Location, Location, Location: Hospital Outpatient Prices Much Higher than Community Settings for Identical Services

Average hospital outpatient department prices for common imaging, colonoscopy and laboratory services can be double the price for identical services provided in a physician’s office or other community-based setting, according to a study by researchers at the former Center for Studying Health System Change (HSC). Using private insurance claims data for about 590,000 active and retired nonelderly autoworkers and their dependents, researchers found, for example, that the average price for magnetic resonance imaging (MRI) of a knee was about $900 in hospital outpatient departments compared to about $600 in physician offices or freestanding imaging centers. Likewise, the average hospital outpatient department price for a basic colonoscopy was $1,383 compared to $625 in community settings. For a common blood test—a comprehensive metabolic panel—the average price in hospital outpatient departments was triple the price—about $37 compared to $13 in community settings.

Moreover, across and within 18 metropolitan areas with substantial numbers of autoworkers, prices varied considerably between the two sites of care for a variety of services. For some simple laboratory tests, average hospital outpatient department prices were as much as eight to 14 times higher than average community-based lab prices in some metropolitan areas but less than 50 percent higher in other areas. In addition, the study found considerable variation in hospital outpatient department and community prices within metropolitan areas, with hospital outpatient prices typically varying more. The large price gaps offer an opportunity for purchasers and health plans to reduce spending by steering patients to lower-price, community-based providers through changes in network and benefit design.