Healthcare spending varies widely by location

Healthcare prices in San Jose, California, have little in common with prices in Baltimore, according to a recent map that revealed the huge variations in overall healthcare costs in 2016 across the nation.

Both San Jose and Baltimore had average healthcare prices well above and below the national averages, according to the Health Care Cost Institute. Healthcare prices within employer-sponsored coverage in San Jose were 2.5 times higher than those in Baltimore, according to the map, which looked at 112 metro areas.

The findings come as the high cost of healthcare has become a significant barrier for many, with more than half of Americans delaying medical care over the last 12 months because they could not afford it. Wide variations in hospital-based healthcare services have also led to questions about pricing contracts and potential legislation or policy that could moderate costs in the future.

Hospitals are also currently grappling with a new rule that will require them to post their prices and be transparent with patients about cost, which could help avoid surprise billing.

Baltimore had the lowest overall healthcare price level in 2016, at 33 percent below the national average. Prices were highest in Anchorage, Alaska, at 65 percent above the national average.

“Across the U.S., health care prices are rising, but what we saw is that certain areas were dramatically more expensive than others,” Bill Johnson, PhD, study author and senior researcher at HCCI, said in a statement. “There wasn’t one single reason a particular area had high or rising prices—the underlying drivers varied from place to place.”

Of the 112 markets, 86 fell below the national price average, HCCI found.

The “striking variation” in pricing was due to market-related differences in price levels and growth of certain services, such as inpatient, outpatient and professional care services, according to HCCI.

Price levels within metro areas also differed based on service type and care setting, though some areas had high or low prices across the board on all types of services.

Physician and other ambulatory care prices were 43 percent higher in Green Bay, Wisconsin, compared to the national average, while inpatient services were 16 percent below and outpatient prices were 17 percent below. By comparison, professional services prices were 19 percent below the national average, while inpatient and outpatient services were 21 percent higher in El Paso, Texas.

Growth and price levels also weren’t always related, contrary to expectations, according to HCCI. For example, Tucson, Arizona, and New York both had higher price growth compared to other metro areas, but had very different price levels in 2016, with New York having higher prices and Tucson recording below the national average.

HCCI analyzed more than 1.78 billion commercial claims in its analysis, comparing the average prices paid for the same set of healthcare services in 112 metro areas.