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Costs for labor, delivery increase across US

By Candice Madsen | Posted - Nov. 14, 2013 at 11:04 p.m.


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SALT LAKE CITY — The Affordable Care Act has raised a lot of questions about healthcare costs and transparency. KSL reporters decided to investigate the costs for the most common cause of hospitalization in Utah — labor and delivery.

"Man, having a baby is expensive," said mother Irinna Danielson. "We were hoping to save money by having a natural birth and make it as cost efficient as possible."

Over the last 15 years, the cost of vaginal deliveries has practically doubled in the U.S., shooting up from $4,918 to $9,294. The cost of Caesarean sections has increased 70 percent from an average of $8,268 to $14,055, according to Truven Health Analytics.

According the Utah Price Point System, the average price for a routine delivery and two-day hospital stay in Utah is $6,600. A C-section cost $11,500. The care of the baby adds an additional $2,500 to the cost.

"After 24 hours we left because again, we didn't want to be charged with the other $4,000 at a second day at the hospital," Danielson said.

Experts explain the cost by pointing to a billing system known as "fee for service."

"The fee for service environment encourages over utilization," said Linn Baker, CEO of Arches Health Plan.

Patients are charged for everything from Witch Hazel to Ibuprofen.

"There was one charge where they charge you for waiting before you go into your recovery room," Danielson said. "My question about that is there is no way I could move out of labor and delivery sooner than I did because they were waiting for a recovery room to open up."

Costs in US and Utah for Labor and Delivery over past 15 years:
  • Vaginal deliveries increased from $4,918 to $9,294.
  • Caesarean sections increased from $8,268 to $14,055.
  • Average cost in Utah for vaginal delivery is $6,600.
  • Average cost of C-section in Utah costs $11,500.

That wait added another $255 to Danielson's bill.

Danielson's total bill was $5,400 for her and her baby's 24-hour hospital stay. After insurance kicked in Danielson, who is a producer at KSL, still owed the hospital $2,300.

"We are hearing that providers are willing to negotiate with people willing to pay cash and giving them a significant discount," said Norm Thurston, Health Reform Implementation Coordinator for the State of Utah.

Intermountain Healthcare offers uninsured patients a 40 percent discount if full payment is made before service is provided. Iasis offers a 50 percent discount at its hospitals.

"There are lots of examples out there where the negotiated discount with your insurance might be higher than the cash price if you are willing to pay up front," Thurston said.

It's difficult to shop around and figure out the best deal. KSL called hospitals around the state and were told over and over they could not provide that information because fee structures are negotiated with insurance carriers.

"If we get away from fee for service and start paying based on episodes of care so that providers themselves knew how costs compared to their peers that is when you are actually going to see competition start controlling costs, " Baker said.

A few years ago, Baker negotiated a contract with several hospitals in Salt Lake City for the company he worked for at the time. They would pay the same amount whether it was a C-section or vaginal delivery.

"One of the leading hospitals when we started paying them in that way had their C-section rate drop from 23 percent to 15 percent," Baker said.

When the Affordable Care Act goes into effect, fee transparency will become even more important to consumers because they are likely to pay more of the bill. Families like the Danielsons will certainly want to know if one hospital charges $2,000 more for the same quality of care.

"Over time the role of the consumer in health care is going to become more important and having informed consumers as a protection to themselves is going to be critical," Thurston said.

The Utah Department of Health and the Utah Hospital Association have created a Price Point System which provides billing information on common procedures for all hospitals in Utah. However, lower charges by the hospital doesn't necessarily mean lower costs for the patient. That still depends on the rates insurance companies have negotiated with the hospital.

The state is also working on an ALL-Payer Claims database. When that project is completed it will provide a deep source of data capable of answering which hospitals and doctors deliver the best care for the best price.

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Candice Madsen

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