Health Care as a "Market Good"?

Appendicitis as a Case Study

Health care consumers are not often aware of health care costs, yet the emerging world of consumer-driven health care encourages patients to know and understand the cost of care. This study examines the cost of care for acute appendicitis in different health care facilities in California. Results show that costs vary significantly across facilities.

Using information from 2009, the researchers conducted a retrospective analysis of patients hospitalized for appendicitis. Financial and demographic information was gathered from the Patient Discharge Database of California’s office of Statewide Health Planning and Development.

Key Findings:

  • Of the 19,368 cases examined, the median hospital charge was $33,611. Costs ranged from $1,529 to $182,955.
  • Increasing ages, Medicaid patients and the uninsured were associated with increased median charge.
  • The estimated median charge for appendicitis from a county hospital was 36.6 percent lower than from nonprofit hospitals.
  • Nearly one-third of the variation in charges was unexplained.

The researchers argue that patients don’t have the time or clinical knowledge to ask questions about appropriate care and pricing when ill. Even if they did, the researchers note that despite comparing similar services using a relatively strict definition of uncomplicated appendicitis, California hospitals charge inconsistently.