The single highest-volume knee-replacement hospital in Medicare's data is NYU Langone in Manhattan — roughly 1,086 Medicare knee replacements a year. Its average billed charge for that operation: $212,523. A few blocks away, the Hospital for Special Surgery does almost exactly the same volume (about 1,060) and bills $122,820 for the identical procedure code. Same city, same operation, essentially the same experience level — a 1.7× gap in the sticker price.
That is not a fluke of two hospitals. We pulled the billed charges for 1,310 hospitals that report Medicare knee replacements (DRG 470, the standard case without major complications). The statistical relationship between how many a hospital does and what it bills is essentially zero — a Pearson correlation of −0.03. Volume explains less than one-tenth of one percent of the variation in the billed price. If you assumed the busiest, best-known surgical center gives you the best deal — or, conversely, that it charges a prestige premium — the billing data supports neither.
The "busy hospital = better deal" assumption, tested
There are two competing intuitions patients bring to this. The first is economies of scale: a hospital that does a knee replacement a thousand times a year should have the process down to a science and pass the efficiency along. The second is the opposite — that a high-volume "center of excellence" is a premium brand that charges more because it is in demand. Both are reasonable. Both are wrong when you look at what hospitals actually bill.
Sorting the 1,310 knee hospitals by volume and comparing the busiest quarter to the quietest quarter:
| Hospital group (knee replacements / yr) | Median billed charge |
|---|---|
| Busiest quartile (avg ~143 cases/yr) | $66,555 |
| Quietest quartile (avg ~14 cases/yr) | $77,268 |
The busiest hospitals — doing roughly ten times the volume — bill a median that is only about 14% lower. That is a rounding error next to the spread within each group. Even limiting the comparison to a single expensive city, the numbers scatter wildly: among hospitals in New York City billing for the same DRG, the average charge ranges from about $65,000 to $212,523 — a 3.2× range with no relationship to how many knees each one does.
The marquee hospitals, side by side
| Hospital | Knee cases/yr | Avg billed | Medicare paid |
|---|---|---|---|
| NYU Langone (New York, NY) | ~1,086 | $212,523 | $21,298 |
| Hospital for Special Surgery (New York, NY) | ~1,060 | $122,820 | $15,082 |
| New England Baptist (Boston, MA) | ~1,033 | $29,394 | $14,385 |
| Stony Brook University Hospital (NY) | ~426 | $52,508 | $19,943 |
Read the third row carefully. New England Baptist is one of the busiest orthopedic hospitals in the country, sitting in Boston — a high-cost city where the "expensive-market" theory predicts high charges. It bills $29,394, roughly one-seventh of what NYU Langone bills for the same operation at nearly identical volume. A high-volume hospital in an expensive city posts the lowest sticker on the list. The billed number simply does not track the things people assume drive it. For the full picture on one procedure, our knee replacement cost hub breaks the same data down hospital by hospital.
Why volume moves outcomes but not the sticker
Here is the part worth being precise about, because it is easy to draw the wrong conclusion. Surgical volume does matter — for outcomes. The volume–outcome relationship is one of the most durable findings in surgery: higher-volume hospitals and surgeons tend to have lower mortality and fewer complications for complex procedures. Birkmeyer et al., New England Journal of Medicine, 2003, and quality groups like The Leapfrog Group have documented it for decades. A busy hospital is often a genuinely safer choice.
What volume does not do is discipline the billed price, and the reason is structural. A hospital's chargemaster — its master list of billed prices — is not a cost sheet. It is a negotiating and accounting instrument, largely disconnected from what any procedure actually costs to deliver. Major teaching hospitals in particular carry structurally higher list prices, reflecting complex case mixes and the extra costs of training and safety-net care that Medicare recognizes through Indirect Medical Education and Disproportionate Share adjustments. So the highest-volume academic centers often have the highest chargemasters — precisely the opposite of the efficiency story. If the concept of a list price hospitals invent and then negotiate down from is new to you, start with what a hospital chargemaster actually is.
