Hospital bills vary widely at California hospitals, study shows

As a whole, California hospitals charge billions of dollars more for their services than it costs them to provide them, according to a report released Tuesday, which shows a wide range in the amounts hospitals in the state bill their patients.

Some hospitals charge five times as much as others, says the study, commissioned by CALPERS, the state retirement system, and the San Francisco-based Pacific Business Group on Health. The group represents 50 large purchasers of health care, and suggests that what hospitals charge insurers and patients bears little relationship to their cost of doing business and the severity of the patients they treat.

"This eye-opening report shines a harsh spotlight on inefficiencies, surprising business practices, and possible abuses that contribute to ballooning costs for individuals and insurance carriers, and make it more difficult for Californians to obtain affordable, quality health care," California State Treasurer Bill Lockyer said Tuesday in a written statement.

'We're seeing hospitals charging whatever the market will bear," added Peter Lee, CEO of the Pacific Business Group on Health.

"We issued this report to make sure that we're paying the right price for the right care at the right time."

The study found that Silicon Valley hospitals as a group appear to charge less than hospitals in Sacramento, a surprising finding considering this region's high cost of living.

In fact, Community Hospital of Los Gatos, El Camino Hospital in Mountain View, and Good Samaritan Hospital in San Jose charged insurers and patients between 3 and 15 percent less than the state average.
In comparison, Sacramento area hospitals charged an average of 30 percent more than the state norm for the same mix of hospital services. Lee speculated that may be because the Sacramento hospital ownership is concentrated among only a few conglomerates.

The study's conclusions immediately drew fire from the California Hospital Association , which blasted the researchers' "confusing" methodology.The study comes at a key point in the ongoing debate over California's health reform push and efforts by some Presidential candidates to draw attention to the nation's rising health care costs.

When it comes to rising health care costs, hospital costs are increasing at a faster rate than other health care costs in general.

That's in part because hospitals are passing along costs of caring for the indigent and uninsured to insurers and patients with health coverage. Hospital costs account for the largest portion of the price of insurance premiums, the CALPERS/PBGH study shows. And all health care costs must be reined in for health reforms to work, proponents of health reforms at both the national and state level say.

Regulators and consumer advocates have scrutinized hospital costs in recent years as some hospitals' aggressive collection practices have forced patients into bankruptcy. Many California hospitals have since scaled back on those practices amid class-action lawsuits brought on behalf of uninsured patients.

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