Medical Devices Not Behind Variations In Hospital Charges, Study Shows

By Sara Jerome,
@sarmje

The cost of admission to a hospital can vary widely from institution to institution, but whether the hospital is using costly medical devices is not to blame for those variations. 

That's according to a study released this week by AdvaMed, absolving the medical device industry of responsibility for a high-profile criticism of healthcare institutions.

The criticism is this, as framed by Stephen Brill in a Time magazine piece entitled “Bitter Pill: Why Medical Bills Are Killing Us”, published earlier this year: "When you look behind the bills that [patients] receive, you see nothing rational — no rhyme or reason — about the costs they faced in a marketplace they enter through no choice of their own. The only constant is the sticker shock for the patients who are asked to pay."

Not our fault, AdvaMed says. Comparing the price of device intensive procedures to non-device intensive admissions, the AdvaMed study found that "the variation among hospitals for charges for device-intensive MS-DRGs [Medicare severity-adjusted diagnosis-related groups] was substantially less than the variation for other charges." The charges (and overall costs) for device intensive procedures were lower than non-device intensive ones.

The core data in the AdvaMed study: "The average difference between highest and lowest quartiles of hospital charges for the device-intensive admissions was 59 percentage points, while it was 72 percentage points for other admissions," it said. "In other words, while there was considerable variation in charges for both types of admissions, the variation was 22 percent greater for the admissions that were not device-intensive."

Policymakers and analysts often find fault with device makers for the healthcare marketplace's high costs and lack of transparency. For instance, a Government Accountability Office study last year concluded that “the lack of price transparency and the substantial variation in amounts hospitals pay for some IMD [implantable medical devices] raise questions about whether hospitals are achieving the best prices possible.”

Still, Time described a lack of correlation between device costs and prices for patients: "The more fundamental disconnect is that there is little reason to believe that what Mercy Hospital paid Medtronic for Steve H.’s device would have had any bearing on what the hospital decided to charge Steve H. Why would it? He did not know the price in advance."

AdvaMed made a broader point with the release of the study, saying that "devices are not driving health care price increases."