Researchers at the University of California San Francisco revealed that the cost for a simple cholesterol test ranged from as little as $10 to as much as $10,169!

Clinical laboratories owned by hospitals and health systems should take note of a public study of hospital laboratory test prices that was conducted by researchers at the University of California at San Francisco (UCSF). It was published this summer and showed a remarkable range of prices for medical laboratory tests charged by California hospitals.

How about a charge of $10,169 for a routine blood cholesterol test? This was one finding a study discussed in the August 2014 issue of the British Medical Journal Open blog. The study was led by Renee Hsia, M.D.. She is an associate professor of Emergency Medicine and Health Policy at the UCSF Medical School. Hsia and her colleagues compared charges for 10 common clinical laboratory tests that were reported in 2011 by all non-federal California hospitals.

Variation in Cost for Common Tests at Some Hospitals Off the Charts! 

The range of pricing for a blood cholesterol test, for example, ranged from $10 to $10,169—that’s a whopping 1,000 times difference from cheapest price to most expensive price. Basic metabolic panels were priced from a low of $35 to high of $7,303, with the average charge $371, noted the study.

The cost for a complete blood cell count (CBC) and a thyroid assay ranged from a low of $20 for each test to a high of $7,439 and $8,392, respectively. Charges for a creatine kinase assay were a low price of $10 to a high price $628. (See a full list of price laboratory price comparisons by facility at: http://app.coolerweb.com/users/myteam21840/Media385.pdf.)

In previous studies of prices at California hospitals, Hsia had identified huge discrepancies in hospital charges for labor and delivery and appendectomies, which ranged from $1,500 to $182,955. However, in a Kaiser Health News report, Hsia commented that the huge variations in common blood tests, “This was even more surprising to me!

“There is always some variation in patients, even among young healthy adults, and there are variations in physician practice,” she continued, noting there is little difference between standard blood tests done at different institutions. “But these are very basic, standard blood tests. It doesn’t matter if you’re sick or not, a complete blood count is a complete blood count! You draw the blood, send it to the lab and put it in a machine.”

Hsia expressed irritation with hospital administrators, pointing out that an auto manufacturer can tell you what it costs to build a car, but “if you ask a hospital CEO how much an appendicitis admission costs, they will not be able to tell you.”

Researchers Call for Market-Driven Cure for Broken Healthcare System 

Patients are increasingly being asked to help keep healthcare costs down by playing a greater role in staying healthy and shopping around for the best quality of care at the lowest price, noted Hsia in the Kaiser Health News article. Additionally, consumers are being asked to pay for a greater share of their healthcare costs out of pocket, particularly because of the increased enrollment in both employer and individual health plans that require high deductibles.

“People say our health care system needs to be more marketplace-driven,” Hsia commented. “But the charging system and payment system are irrational. When people try to understand why prices are the way they are, we have no ability to explain it. That is the take home message,” Hsia observed. “That is what is so disturbing.”

Pictured above is Renee Hsia, M.D., an associate professor of Emergency Medicine and Health Policy at the University of California, San Francisco Medical School. She recently led a study that revealed huge variations in what California hospitals charge for common clinical laboratory tests. (Photo copyright University of California, San Francisco.)

Pictured above is Renee Hsia, M.D., an associate professor of Emergency Medicine and Health Policy at the University of California, San Francisco Medical School. She recently led a study that revealed huge variations in what California hospitals charge for common clinical laboratory tests. (Photo copyright University of California, San Francisco.)

CHA Responds, Claiming No One Pays Full Price for Healthcare Services

The California Hospital Association spokesperson Jan Emerson-Shea dismissed the report about the high cost of medical laboratory tests at California hospitals as meaningless, contending that “virtually no one pays [chargemaster] list charges.

“It’s true that an uninsured person will receive a hospital bill based on [chargemaster] charges,” admitted Emerson-Shea, who is Vice President for External Affairs at CHA. She did note that California law requires the bill to “include text referencing the availability of free or discounted care to persons who meet income guidelines. Those discounted fees must be based on what government programs pay for services under California law,” Emerson-Shea added.

But the researchers disagreed. They noted that the hospital list prices are a starting point for negotiations with insurers and patients, so they play a role in driving up healthcare costs. And some uninsured patients—as well as those with insurance who have gone out of network—may be billed for full list prices.

Non-Profit Hospital Charged 100 Times More Than the Cost at National Lab

Over-the-top pricing for hospital laboratory testing services is nothing new. Last year, Dark Daily published an article that highlighted the case of Katy Meinhardt, a graphic designer in the Napa Valley. She was billed more than $4,000 for blood work done at Queen of the Valley Medical Center, a non-profit Catholic hospital in Napa, California. At that same time, those same medical laboratory tests would have cost Meinhardt just $464 at a Quest Diagnostics Incorporated (NYSE: DGX) lab in the same town. (See: Dark Daily, “California Patient Gets Outrageous Clinical Pathology Laboratory Test Bill From Napa Hospital, Almost 10 Times Higher Than Similar Testing from Quest Diagnostics,” June 10, 2013.)

UCSF Study is ‘Wake-up Call’ for Hospital Labs

Hsia’s study of how California hospitals price medical laboratory tests brings this problem into the national spotlight. Publication of the study and the national news headlines triggered by reports of $10,000 routine lab test prices should be a wake-up call for hospital administrators, pathologists, and clinical laboratory managers everywhere. Both consumers and employers footing the bill for employee health insurance are becoming more astute in regard to these schemes put forth by many hospital’s and other provider’s pseudo-pricing for healthcare services that greatly exceed the actual costs of providing such services.

—by Patricia Kirk

Related Information:

Variation in charges for 10 common blood tests in California Hospitals: a cross-sectional analysis

Wide Variation In Hospital Charges For Blood Tests Called ‘Irrational’