Analysis of variation in charges and prices paid for vaginal and caesarean section births: a cross-sectional study

OBJECTIVE: To examine the between-hospital variation of charges and discounted prices for uncomplicated vaginal and caesarean section deliveries, and to determine the institutional and market-level characteristics that influence adjusted charges. DESIGN, SETTING AND PARTICIPANTS: Using data from the California Office of Statewide Health Planning and Development (OSHPD), we conducted a cross-sectional study of all privately insured patients admitted to California hospitals in 2011 for uncomplicated vaginal delivery (diagnosis-related group (DRG) 775) or uncomplicated caesarean section (DRG 766). OUTCOME MEASURES: Hospital charges and discounted prices adjusted for each patient's clinical and demographic characteristics. RESULTS: We analysed 76 766 vaginal deliveries and 32 660 caesarean sections in California in 2011. After adjusting for patient demographic and clinical characteristics, we found that the average California woman could be charged as little as US$3296 or as much as US$37 227 for a vaginal delivery, and US$8312–US$70 908 for a caesarean section depending on which hospital she was admitted to. The discounted prices were, on an average, 37% of the charges. We found that hospitals in markets with middling competition had significantly lower adjusted charges for vaginal deliveries, while hospitals with higher wage indices and casemixes, as well as for-profit hospitals, had higher adjusted charges. Hospitals in markets with higher uninsurance rates charged significantly less for caesarean sections, while for-profit hospitals and hospitals with higher wage indices charged more. However, the institutional and market-level factors included in our models explained only 35–36% of the between-hospital variation in charges. CONCLUSIONS: These results indicate that charges and discounted prices for two common, relatively homogeneous diagnosis groups—uncomplicated vaginal delivery and caesarean section—vary widely between hospitals and are not well explained by observable patient or hospital characteristics.