I write about this a lot because it is a source both of inefficiency and of opportunity to lessen health spending. There is a lot of variation in the charge for health care services across payers, across providers, and across geographies. The same service shouldn’t have a dramatically different cost of delivery or price to whomever is paying the bill. But it does. The authors in this study looked at geographic price variation for one payer, Humana, for seven services delivered to its commercial members. I would note that this isn’t the best data source, since Humana is a relatively small player which actually subsequently abandoned the commercial market. But the data is probably representative of actual trends. (JAMA Article)
Prices varied by over 50% for every one of the services, with MRIs, ER visits and basic lipid (fat) level blood tests having the greatest variation. The explanation is likely partly due to relative market power, it can’t be costs because an MRI scan or a blood test should have an underlying cost to deliver that is basically identical everywhere. Or it may be that some providers are just more willing to engage in price gouging to pay fat salaries to management.
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at 
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Since I am largely dealing with patients who are paying out of pocket, this doesn’t surprise me at all. The same hip replacement costs at least 50% less in Fargo than in St. Cloud, which has a local monopoly. Imaging tests are ALWAYS cheaper at stand-alone facilities, sometimes 30% or less than what is charged at the nearby hospital. I consider it part of my job to help patients find a better deal when possible.
I broke down and raised my rates last week, which I hadn’t done for several years. The Biden era is turning out to be a lot like the Obama years where fiscal status is concerned. We now charge $100 for an office visit.
Thanks for writing this blog. It’s nice to see my observations verified by other sources.
While 50% price variation across markets sounds bad (and it is); the more troubling fact is there is even more price variation in all towns. Typically price variation in most towns and cities is 500%+ on almost all services. We know that most patients don’t want to travel to another town to save some money, but the good news is that they can often drive a few blocks and save even more. Often patients can find high quality providers that offer excellent service and charge 1/5th other providers in the same town.