How much does your hospital charge for a hip replacement, knee replacement or spinal fusion?

What’s the sticker price for a knee replacement cost in the Philadelphia area? It depends where you go.

The average charge for the procedure at Thomas Jefferson University Hospital is $72,340. Across town, Penn Presbyterian Medical Center charges an average of $90,098.

Temple University Hospital charges more on average for a knee replacement than any other hospital in the region: $152,521, twice the statewide average, according to analysis of common hospital procedures by the Pennsylvania Health Cost Containment Council, which manages a database of billing information submitted by hospitals.

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Hospital charges are notoriously arbitrary and exorbitant. They represent the prices billed for care — not the amount patients or insurers actually pay. Private insurers and the government-funded Medicare and Medicaid health-care programs negotiate in advance to pay rates that are significantly lower.

Temple, for instance, says that less than 1/10th of 1% of its patients pay the charge rate. Patients aren’t hurt by the inflated prices, hospitals argue.

“We’re not lining our pockets with gold,” said Gerald P. Oetzel, Temple Health’s chief financial officer. “It is meaningless.”

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But charge rates, or list prices, are often among the few financial details patients are able to unearth when trying to compare how much a procedure might cost at different hospitals.

And while most patients won’t ever be on the hook for a list-price service, people who are uninsured or who have insurance from a small firm that can’t negotiate a steep discount could end up paying, said Ge Bai, a professor of accounting and health policy at Johns Hopkins University. Excessive charges can play a role in driving up health-care costs for people with insurance, giving hospitals more bargaining power to negotiate higher payments, she said.

Finding out how much a knee or hip replacement actually costs can be challenging. Hospitals have been required since 2021 to post online their charges and negotiated insurance rates for thousands of procedures, but the spreadsheets can be difficult to understand, much less compare across multiple hospitals.

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Independent price websites peg the price of a total knee replacement from $15,000 to over $100,000. Private insurance, Medicare, and Medicaid typically cover the procedure, and insurers may provide more exact estimates based on a patient’s specific health plan.

PHC4’s annual Common Procedures report offers a peak behind the curtain for three procedures: knee replacement, hip replacement, and spinal fusion, based on data from October 2022 through September 2023. The report focuses on these procedures because they are common and and less complex than, say, heart surgery. This makes it easier for PHC4 to correct for differences and compare across multiple hospitals.

Hospital charges generally do not predict how much a patient will actually pay for their care.

“We could charge a million dollars and they’re going to pay us $12,000, or whatever the rate is set at,” said Michael A Young, Temple Health’s president and CEO.

So why charge such high, unrealistic rates?

Medicare and Medicaid consider charge rates when deciding how much to pay for care in some cases. Medicare will make an additional payment when the cost of a patient’s care exceeds the normal Medicare rate. These additional payments, called outlier payments, are calculated as a percentage of the charge rate.

“It’s very, very minuscule, but there’s money there,” Young said.

Temple has the highest average charge for all three procedures — hip replacement, knee replacement, and spinal fusion.

Temple charges an average of $177,600 for a hip replacement, $58,000 more than the next-most expensive hospital in the Philadelphia area, the Hospital of the University of Pennsylvania (which charged an average of $119,155 on five cases analyzed by PHC4). Temple’s price is more than twice the statewide average of $75,883.

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High list prices can also give health systems an upper hand when negotiating rates with insurers, said Bai, the Hopkins professor. Charge rates serve as health systems’ opening negotiation offer — the prices settled on are typically a percentage discount off the list price.

“Having the higher chargemaster pays off,” Bai said. “The potential financial benefit is there.”

Smaller insurance plans may not have much negotiating power against a large health system to negotiate a significant discount off high list prices, she said.

People with high deductible health plans pay thousands of dollars out of pocket before their plan kicks in payment at a higher rates — they, too, can be stung by high list prices.

Lots of factors can influence price: the complexity of cases, how long patients remain hospitalized, their health status, and what additional care they needed during their stay.

PHC4 accounts for these factors by calculating what it calls a “trimmed and case mix-adjusted charge average,” which is the average amount a hospital charged patients for the entire stay during which they had their procedure.

Charges still vary widely — even within health systems, according to the PHC4 report.

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Hospital of the University of Pennsylvania had the highest average charge for knee and hip replacements within the Penn Medicine system. That’s because the hospital handles a small number of the most complicated cases — the vast majority of the system’s knee and hip replacements are done at Penn Presbyterian Medical Center and Pennsylvania Hospital, said Holly Auer, a spokesperson for the health system.

Thomas Jefferson University Hospital charges an average of $80,263 for a hip replacement, almost twice as much as Jefferson Abington. The suburban hospital’s average charge of $44,114 is among the lowest in the Philadelphia area.

Jefferson Einstein Philadelphia hospital charges an average of $184,164 for a spinal fusion, compared to $58,165 at Jefferson Lansdale.

Jefferson did not respond to a request for comment in time for publication.