After reading about the recent release of hospital charge data by CMS, I immediately thought of the “average Joe” trying to understand it. At first blush, the numbers are stunning, revealing as they do huge disparities in what hospitals charge for the same procedure. The Chicago Tribune did a great job in reporting this story, with charts and analysis galore. The Trib pointed out that the least expensive joint replacement in Illinois is served up by Iroquois Memorial Hospital in Watseka for $29,000. Now compare that to the most expensive, from Galesburg Cottage Hospital—a whopping $117,000! Here in Chicago, the list price for a major joint replacement at Mount Sinai was over $74,000, while Mercy Hospital charged less than half that.

I’ve been writing about the industry long enough to know, sadly, that these “list prices”— aka “charges” – are in some ways, all but meaningless. One finance director I spoke to recently likened them to the prices you see posted on the backs of hotel doors. “In a hospital, no one pays charges,” noted Charlton Park, finance director at the University of Utah Hospitals and Clinics. “They are fiction. Nobody pays that rate. We have rates, but everything is discounted. Even self-pay uninsured patients are given steep discounts.”

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