Healthcare Pricing in California: Same Surgery, $59,000 Difference

ACL Surgery or European Vacation? Just Depends Where You Go.

I remember a few years back when the commercial price tag variation began to burble out and I saw that a person with one insurance plan could pay ten times the price for the same exact surgery at two different hospitals in the same region.

In fact, it’s worse than that. If you happen to have Cigna, you will pay $4,400 for an ACL surgery (CPT Code 29888) at Woodland Memorial, or you can pay $63,800 at Sierra Nevada Memorial Hospital. Same carrier, same exact surgery and these two hospitals are only 75 miles apart. 14.5X price difference.

Look like a functional market to you? Yeah, me neither.

Feel like healthcare prices in America are pulled from a hat? That’s because they basically are.

Employers, this is your 2nd or 3rd largest expense. If you are relying on an insurance carrier to negotiate the best prices on your behalf, you are losing. You can’t win. This system is fixed for them and the hospitals to win.

Relying on hospitals to follow the law and publish their cash prices? Welp, that’s a joke as only 3 of the 11 hospitals in this analysis even bothered. Plus, the average price of those hospitals that did publish a price was $57,000, whereas the average commercial price was $22,600.

The Fresno Bee recently reported:

Nationwide, about 21% of hospitals — 421 in total — posted their prices in machine-readable files as federally required, the report said.

That’s down from a hospital compliance rate of 34%, as reported in Patient Rights Advocate’s previous price transparency report released in February.

Out of the 177 California hospitals the group reviewed in November, only 37 fully complied with the federal hospital price transparency rule.

I particularly like John Muir’s approach – straight up flipping the bird to cash pricing by making it four times the average commercial reimbursement. A complete joke.

Think you can beat this system by installing one of these giant insurers, intercepting members, and steering them to the lower-cost facilities? Not so fast—their contracts prohibit that and make it excessively hard to circumvent their byzantine, monopolistic stronghold on the system.

How does reference-based pricing (RBP) save an employer so much? This chart is a great example. Even if we set the RBP benchmark at 40% MORE than Medicare would pay, we are almost at EXACTLY half of the average commercial rate - $11,340 vs. $22,564.

And before the hospital apologists out there start to scream about the injustice of it all, I’d like to just point to two items:

1) Look at how many hospitals can do this surgery for less than $11k - at all of the green cells in this chart.

2) And then I’d recommend you head over to Doug Aldeen’s post on Sunday and read about how:

Mickey Mouse wishes he had the profit margins of some hospitals. AdventHealth is currently more profitable than the average company within the S&P 500. The tax-exempt, religious system, which runs 53 hospitals across nine states, generated a 17% operating margin and 23% net margin, inclusive of investments, in the first three months of 2025. Its net margin was larger than that of Amazon, ExxonMobil, and, yes, Walt Disney.