The state Division of Health Care Finance and Policy report did not find significant differences in the quality of procedures offered at hospitals despite the price variations.
BOSTON -- A new report from the administration of Gov. Deval L. Patrick documents some wide differences in prices that hospitals are paid for some common operations.
Hospitals in Western Massachusetts are in some cases paid sharply lower prices than hospitals in the Boston area for the same procedures. The report, called Price Variation in Massachusetts Health Care Services, found some wide differences in the costs for some procedures even among hospitals in Western Massachusetts.
According to the report, which includes costs for 2009, Holyoke Medical Center, for example, was paid $196,489 for 53 vaginal deliveries of babies at an average cost of $3,430, while Baystate Franklin Medical Center in Greenfield was paid $590,738 for 114 deliveries at an average cost of $5,274.
Baystate Medical Center in Springfield was paid $2.450 million for 479 deliveries at an average $4,682, Mercy Medical Center in Springfield, $505,705 for 130 deliveries at $3,805, and Cooley Dickinson Hospital in Northampton, $1.094 million for 180 deliveries at an average $5,664.
Governor Deval Patrick speaks at a Boston event on TuesdayThe same procedure at Massachusetts General Hospital in Boston cost an average of $6,146.
Holyoke Medical Center provided the most economical vaginal delivery, but Cooley Dickinson received the sixth highest average payment for the procedure.
Cooley Dickinson was also paid an average $8,922 for treatment of 33 people admitted for pneumonia, while Brockton Hospital, located south of Boston, was paid an average $5,524 for 27 people with pneumonia.
The report includes data from five large private insurers including Health New England in Springfield. The report shows the prices paid by these insurers for procedures.
Cooley Dickinson Hospital President/CEO Craig N. MelinSeena P. Carrington, acting commissioner of the state Division of Health Care Finance and Policy, which released the report, said the report did not find significant differences in the quality of the procedures offered at hospitals despite the price variations.
Carrington said various factors can affect prices for procedures including wages paid to hospital workers, the use of costly high-tech equipment and the number of low-income patients treated at a hospital.
She said a special state commission will dig deeper into the reasons for the drastic price differences for hospital procedures.
"We didn't try to identify, innumerate or draw conclusions between factors and prices," she said.
Price Variation Report
In the report, the division aimed to increase understanding of price differences at hospitals and
other professional services for certain health care services in three categories: inpatient
hospital care; outpatient hospital care; and physician and other professional services.
The report is intended to promote transparency in health care payments and advance the debate about ways to check rising costs of health care.
A second report released on Thursday by the division -- Premium Levels and Trends in Private Health Plans -- showed that private group health insurance premiums increased 5 to 10 percent each year over two recent years when adjusted for benefits, while the consumer price index, a measure of inflation on consumer goods and services, increased by only 2 percent in the Northeast.
Gov. Deval L. Patrick said the reports should "serve as an alarm bell" for moves to control rising health care costs in the state.
In February, Patrick filed a bill to overhaul health care payment and delivery in the state. The bill establishes a structure and process to spur significant changes to the state's health care payment and service delivery systems over the next three years.
In a prepared statement, Craig N. Melin, President and CEO of Cooley Dickinson Hospital, said he was a bit disappointed that the report focused on cost of each unit of service.
"The real measure of healthcare cost is cost per person," he said in the statement. "Insurance rates are linked not just to the price per unit of service, but the overall cost of healthcare per person. The recently released price comparison explicitly focuses on the fee for service payment system which the commonwealth and the nation seek to move away from. Pressure on price per unit tells providers to skip the very steps that will improve health and reduce avoidable care needs. Overall, we acknowledge that the cost of care has to come down. At Cooley Dickinson Hospital, we continue to take proactive measures to improve health, which fits the way healthcare needs to go."
The state’s study did not examine Cooley Dickinson's overall price to consumers, which could have been lower because the hospital works to keep people healthy and out of the hospital, Melin said.
According to the report, Cooley Dickinson is the most is the most underpaid hospital in the state, he said. "Forty-five percent of our patients are Medicare," he said. "Being underpaid in this area means we have to make ends meet, which affects the pricing for commercial care."
Steven F. Bradley, vice president of government and community relations and public affairs for Baystate Health, also issued a prepared statement.
“Greater transparency in cost and quality measures benefits patients, providers and payers alike as we work toward a more sustainable and value-driven health-care system," Bradley said. "Baystate Health is playing its part in containing health-care costs by ensuring that, through actions such as preventing medical errors and reducing readmissions, every patient receives the highest-quality and highest-value care. Others must play their part, too, by ensuring that reimbursements reflect the value of the care provided.“
The report found that Baystate Medical Center was paid an average of $7,025 for 83 appendectomies, while Cooley Dickinson Hospital in Northampton received an average of $10,120 for 69 appendectomies and Children's Hospital in Boston, $11,889 for 166 of the operations, the report said.
Baystate Medical was paid an average $21,266 for 58 hip replacements, compared to the average $22,342 paid for 59 of the operations at Brigham & Women's Hospital in Boston, the report said.
Baystate Medical Center received an average $19,375 for 118 knee replacements, while Brigham & Women's garnered an average $25,284 for 228 such replacements.
Baystate Medical Center also offered relative value for treating a heart attack. It was paid an average of $11,082 for treating 48 heart attacks, compared to $19,059 paid to the University of Massachusetts Memorial Medical Center in Worcester for 56 heart attacks.
A Cesarean delivery also carried a different price depending on the hospital. Baystate Medical was paid an average $7,536 for 264 Cesareans, Cooley Dickinson, an average $8,649 for 95 of the procedures and Massachusetts General Hospital in Boston, an average $10,517 for 483 Cesareans.
In a statement, the Massachusetts Hospital Association said each hospital in the state is different.
The association cited the state's chronic underpayments to hospitals for the cost of caring for patients in public programs such as Medicaid. Low government reimbursements are "a significant contributor" to escalating premiums, though not the sole driver, the association said.
" Unfortunately, many hospitals that provide care to large numbers of patients covered under public programs do not have the ability to shift much or any of the government’s underpayment burdens to the private sector due to their market circumstances, such as having a very small proportion of private sector patients," the association said. "Many hospitals are forced to make do with these losses and this affects hospital employment, facility investment, and services. Other hospitals do the same but have greater opportunities to shift a portion of the burden to private insurance payers, which results in a significant impact upon private premiums."