Why Healthcare Costs Vary

What’s Charged vs. What’s Paid and More

Image of doctor's stethoscopreThe ultimate “out of pocket” cost to you for healthcare services is difficult to define, because it can be impacted by many factors:

  • Your health insurance
  • Your unique health condition and needs
  • Your provider
  • Unexpected care related to your treatment

The insurance factor: Unlike many goods and services, the cost of healthcare often involves a third-party in the form of your insurance provider. The healthcare provider sends the bill to the insurance company which then determines how much you actually pay based on your specific coverage. For this reason, what one person actually pays for a procedure might be much different than what another person pays. You can think of it like buying a loaf of bread – the cost might be $3.00, but you may have a coupon for $1.00 off whereas the person in line behind you only has a coupon for 50-cents off. You get the same product, but your out-of-pocket price is less.

The personal health factor: Each person and his or her health conditions are unique. Your provider and care team take the time to ensure they understand your health, your lifestyle and other factors that impact your care. Care is individualized to ensure your outcomes are the best they can be. No surgery or treatment is ever quite the same from one person to the next – and that can be a good thing if it means the care is more personalized. For example, think of a knee replacement surgery. The technique and implant the surgeon uses might be very similar from one person to the next, but what if one person has high blood pressure? Diabetes? Another complicating factor? Additional care, different medications or longer time in the hospital might be needed in order to provide that person with the safest outcome.

The provider factor: As a healthcare facility, we can anticipate certain costs related to your care and incorporate those into your estimate charge. Our services, though, are just one part of your overall experience. Physicians and other providers, many of whom are employed independent of a hospital, also have their own set of charges and their own negotiated prices with health insurance companies. You may have heard of “bundled” payments. This solution, which combines all charges for a patient under one umbrella, is becoming more common. As providers and healthcare facilities continue to find ways to enhance their partnerships, creating one cohesive price estimate for patients becomes easier.

Understanding Healthcare Prices: A Consumer Guide (PDF)