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Monday, March 07, 1994 Page: 1 & 16A QUICK WORDS: AT WHAT PRICE
HEALTH
At what price health?
Report helps you decide
Pennsylvania Health Care
Cost Containment Council lists charges at area hospitals, but some
administrators caution the compilers didn’t compare apples with apples
By CECE TODD
Times Leader Staff Writer
For patients, giving birth or having a gallbladder removed in
Wilkes-Barre-area hospitals is akin to buying a car: The sticker price varies
from dealer to dealer.
Mercy Hospital charges an average of $2,017 for a vaginal delivery;
Wilkes-Barre General charges $1,534. Nesbitt Memorial Hospital charges an
average of $5,369 for gallbladder surgery; Geisinger Wyoming Valley Medical
Center charges $4,950.
The same procedures, different deals.
As the nation focuses attention on transforming the health-care system,
patients, businesses and insurers are looking for the best quality at the best
price.
Average charges compiled by the Pennsylvania Health Care Cost Containment
Council give consumers an idea of how much local hospitals will charge to
treat a particular medical condition.
Nesbitt has the highest cost for many of the 56 procedures surveyed. Most
of Luzerne County’s hospitals have average charges below the Northeastern
Pennsylvania average.
“For the uninsured, or those who buy their insurance on the open market,
this information is very meaningful,” said Joe Martin, spokesman for the
council.
Try “meaningless,” say hospital administrators, who argue the charges are
too complicated to compare.
“The average charge doesn’t tell how much we actually collect,” said Tom
Sokola, chief financial officer for Geisinger Eastern Region. Most of the
charges for many patients are covered by their health-insurance policy.
“Charges are misleading,” said Dave Plaviak, vice president and chief
financial officer for Wyoming Valley Health Care System Inc., which operates
Wilkes-Barre General and Nesbitt hospitals.
Average charges are “not a very good source of information,” said Terry
Conrad, vice president and chief financial officer at Mercy.
Yet, average charges are presented by the council, an independent
organization, as a factor for patients, businesses and insurers to consider in
making health-care decisions.
Words to live by?
For patients covered by group health-insurance plans, the decision on which
hospital to use often is made when the insurance is chosen — and long before
any surgery or hospitalization is scheduled.
People under the Geisinger health-insurance police are hospitalized at a
Geisinger hospital.
Blue Cross/Blue Shield HMO patients are hospitalized at Wilkes-Barre
General or Nesbitt hospital, under a recent agreement between the insurance
company and Wyoming Valley Health Care System.
Other patients choose their hospital — sometimes unknowingly — when they
choose their physician. Physicians, who are developing their own health
organizations to compete in the changing health-care market, steer patients to
the hospitals with which they are associated.
But, for business owners, who make choices on which insurance policies to
offer employees, the report may provide information to use in evaluating the
effectiveness of a hospital in controlling costs, Martin says.
The council, an independent state agency operating on a $3.3 million
budget, sent out at least 25,000 copies of the Hospital Effectiveness Report
released in 1992 to businesses, insurers, libraries and lawmakers.
Martin doesn’t know how many copies of the current report have been
distributed.
In addition to average charges, the report also compares average lengths of
stay and morbidity rates. Comparisons are broken down according to a national
illness-classification system: vaginal deliveries without complications,
Caesarean deliveries without complications, gallbladder removal and so on.
Blue Cross of Northeastern Pennsylvania often uses the report to evaluate
the effectiveness and quality of hospitals. “We consider it a worthwhile,
valuable guide,” said Donald Serfass, manager of public relations. “It does
carry some weight.”
Difference of opinion
Based on 1991 data, the most recent available, Nesbitt Memorial Hospital
had the highest average charge among Wilkes-Barre area hospitals for most
procedures considered in the report.
Excluding cancer patients, Nesbitt in 1991 also had the highest summary
adjusted charge — $8,138 — for all procedures reviewed in the report.
Geisinger had the lowest summary adjusted charge, at $5,980. Mercy’s was
$6,107, and Wilkes-Barre General’s, $6,384. The charges ranged from 2 percent
to 7 percent higher than the 1990 charges.
The adjusted charge, Martin said, is the average charge adjusted to account
for the relative costliness of patients or illnesses treated at each hospital.
He explained: “Let’s say Wilkes-Barre General does some of the more
complicated procedures. If you just look at the average, you might see a
higher average than a hospital that focuses on something such as maternity
procedures. The adjusted charge takes that into account.”
But officials at Wyoming Valley Health Care System, which operates Nesbitt
and Wilkes-Barre General, say charges alone are misleading.
“You need to look at what influences hospital charges,” said Steven C.
Bjelich, executive director of hospital services.
The age, medical history and social support system of the patient,
technology and resources all affect hospital charges and patient care, he
said.
For example, older patients often stay in the hospital longer because of
their age and conditions that can develop with age. That person will be
charged more than a younger, healthier patient having the same procedure but
staying in the hospital a shorter length of time.
At Mercy, Conrad used a chest X-ray as an example of how charges are set:
The hospital estimates the costs, looks at the area market rate and considers
what insurers are willing to pay.
While Nesbitt and Wilkes-Barre General had the highest summary adjusted
charges among Wilkes-Barre area hospitals, Wyoming Valley Health Care System
officials noted that data — the most recent available — were gathered from
procedures performed before the hospitals’ merger in 1992. The two hospitals
continue to function independently, and each sets its own charges.
But Bjelich and Plaviak, while they did not have specific savings figures,
said the merger is reducing the costs of health care in those facilities by
reducing duplication of services, administrative and building expenses.
Through its health-maintenance organization, Geisinger emphasizes
preventive care, which helps keep costs down, administrators say.
Administrators at all the hospitals said the average charges given in the
report do not reflect the bulk of their patients — those on Medicare and
Medicaid, Blue Cross members and others who receive a group discount through
their health plans. Rates for those patients are fixed.
“We can charge, but what comes back to us is a fixed rate,” Sokola said.
“We lose money from Medicaid and Medicare.”
To make up what they lose on those patients, hospitals shift costs to other
patients.
“It’s true that the majority of insured patients are insured under Medicare
or Medicaid, and they do pay a flat rate,” Martin said, “but I still support
the fact that the difference in hospital charges is meaningful.
“Each hospital receives essentially the same rate for Medicare and
Medicaid, and they’re still receiving in the ballpark the same basic rate for
Blue Cross. Yet, their charges are still very different.”
Quality is key
Hospital administrators say their facilities should be judged according to
the quality of care they give, not the prices charged.
Mark Stephens, vice president of marketing and planning at Mercy, said, “In
the longer term, the competition will be in the offering of various health
plans