North Bay new parents get sticker shock from baby-delivery bills

Giving birth is one of the most common hospital procedures. For the more than half-million women who give birth at California hospitals every year, however, medical costs are difficult to predict and can result in differences of thousands of dollars among facilities even in the same geographic area.

'The cost varies. There is no standardized pricing. It's very market-driven in the U.S.,' said Renee Hsia, professor of emergency medicine and health policy at University of California, San Francisco. 'Most Americans think it can be set up like a commodity, but there is variation across the state and across the nation. It's not regulated, so there is irregularity and irrationality in costs. Unlike other industries, the way health care is priced and paid for is notoriously opaque, making it difficult for patients to act as educated, price-comparing consumers.'

According to a 2014 University of California, San Francisco, study, in California, women giving birth were charged from $3,296 to $37,227 for an uncomplicated vaginal delivery, depending on which hospital they visited.

'The findings are still very pertinent today. Not much has changed how we finance health care,' said Hsia, who headed the study.

For a C-section, women were billed between $8,312 and nearly $71,000. Few of the women in the study had serious health issues and most were discharged within six days of admission.

Across the U.S., hospital deliveries on average cost $3,500 per stay, according to the Agency for Healthcare Research and Quality Healthcare Cost and Utilization Project. Add in prenatal, delivery-related and postpartum healthcare, and the cost rises to $8,802 according to a Thomson Healthcare study for March of Dimes.

Why the discrepancies?

Earlier this month, researchers at University of California-Berkeley issued a report that examined the consolidation of the hospital, physician and health insurance markets in California from 2010 to 2016. The authors said 44 of California's 58 counties had 'highly concentrated' hospital markets.

The problem is worse in Northern California. The report found prices for medical procedures are often up to 30 percent higher here than in Southern California, which has more competition.

Sacramento is the most expensive place for childbirth and San Francisco comes in at No. 2 in the nation's 30 largest metropolitan areas according to Castlight Health, a San Francisco-based health care information company that analyzes medical costs to help consumers and purchasers compare prices.

A vaginal delivery costs an average of $15,420 in the Sacramento area and $15,204 in San Francisco — nearly $4,000 more than the third-most expensive location, Minneapolis. In the least expensive metropolitan area, Kansas City, a vaginal delivery costs $6,075.

'Consumers are paying more for health care as a result of market consolidation. It is now time for regulators and legislators to take action,' the report by the Petris Center on Health Care Markets and Consumer Welfare at the University of California-Berkeley stated.

The report was a response to California's attorney general who has sued Sutter Health, a dominant health care system in Northern California, accusing the hospital giant of illegally quashing competition and for years, overcharging consumers and employers, as concerns mount nationally about consolidation among hospitals, insurers and other industry middlemen.

'It's time to hold health care corporations accountable,' said state Attorney General Xavier Becerra at a news conference. 'We seek to stop Sutter from continuing this illegal conduct.'

The antitrust suit, filed in San Francisco County Superior Court, asks the court to prevent Sutter from engaging in anti-competitive practices and 'overcharges.'

It said Sutter employs a variety of improper tactics, such as gag clauses on prices, 'punitively high' out-of-network charges and 'all-or-nothing' contract terms that require all of its facilities to be included in insurance networks.

Sutter, which owns 24 hospitals, reported net income of $893 million last year on $12.4 billion in revenue. Sutter's nonprofit health system also has 35 surgery centers, 32 urgent-care clinics and more than 5,000 physicians in its network.

The suit says Sutter Health has gobbled up doctors' practices across the Bay Area, gaining market muscle that has pushed costs upward.

Sutter said in a statement 'healthy competition and choice exists across Northern California' for consumers seeking medical care. It also said its charges for an inpatient stay are lower than what other nearby hospitals charge.

'Sutter Health is proud to save patients, government payers and health plans hundreds of millions of dollars each year by providing more efficient and integrated care,' the statement said.

Obstetricians employed by Sutter Health are reimbursed about three times more for the same service than independent doctors, according to a KHN review of OB-GYN charges on several insurers' online cost estimators. It's a key reason why Northern California is the most expensive place in the country to have a baby, the review said.

'Some hospitals say consolidation will ensure more efficiency — better care and lower costs — but there is a significant amount of evidence that this has not been the case,' Hsia said. 'Studies of consolidations have shown that prices for consumers (patients) rise after the consolidation. This could be due to more market power of these now-larger hospitals, or other factors, including that insurance companies — which some see as the middleman in health care — may not be passing savings down to consumers.'

Jesse Duarte and his wife, Rethel, who live in Napa County, had a baby at Adventist Health St. Helena last year.

Before leaving the hospital, Duarte received a bill for about $800, which he thought was his portion of the procedure. A couple of months later, he was surprised to receive another bill.

'In all, it was a few thousand out of pocket, plus maxing out my deductible, which is $2,800' he said.

Between the hospital bills and postpartum care, Duarte said he and his wife will only be having the one child.

'I knew going in it would be expensive. Every year I'm paying more and more for insurance and getting less and less. That's the reality,' he said.

Duarte also said his premiums have gone up over the years.

'Health insurance is a huge cost for the employer and they are putting the burden on the employee,' Hsia said. 'Nobody (patients) ever knows what hospital costs are because cost is not passed down to the consumer. One of the basic tenets of health care is to prevent a patient from financial ruin. But this is the way our health care system is designed.'

Rebecca Levy Gantt runs one of the only small, private obstetrics and gynecology practices in Napa. She moved from New York several years ago and said the health care provider situation here is very different.

'Napa is a very strange place. There is an obstetrics group at the hospital (Queen of the Valley) and there's nobody else. I was in New York for 12 years where there were multiple hospitals and groups with private practices. This is very strange to me,' she said.

There used to be a few more private OB-GYN practices in Napa but they either retired or went to large groups, Levy Gantt said.

'I'm the abnormal. Private practice is pretty much gone. It's not lucrative. The incentive to do it for the passion is gone.'

While a doctor in private practice normally has a coverage agreement with another organization. Levy Gantt does not. She has about 30 pregnant patients at any time, and in her four years of practice in Napa she has missed only two of her patient's deliveries. She knows her personal schedule a year out and only takes patients whose delivery she knows she can make.

Most of her deliveries are at Queen of the Valley where there is an obstetricians group. Those with Kaiser Permanente insurance go to Vacaville or Vallejo.

'Kaiser is a take all who comes. Women who go to Kaiser don't know who will deliver them. They are lovely practitioners, but it loses something when you don't know who will deliver you and they don't know you,' she said. 'There's no solution.'

Levy Gantt says she understands why doctors forgo private practice to join a large health care organization for a salary.

'The lifestyle makes sense to me. I totally understand where they are coming from. What I'm doing is not lucrative. No hospital pays me. I lay awake at night…' she said.

Levy Gantt gets paid a global fee after delivery and postpartum of $1,800–$2,000 per patient. In New York, that fee was about $5,000.

'It's insane,' she said.

However, there is hope.

'A momentum is building up as consumers (patients) get more educated, that we are able to change the system. We like the market to drive things, but this is one of the places where government has a role to level the playing field to protect the consumer, so it's not just like the Wild West,' Hsia said.

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