As health care costs have risen in America, it has become increasingly difficult for consumers to track the prices of their respective surgeries. For example, the cost of knee replacement surgery has reached an average price of $50,000 at Gundersen Health System, a Wisconsin hospital, but the administrators there no longer have a precise real-world cost. They set a price using a combination of educated guesswork and a canny assessment of market opportunity. ... Instead the fee is a combination of educated guesswork and market opportunism. When the health system conducted an 18-month review, it found that the actual treatment cost was $10,550 at most. The same thing happens with other medical procedures. Compounding the issue is that most patients, particularly those who are insured, do not know the cost themselves and therefore do not attempt to find a better deal. This dynamic is at the heart of the rise of health care costs in the US, which is set to hit 20 percent of GDP. Hospital prices have outstripped inflation for decades, illustrating that the health market is not competitive. Price negotiations between insurers and hospitals remain confidential, and consolidation among providers has given greater strength to hospitals in these negotiations. For knee replacement surgeries higher-cost hospitals spent almost twice the amount of their lower cost equivalents. A range of factors contributed to the rising price of the procedure, with inefficiency and unexpected variations between treatment programs, both before and after surgery, all of which added to significant labor costs. Having observed these issues, the Gundersen health system cut the cost of to an average of $8700, as well as trimming back the typical stay for patients. The hospital is hopeful that by applying the same drive for efficiency, they will be able to cut costs for other procedures they carry out.
As health care costs have risen in America, it has become increasingly difficult for consumers to track the prices of their respective surgeries. For example, the cost of knee replacement surgery has reached an average price of $50,000 at Gundersen Health System, a Wisconsin hospital, but the administrators there no longer have a precise real-world cost. Instead the fee is a combination of educated guesswork and market opportunism. When the health system conducted an 18-month review, it found that the actual treatment cost was $10,550 at most. The same thing happens with other medical procedures. Compounding the issue is that most patients, particularly those who are insured, do not know the cost themselves and therefore do not attempt to find a better deal. This dynamic is at the heart of the rise of health care costs in the US, which is set to hit 20 percent of GDP. Hospital prices have outstripped inflation for decades, illustrating that the health market is not competitive. Price negotiations between insurers and hospitals remain confidential, and consolidation among providers has given greater strength to hospitals in these negotiations. For knee replacement surgeries higher-cost hospitals spent almost twice the amount of their lower cost equivalents. A range of factors contributed to the rising price of the procedure, with inefficiency and unexpected variations between treatment programs, both before and after surgery, all of which added to significant labor costs. Having observed these issues, the Gundersen health system cut the cost of to an average of $8700, as well as trimming back the typical stay for patients. The hospital is hopeful that by applying the same drive for efficiency, they will be able to cut costs for other procedures they carry out.