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Study exposes huge price differences at MN hospitals

A knee replacement could cost eight times more, depending on which hospital you choose and the healthcare network your employer uses. The state economist says that's a problem.

MINNEAPOLIS - A study by the Minnesota Department of Health has revealed how Minnesota hospitals can charge job-based health plans drastically different prices for the same procedure.

The Minnesota Department of Health studied actual prices paid for four routine procedures from July 2014 to June 2015. For instance, the same knee replacement was found to cost as little as $6,186 and as much as $46,974. That's eight times more depending on the hospital and the commercial payer involved.

A cesarean section baby delivery ranged from a minimum of $4,693 and a maximum of $22,831, a nearly five-fold difference.

"I think, until we saw the numbers, we didn't know the magnitude of the variation," said Stefan Gildemeister, State Health Economist.

Gildemeister says the numbers come from a state database that tracks what hospitals charge job-based insurance plans, and he says studies have shown those higher prices don't often correspond to better outcomes.

"Just because you're paying more doesn't mean your getting a better service," Gildemeister said.

He says the numbers now give employers a way to compare some prices and ask some tough questions to of their insurance providers or networks.

What it does not reveal is which hospitals are charging what.

"That's one of the weakness of this analysis," he said. "We don't sort of distinguish between who pays what."

He said often times a single hospital can also charge different prices, depending on which job-based plan or network is paying.

"Oh absolutely," he said. "I think what that speaks to is that hospitals seek different prices from different insurers."

He says revealing that information would help better inform both employers and consumers, but it would need the approval of the State Legislature.

"I think more discussion around prices and costs will help transform the system," Gildemeister said. "The question is, what tools do you use to shrink that variation because it represents inefficiency and waste in the system."