Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Gen Villa lives in Salinas, California, and she told us
Speaker 2: that a few years ago, when she went into labor
Speaker 2: with her second child, things moved really quickly.
Speaker 1: My water broke in the middle of the night and
Speaker 1: I was like, okay, well, let me take a shour
Speaker 1: and get ready, but my partner's like, no, we got
Speaker 1: to go.
Speaker 2: They got in the car and drove forty five minutes
Speaker 2: north across county lines to a hospital in Santa Cruz.
Speaker 1: My contractions were getting shorter and shorter, and then when
Speaker 1: we arrived they asked how what would been timing them,
Speaker 1: and it was like a couple of minutes. So they
Speaker 1: rushed me into the room and as they were registering
Speaker 1: me in my room, I was giving birth.
Speaker 2: The reason the timing was so tight, the reason Jen
Speaker 2: chose to go to a hospital almost an hour away.
Speaker 2: It's not because it was the closest option. In fact,
Speaker 2: the closest hospital to her home is only about half
Speaker 2: a mile away.
Speaker 1: Like I could probably drive there and get there maybe
Speaker 1: in the same minute.
Speaker 2: The reason Jen and her partner made that middle of
Speaker 2: the night drive came down to money. When Jen gave
Speaker 2: birth in Santa Cruz County. The tab was about eighty
Speaker 2: three hundred dollars, but if she had given birth at
Speaker 2: a hospital in the county where she lives, the cost
Speaker 2: could have been more than forty thousand dollars. Today, on
Speaker 2: the show Bloomberg News Crunch, the data on hospital pricing
Speaker 2: around the country. What they found reveals a new picture
Speaker 2: of just how much healthcare prices can vary, even just
Speaker 2: a few miles apart. I'm Sarah Holder and this is
Speaker 2: big take from Bloomberg News. Gen Via started thinking about
Speaker 2: having a second child after she moved to Salinas.
Speaker 1: Mind you, it was like planned, so I was kind
Speaker 1: of like looking into like when's the beeth time.
Speaker 2: Where's the doctor's She was thinking about who could deliver
Speaker 2: the baby because the obgin she had wasn't in network,
Speaker 2: and Jen knew having a baby with an out of
Speaker 2: network doctor would be expensive. She needed some guidance. Jenn's
Speaker 2: a special education teacher, and so she turned to the
Speaker 2: head of her teachers' union for advice.
Speaker 1: What do I do you know? Like, how do I
Speaker 1: start this? Since I wasn't pregnant yet? She said, like,
Speaker 1: you could you have time to just change your insurance
Speaker 1: is just going to be a lot more if you
Speaker 1: want to have your baby and keep your doctor. And
Speaker 1: I said, okay, so how much more? And then when
Speaker 1: it was like about a thousand more, it's like, I'll drive.
Speaker 2: A thousand dollars more a month. That's how much more.
Speaker 2: Jen says she would have to pay to get a
Speaker 2: health insurance plan that would allow her to get care
Speaker 2: from the hospital closest to her home, and not just
Speaker 2: that hospital. Her insurance wouldn't cover her giving birth at
Speaker 2: any of the three hospitals in her county, which are
Speaker 2: among the most expensive in the country.
Speaker 1: My first reactions like, you gotta be kidding me, are
Speaker 1: you serious? Okay, well, financially, one makes way more sense
Speaker 1: than the other, so I'm gonna do this, But like,
Speaker 1: how dare them? Like how is this okay? Like how
Speaker 1: is okay that I people that work in the hospital,
Speaker 1: I'm teaching your kids, you know, like I'm working to
Speaker 1: better our community as a whole, but I can't use
Speaker 1: the hospital.
Speaker 3: Gen's experience is sort of an extreme situation because of
Speaker 3: the place she lives and the price levels there that
Speaker 3: are so high.
Speaker 2: That's my colleague John Tazzi. He covers all things related
Speaker 2: to the cost of healthcare in the US.
Speaker 3: But everyone in the United States who has commercial insurance
Speaker 3: is sort of exposed to this problem, right.
Speaker 2: John and his colleagues recently got an up close look
Speaker 2: at this problem when they cunched some data on hospital
Speaker 2: pricing collected by a research group called the Rand Corporation,
Speaker 2: and they found pricing disparities like the one gen Via
Speaker 2: described all over the country.
Speaker 3: In New York City, in Texas, in Indiana, pretty much
Speaker 3: everywhere you look where there are multiple hospitals, there are
Speaker 3: lower cost or higher cost options within a certain range.
