During 1997 and 1998, researchers at the Sunnybrook Foundation examined the charges for 16 well-defined hospital services in different parts of the United States in order to test the hypothesis that there are wide price differences for the same hospital services.
Sunnybrook is a hospital-based research organization in North York, Ontario, Canada.
As predicted, the study found a wide range in charges: the largest difference was for knee replacement surgery, which ranged from a low of $7,160 to a high of $46,985.
The variations cannot be explained by differences in the age, severity of disease, co-morbidity, willingness to pay or insurance status of the patient.
The results suggest that charges for hospital services do not follow the market discipline observed for other goods and services in society.