How KHN Obtained Data For The California Hospital Prices Story

The Kaiser Health News story on California’s Costliest Hospitals, months in the making, relied on data from a number of sources.

California hospitals generally try to keep confidential the amounts they charge commercial health insurers to care for patients. But hospitals are required to report annually to the Office of Statewide Health Planning and Development (OSHPD) the revenues they are paid by insurers, employers and patients, as well as the number of patients they treated. The data, used by researchers, academics and hospitals themselves, are the best available information to calculate and compare the actual amounts hospitals are paid by insurers – as opposed to the “sticker prices” for procedures that hospitals publicize but rarely charge in full. KHN used the data to compute the average cost of a day of care in 2009, using an OSHPD formula that takes into account both inpatient stays and outpatient visits. The data used in this story is based on a Sept. 10 annual financial spreadsheet provided by OSHPD.

KHN also looked at an internal analysis by Blue Shield of California, one of the state’s big insurers, of how much it paid for the average inpatient stay and outpatient visit. The Blue Shield data, which the insurer provided at KHN’s request, showed annual increases very similar to those found in the OSHPD data.

Several of the hospital systems included in the graphics accompanying the story said the data don’t take into account the types of services provided. Generally, hospitals that perform lots of expensive procedures, such as transplants, are paid more than those that provide lots of less expensive services. But there is no consensus among those who use OSHPD data on the best way to control for such differences when comparing prices.

The University of California said that its revenues for average patient care tend to be higher-as indicated in the interactive graphic – because so many of their cases are more complex, and thus more costly, than the average. Scripps Health said that competing hospital systems that provide a lot of long-term care-which is less costly than acute care-will appear to be less expensive than Scripps, which provides no long-term care. Sutter Health noted that the data used in the chart includes some revenues from some non-commercial sources, including workers compensation and state programs for lower-income children. Sharp Health said that its system’s average cost would be lower if Sharp Mary Birch Hospital for Women had been included in the analysis. OSHPD categorized it as a specialty hospital.

The KHN analysis only looked at acute care and children’s hospitals. KHN excluded psychiatric health facilities, specialty hospitals and state hospitals because the services they provide are so different. KHN also excluded Kaiser Permanente hospitals because OSHPD does not consider that system comparable with traditional hospitals that take outside insurance. (KHN is part of the nonprofit Henry J. Kaiser Family Foundation and is not affiliated with Kaiser Permanente.)