Speaker 2: In total, John and his team found more than three
Speaker 2: hundred and fifty hospitals that had significantly lower cost competitors
Speaker 2: within just five miles.
Speaker 3: And if patients were willing to travel thirty miles, almost
Speaker 3: half of US hospitals have a significantly less expensive competitor
Speaker 3: within thirty miles.
Speaker 2: So why would it cost thousands more dollars in one
Speaker 2: county and then in another county thirty miles over it
Speaker 2: would be a lot cheaper.
Speaker 3: It's a very good question.
Speaker 2: It's the question.
Speaker 3: It's the question. It's the question of American healthcare.
Speaker 2: Have you talked to hospitals where they're charging more than
Speaker 2: other people nearby, what do they say about their prices?
Speaker 3: Yeah, so, I mean in general, the hospital industry kind
Speaker 3: of says that this variation in and of itself is
Speaker 3: not a problem because hospitals do have different cost structures
Speaker 3: in different of the patients they see. Some of the
Speaker 3: hospitals say that they are financially at risk and that
Speaker 3: they need to you know, they see other hospitals, particularly
Speaker 3: in rural areas, closing, so that they need to make
Speaker 3: sure they are charging a price that will sustain their operations.
Speaker 3: But I think, you know, whenever we hear assertions from
Speaker 3: the industry that they need higher reimbursements from ultimately it's
Speaker 3: all paid for by patients or tax payers, I think
Speaker 3: we should scrutinize claims that we need to pay more
Speaker 3: for what we're getting.
Speaker 2: Well, do the people who end up paying more get
Speaker 2: better care?
Speaker 3: So there is a lot of research trying to understand
Speaker 3: the relationship between price and quality. We should say measuring
Speaker 3: quality and healthcare is pretty challenging in some ways. Some
Speaker 3: hospitals might have like really top quality cardiac care not
Speaker 3: as good quality, or thepedic care, and so I think
Speaker 3: you need to be really kind of clear and specific
Speaker 3: about what you're comparing when you're trying to do that
Speaker 3: sort of analysis. But in general, the answers know that
Speaker 3: higher cost care is not better quality.
Speaker 2: How clear is this to consumers? Do people generally know
Speaker 2: they can get cheaper care as close as a couple
Speaker 2: miles away.
Speaker 3: I think most consumers are largely baffled and confused every
Speaker 3: time they interact with the healthcare system, So as a baseline,
Speaker 3: I would say no.
Speaker 2: Part of the reason why the cost of healthcare can
Speaker 2: be so confusing is that many people don't pay for
Speaker 2: it directly. They pay their insurance company, and then their
Speaker 2: insurance company negotiates the prices with the provider, And for
Speaker 2: a long time, even if you wanted to look up
Speaker 2: how much something would cost at different hospitals, it was
Speaker 2: hard to do.
Speaker 3: Until relatively recently, all these kind of prices and contracts
Speaker 3: were private. They were hidden, they were secret, they were
Speaker 3: not public by default.
Speaker 2: That started to change in recent years due to new
Speaker 2: regulations under the Trump and Biden administrations that require hospitals
Speaker 2: to publish their prices. But John Say's compliance has been slow,
Speaker 2: and we're still a long way off from a world
Speaker 2: where it's easy for individual patients to find the most
Speaker 2: affordable care.
Speaker 3: For twenty odd years now, in the US, there's been
Speaker 3: a movement toward trying to make consumers, you know, patients
Speaker 3: people need healthcare into shoppers, consumers who will compare price
Speaker 3: and quality and make the best decisions based on that information.
Speaker 3: There are now various websites and places where you can
Speaker 3: try to compare pricing. I would say it's still really hard,
Speaker 3: and like, particularly for people who are maybe having a
Speaker 3: medical crisis, maybe kind of overwhelmed by other things the time,
Speaker 3: it's a high bar to kind of like ask people
Speaker 3: to do complicated analysis and try to weigh trade offs
Speaker 3: between price and quality, right and like figure out Like,
Speaker 3: it's hard, it's really hard. So I would say, you know,
Speaker 3: even if consumers know that there's potentially other options, trying
Speaker 3: to do that decision making on your own is really challenging.
Speaker 3: We're looking at a part of our economy and a
Speaker 3: part of our lives that we have like designated to
Speaker 3: the market, Unlike a lot of countries have decided that
Speaker 3: we're going to use a market approach to commercial healthcare.
Speaker 3: In the US, and it's not working.
Speaker 2: So we've got this big problem in pricing. What do
Speaker 2: we do about it? After the break, we visit a
Speaker 2: place that has taken steps to get hospital pricing disparities
Speaker 2: under control. Out of all the data John and his
Speaker 2: team analyze, he said, there was one state that's led
Speaker 2: the way on addressing hospital pricing disparities.
