New Study Finds Tremendous Disparity In Appendectomy Costs

Appendectomies are a relatively common medical procedure, which means that there are plenty of them done around the country. It therefore makes a great study to see just how much they cost.

The results of that study are eye-opening.

The costs range by tens of thousands of dollars.

In fact, the cheapest appendectomies were under $2,000 while the most expensive were over $100,000. The median cost was $33,000.

What do hospitals charge to remove an appendix? The startling answer is that it could be the same as the price of a refrigerator — or a house.

It's a common, straightforward operation, so you might expect charges to be similar no matter where the surgery takes place. Yet a California study found huge disparities in patients' bills — $1,500 to $180,000, with an average of $33,000.

The researchers and other experts say the results aren't unique to California and illustrate a broken system.

"There's no method to the madness," said lead author Dr. Renee Hsia, an emergency room physician and researcher at the University of California, San Francisco. "There's no system at all to determine what is a rational price for this condition or this procedure."

The disparities are partly explained by differences among patients and where they were treated. For example, some had more costly procedures, including multiple imaging scans, or longer hospital stays. A very small number were treated without surgery, though most had appendectomies. Some were sicker and needed more intensive care.

But the researchers could find no explanation for about one-third of the cost differences.

The researchers took uncomplicated cases, which involved patients aged 18-59, and examined what the patients were billed. It didn't look at the negotiated payments that the insurance companies made on behalf of patients.

Many patients have no idea how much procedures are going to cost before doctors go and perform them. There's little transparency on costs, though some insurers are beginning to provide that data to their customers.

It's cost-roulette. The differences can be significant within geographical areas, and even between hospitals in the same city.

The NY Times indicated that one instance found a patient hit with charges for his appendectomy that were six times the median for his geographical area.

In all, Mr. Hong was charged $59,283, including $5,264 for the doctors. According to the Healthcare Blue Book, that amount is six times the fair price for an appendectomy in Northern California, which is $8,309 (including a four-day admission) for the hospital and an additional $1,325 for the doctor. Even after Mr. Hong’s insurer paid the hospital $31,409 and Mr. Hong paid the doctors $4,034, the bills kept coming.

Even when balancing for complexity of cases, the disparity shows that the billing isn't necessarily reflective of the costs for cases and that there is tremendous room for improvement in reducing health care costs.

Some hospitals and medical groups are starting to provide relative costs for procedures, but it's not sufficiently widespread.

One area of regulation that might help increase transparency and reduce health care costs is requiring hospitals to provide easily accessible pricing for procedures so patients can understand the costs involved and potentially shop around and/or negotiate a better price.

Billing should provide more information - including a clear description of charges and itemized accounting for expenses and billing codes.