Box 9.4 describes the diffi culty that consumers may have in searching for the total “bundled”

price for their hospital care. What are some of the implications of this lack of pricing transparency for (i) the individual consumer, and (ii) the effi ciency of health care delivery?

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BOX 9.4 How Much Will That Hospitalization Cost Me? The success of high-deductible plans and other market-based initiatives relies on patients' abilities to make rational choices based on price and quality. Health care prices are hardly transparent to patients. Hospital prices are especially troublesome, in part, because patients may be billed separately by the hospital, and various physi- cian providers such as the surgeon, the radiologist, and the anesthesiologist. Rosenthal, Lu, and Cram (2013) investigated the challenges patients face when they try to obtain pricing information. Using total hip arthoplast (THA), a common orthopedic procedure among the middle-aged and elderly, the authors telephoned two hospitals (up to five times if necessary) in each state and the District of Colum- bia, as well as 20 leading orthopedic hospitals, to determine the "bundled price" that includes all services for a 62-year-old uninsured grandmother who was willing to pay out-of-pocket. Nine of the 20 top-ranked hospitals provided the bundled price but only 10 of the 102 other hospitals were able to do so. After separately contacting hospitals and physicians, the authors obtained complete bundled prices from three additional top ranked hospitals and 54 other hospitals. Aside from showing just how difficult it can be for patients to obtain meaningful price information, the study revealed extraordinary variation in the bundled prices. Prices at top-ranked hospitals varied by more than 8-fold, ranging from $12,500 to $105,000 with a mean of $53,140. Prices at the other hospitals varied by almost 12-fold, ranging from $11,100 to $125,798 with a mean of $41,666. Although there can be substantial savings for those who "shop around," the lack of price transpar- ency, combined with the need to find a physician with admitting privileges to lower cost hospitals, and the costs of travelling to the hospital, can make it difficult to actually attain the savings.