, Providence Portland has the lowest rates. For every $100 spent on these treatments at Providence Portland, health insurance companies can expect to pay the following amounts for the same treatments at these hospitals:

 

Providence St. Vincent Medical Center  $102.17 Providence Newberg Medical Center $118.32 Legacy Silverton Medical Center    $132.31 Salem Health’s Salem Hospital    $225.59 Legacy Emanuel Medical Center   $233.27 OHSU Hospital     $278.75 Adventist Tillamook Medical Center   $295.22 Adventist Medical Center   $318.27 Willamette Valley Medical Center    $335.28 Legacy Meridian Park Medical Center   $342.89 Legacy Good Samaritan Medical Center $344.73 Legacy Mount Hood Medical Center   $346.01 Providence Hood River Memorial Hospital   $354.21 Sky Lakes Medical Center $384.02 Asante Three Rivers Medical Center     $444.88 Mercy Medical Center   $451.97 Asante Rogue Valley Medical Center     $466.80 Samaritan Albany General Hospital $472.44 Samaritan Good Samaritan Regional Medical Center     $478.03 St. Anthony Hospital   $494.15 Samaritan Pacific Community Hospital   $498.97 Santiam Hospital     $511.21

Scott Ekblad, director of the Oregon Office of Rural Health at Oregon Health & Science University, said small and remote hospitals have good financial reasons to charge more.Though Santiam Hospital is the most expensive for insurance companies, its higher prices do not necessarily hit patients’ wallets. People who are insured are more likely to pay a much smaller co-pay than the total cost of care, with the insurance company picking up the bulk of the bill.

“Smaller hospitals’ costs are higher due to fixed costs with lower volume, and (they) need cost-based reimbursement in order to keep their doors open and able to serve their communities,” Ekblad said.

In cost-based pricing, rates are set based on the cost of materials and services provided. By contrast, the Affordable Care Act has encouraged insurance companies to pay for results --  how healthy a patient is after treatment -- rather than based on the cost of providing care.The median price of medical care also may be higher at hospitals that treat sicker patients or those with more complex needs.

The Oregon Health Authority’s database was created to bring new light to the hazy world of medical spending.

"The Oregon Hospital Payment report is another way to shine a light on the cost of health care in Oregon," said Jeremy Vandehey, OHA’s director of health policy and analytics. "For policymakers, it’s another tool to use as we look for ways to control the rising cost of health care."