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New hospital is no guarantee of lower prices

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Mary C. Starmann-Harrison

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Joe Nemeth

JANESVILLE — Need a new knee?

St. Mary's Hospital in Madison is the place for the cost-conscious consumer considering a knee replacement at either St. Mary's or Mercy Hospital in Janesville.

For heart failure, however, Mercy is the less expensive choice, according to data from the Wisconsin PricePoint System for procedures done between April 2008 and March of this year.

But consumers shouldn't necessarily use the date to draw conclusions on what prices may be when SSM Health Care of Wisconsin and Dean Health System open a new hospital in Janesville in late 2011.

"I wouldn't make assumptions off of that because it's on a smaller scale in Janesville, and until we get that hospital open and get all those charges feeding into PricePoint, it will be hard to predict," said Mary Starmann-Harrison, president and CEO of SSM Health Care of Wisconsin.

"It won't be the exact same as Madison, but our goal is to get to be as efficient as possible with high quality care. Madison does that, and you'll see that in Janesville."

Each market and its health care pricing, particularly at the inpatient level, are different, said Joe Nemeth, a Mercy vice president.

That's because procedures are classified as diagnosis related groups that were designed to connect certain types of patients to the hospital resources they consumed. As new demands have been placed on the classification system, several different DRG systems have been developed. Local populations and the sources of their health care payments often affect DRGs.

"One of the problems with multiple systems is you can get different prices for the same DRG," Nemeth said, adding that DRG pricing for the same procedure is different between Mercy's hospital in Janesville and its hospital in Walworth.

"I think it would be a misassumption that (St. Mary's is) going to transfer those same rates down here," Nemeth said. "It's a different set of patients."

For example, PricePoint data show that a knee replacement at Mercy in Janesville in 2007 cost $9,500 more than it did at Mercy in Walworth. Treatment of bacterial skin infections was $1,800 less expensive in Janesville.

Similar discrepancies existed at SSM's hospitals in Madison and Baraboo in 2007.