The number that barely moves: what Medicare pays
Look back at the "Medicare paid" column in the table above. While the billed charges span roughly 7× across those four hospitals, the amounts Medicare actually paid land in a tight band — about $14,000 to $21,000. Across all 1,310 hospitals, the median billed charge is $74,215, but the median amount Medicare pays is $12,600. The sticker is where all the chaos lives; the paid amount is comparatively stable.
That is by design. Under Medicare's Inpatient Prospective Payment System, a hospital receives a predetermined, DRG-based payment for the admission that is independent of its own billed charges (CMS). Bill $30,000 or bill $530,000 — for a given DRG, Medicare pays roughly the same. Commercial insurers negotiate their own rates off the chargemaster; the 2024 RAND Hospital Price Transparency Study found they paid an average of 254% of Medicare rates in 2022. Still a multiple of Medicare — but nowhere near the raw billed number. We break the billed-versus-paid gap down further in what Medicare actually pays for surgery.
What this means for your bill
If you are insured and in-network, most of this happens above your head — you pay your plan's negotiated rate and your out-of-pocket maximum caps the damage. The billed sticker matters most in three situations:
- You are uninsured or paying cash. The chargemaster is the starting point, and its arbitrariness is your leverage: a hospital billing $212,000 for a knee cannot defend that as a real cost when a peer bills $29,000 and Medicare pays $12,600. Ask for the cash/self-pay rate and financial assistance before you touch the billed figure. See how to negotiate a surgery bill.
- You go out-of-network at a facility you chose. The No Surprises Act (2022) shields you from balance billing for emergencies and for out-of-network providers at in-network facilities — but not for non-emergency care you voluntarily schedule at a fully out-of-network hospital (CMS). There, the billed charge can anchor what you owe.
- You are comparison shopping a scheduled procedure. Do not assume the busiest name-brand hospital is either the safe-and-expensive option or the efficient-and-cheap one. On price, its bill is close to random. Get an itemized good-faith estimate from each facility and compare the actual quoted numbers.
The same pattern holds well beyond knees. The hospital-to-hospital billed spread for the same procedure runs about 28× for a pacemaker, 30× for a heart bypass, 39× for gallbladder surgery, and 65× for open-heart surgery — and in none of them does volume reliably move the number. Even in outpatient cataract surgery, the highest-volume center in Medicare's data (Cleveland Clinic, ~3,497 cases) bills about $7,126, while lower-volume programs bill two and three times more. Volume is not the variable.
Frequently asked questions
Does a higher billed charge mean better care?
No. Billed charges reflect a hospital's chargemaster strategy, not the quality or complexity of the care you receive. Outcome quality correlates with surgical volume, not with the sticker price — and volume, as shown above, is nearly uncorrelated with what a hospital bills.
Should I choose a low-volume hospital to save money?
No — that inverts the finding. Low volume does not reliably mean a lower bill (the quietest-quartile median was actually higher), and lower volume can mean worse outcomes for complex procedures. Choose on outcomes and your negotiated/quoted price, not on the billed figure.
Why is Medicare's payment so much lower than the billed charge?
Medicare pays a fixed, predetermined rate per DRG that is set by formula and does not depend on the hospital's billed charges. The billed charge is essentially the list price; almost no one pays it in full.
How current is this data?
Figures come from CMS Medicare Provider Utilization and Payment data (the most recent facility-level release) and cover Medicare fee-for-service claims for DRG 470. They represent averages per hospital and are a strong proxy for hospital pricing behavior, though your specific case and insurer will differ.
The takeaway to act on: when you get a surgery estimate, ignore the headline billed number and ask two questions instead — what will my insurer's negotiated rate (or the cash rate) be, and how does that compare to what Medicare pays for this procedure? The busiest hospital in the state has no special claim to being cheaper, and the smallest one has no special claim to being a bargain. On price, the sticker is noise; the paid rate is the signal.