Hospital Pricing vs. Private Practice Pricing

Healthcare today focuses on cost, quality, and accessibility. Today, an independent doctor has an edge: value. As private payors and the government have called for healthcare providers to trim costs and make pricing practices more transparent, private practices and hospital systems are competing: Patients need to determine which providers are offering them high-quality care at economical prices.

Saving on Diagnostic Procedures

Whereas it is not uncommon for individuals to compare prices when they are purchasing products online, many neglect to take the time to compare costs for healthcare services. Frequently, people do not realize that simply taking time to compare health care providers could save them thousands of dollars.

Although many people receive their diagnostic care at a hospital, the majority do not realize that they can receive identical care, for less, at another facility. In fact, the fees charged for diagnostic procedures like X-rays, MRIs and computerized tomography (CT) scans can vary greatly. Consider that an MRI performed at an imaging center owned by a hospital can cost from $2,000 to $3,000, while the identical scan at a private imaging center could cost as little as $450.

Patients Paying Higher Coverage Costs, Deductibles, and Co-pays

According to the Dec. 16, 2015 USA Today article, State by state data show bigger 2016 exchange premium, deductible jumps, individuals are paying significantly more for their medical coverage, including substantial rises in their deductible amounts and co-pays. These deductible changes have led to patients themselves paying significantly more for their medical care before their insurance benefits even start paying any claims. Needless to say, these increases have placed a financial burden on the patient. However, there are ways a patient can reduce his or her healthcare costs by avoiding hefty charges.

Changes in Florida’s Exchange Deductibles

According to Freedom Partners Chamber of Commerce, Americans in 41 states are facing higher deductibles under the Affordable Care Act, with 17 of these states experiencing increases that are in the double digits, one of which is the state of Florida. Freedom Partners used information from the Centers for Medicare and Medicaid Services, as well as information gathered from Robert Wood Johnson Foundation to calculate a weighted average of deductibles.

For those residing in Pensacola, Florida, increases are as follows:

  • The Bronze Plan has increased by $472
  • The Silver Plan has increased by $1,129
  • The Gold Plan has increased by $94
  • The average plan increase in Florida is $990

Reasons for Cost Differences Between Outpatient Departments and Private Practices

There are several theories as to why there are substantial cost differences between a private practice and a hospital’s outpatient department (OPD). Overall, it is presumed that three areas account for these price variations.

These three areas include:

  1. The practice patterns of the physician
  2. Patient characteristics
  3. The location of a hospital’s ambulatory care services

Examples of cost differences based on location of services:

Ankle Fracture

  • Physician Reimbursement – $791
  • Ambulatory Surgery Center – $2,318
  • Hospital Outpatient – $4,227
  • Hospital Inpatient – $9,031

Bunion

  • Physician Reimbursement – $596
  • Ambulatory Surgery Center – $1,467
  • Hospital Outpatient – $5,217
  • Hospital Inpatient – $7,316

Achilles Repair

  • Physician Reimbursement – $674
  • Ambulatory Surgery Center – $2,063
  • Hospital Outpatient – $3,762
  • Hospital Inpatient – $6,803

Hospitals Are Purchasing Doctors’ Offices and Increasing Charges

In general, hospitals charge more than independent physicians do for identical procedures. Consider that a patient with Medicare coverage visits his or her independent practitioner’s office to receive a heart ultrasound in May: Medicare pays the physician’s office $200 and the patient pays his or her co-pay, which is 20 percent of the bill. Before the patient returns for his or her visit the following month, the physician’s practice is purchased by the local hospital. When the patient returns to see the same physician, at the same location and receives the same heart ultrasound since the physician’s practice is no longer independent charges for the identical services have doubled to $400. Medicare and the patient will pay more for the same services simply because a hospital purchased the practice.

Some Physicians Are Selling Their Practices to Increase Profits

One reason that physicians are selling their practices to hospitals is because Medicare typically pays doctors who work for a large health system more than an independent doctor: Even when the same services are provided at the same location. Since private insurers follow many of Medicare’s payment policies and hospitals generally have the ability to negotiate for higher prices than the smaller practices do, physicians benefit from selling their practices.


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