(NOTE:  Read all 7 steps before proceeding on your research for this discussion)

1.  Visit the website of the hospital you have been researching, or a hospital in your area.

2.  Next, visit the website of a competitor of that hospital (if you are having difficulty finding another hospital during the pandemic, you can visit a hospital’s website at www.brookshospital.org.  The chargemaster is outdated, but it is definitely there.  In this case, you are not comparing apples to apples, but you may gain a better understanding of price differences on a regional basis.)

3.  For both hospitals, search within a tab called “patient financial services” or “patient pricing” and find the hospital’s Chargemaster.  A Chargemaster is a comprehensive list of items billable to a hospital patient or a patient’s health insurance provider.

4.  Within the list of thousands of hospital services, search for a medical procedure that you are familiar with (or equipment fee, drug, supply, diagnostic imaging/radiology or blood test).

5.  Do the same search within the competitor’s Chargemaster.

6.  Compare prices for the exact same service (or drug or supply).

7.  What is the price for the same service at each hospital?  Are the prices similar or different? Why (make sure to consider the healthcare system in the USA- on what level the decisions made?) How does it affect patient mix and satisfaction with the services?

SOLUTION

Comparing the charge masters of hospitals is a useful way of understanding price variation in the health care system. I will analyze and compare two hospitals: Cedars-Sinai Medical Center in California and the Center for Behavioral Medicine in Missouri. The two institutions declare their prices as required by state and federal laws, although noticeable disparities in costs and approaches are evident. Chargemaster, the price of an MRI scan in Cedars-Sinai, California, is approximately $1,800 for a standard MRI scan. This pricing is tied to the fact that California has very strong laws on charity care with high requirements for hospital reporting on costs. According to Schneider et al. (2021), standardization is also important in the state context to limit the variations in prices for insurance plans and to support better decision-making among patients. As part of this system, Cedars-Sinai gets to enjoy the advantages of scale economies and a fairly competitive and standardizing regulatory structure.

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