Speaker 3: So in some ways, the state of Indiana's kind of
Speaker 3: ground zero for what we're talking about here.
Speaker 2: Back in twenty sixteen, John says, an employer's group called
Speaker 2: the Employer's Form of Indiana got concerned that hospital pricing
Speaker 2: in their state was getting out of hand.
Speaker 3: And they said to some economists that RAND, Hey, can
Speaker 3: you help us understand this.
Speaker 2: RAND that's the research group that collected data on hospital pricing.
Speaker 2: RAND compared what hospitals in the state were charging patients
Speaker 2: with commercial insurance versus what they were getting paid for
Speaker 2: patients on Medicare, and they found that many of the
Speaker 2: hospitals in Indiana were unusually expensive, including the state's largest
Speaker 2: health system, Indiana University Health.
Speaker 3: That kind of led employers in Indiana to be pretty
Speaker 3: upset about what they were paying. They didn't understand why
Speaker 3: they were paying so much, and people in other states
Speaker 3: weren't necessarily paying as much.
Speaker 2: How did prices at Indiana University Health get so high?
Speaker 3: I don't think there's one clear answer. One thing they
Speaker 3: did say is, you know, like a lot of big
Speaker 3: hospital systems, they've made acquisitions in recent years, they've absorbed
Speaker 3: smaller hospitals. Some of those hospitals had existing contracts with insurers,
Speaker 3: so they sort of inherited different prices. But you know,
Speaker 3: I think how they got so high. Again, that's sort
Speaker 3: of the fundamental question of like all of this that
Speaker 3: we don't really have a good answer to, except that
Speaker 3: those are the prices that insurance companies agreed to pay.
Speaker 2: Bloomberg News asked to interview executives from each of the
Speaker 2: fifty hospital systems across the country that Rand identified as
Speaker 2: the most expensive. Indiana University Health was the only one
Speaker 2: that agreed.
Speaker 3: When we talked to the hospital, they didn't dispute that
Speaker 3: this was an issue. They actually said that they're trying
Speaker 3: to make affordability part of their strategy, and they have
Speaker 3: pledged to kind of get their prices in line at
Speaker 3: least with national average is over a five year.
Speaker 2: Period, Indiana University Health pledged to start cutting prices in
Speaker 2: twenty twenty, and since then, ambulance charges have fallen twenty
Speaker 2: four percent, pharmacy services are down by thirty percent, and
Speaker 2: radiology prices are now almost half of what they used
Speaker 2: to be. John says it's a rare example of a
Speaker 2: hospital group responding to pressure to bring their prices down.
Speaker 3: So I think in Indiana you have a story of
Speaker 3: a really engaged group of employers that really put this
Speaker 3: issue on the map with data, They brought it to legislators,
Speaker 3: They kind of made a political issue over hospital prices,
Speaker 3: and that has at least begun to kind of trickle
Speaker 3: into both policy changes but on some market changes where
Speaker 3: we see IU Health responding to some of these concerns.
Speaker 3: So I think the question to watch over the next
Speaker 3: few years is like, first of all, what happens in
Speaker 3: Indiana to overall cops, But then do we start to
Speaker 3: see that kind of nationally right, do more hospitals come
Speaker 3: out and say, hey, we understand there's a problem here
Speaker 3: and we're gonna try and shift some things to address it.
Speaker 3: I think we are seeing this increasingly as a political issue,
Speaker 3: but in terms of like the public pressure on hospitals.
Speaker 3: It's nowhere near like you look at pharma. I mean,
Speaker 3: every politician is talking about drug prices constantly, even though
Speaker 3: we spend far more on hospital care. Right So, I
Speaker 3: think it'll be interesting to watch how this plays out
Speaker 3: nationally over the next few years. John, thanks so much,
Speaker 3: Thanks so much for having me.
Speaker 2: Thanks for listening to Big Take from Bloomberg News. I'm
Speaker 2: Sarah Holder. This episode was produced by David Fox. It
Speaker 2: was edited by Caitlin Kenny and Timinette. It was mixed
Speaker 2: by Blake Maples. It was fact checked by Tiffany Choi.
Speaker 2: Our senior producers are Naomi Shaven and Jilda Decarly. We
Speaker 2: get editorial direction from Elizabeth Ponso. Nicole Beemster Bore is
Speaker 2: our executive producer. Sage Bauman is Bloomberg's head of Podcasts.
Speaker 2: Thanks for tuning in. We'll be back tomorrow.