The Philadelphia Inquirer has done a great service by its recent article, “The cost of hospital care is difficult to pin down,” if for no other reason than highlighting the absolute absurdity of the pricing world hospitals live in — they will not tell you a price, and when you get the bill, it is not understandable.
Furthermore, hospitals regularly price gouge the uninsured — this is not news to most — but it does show the complete lack of motivation on the part of the hospitals to reform themselves.
Why should hospitals reform themselves and their pricing? Who is going to make them? Congress, where hospitals are often the largest employer in the Representative’s district?
Two hospital specialties, bankrupting the uninsured and health care inflation, are the same things that are charging the health care political debate.
Here part of the Philadelphia Inquirer story:
“The quest for information
“Should you attempt to do this experiment on your own, as an Inquirer reporter did with eight hospitals in the region, prepare to hear a lot of canned music and automated voices. And prepare to enter a world so Byzantine that a top Medicare administrator pronounced it impossible for a “human being of average intelligence and limited patience” to understand. The reporter, who is, at least, patient, persisted and will spare you the most painful parts of the odyssey.
“When asked anonymously for their prices for either a colonoscopy or an uncomplicated vaginal birth, half the hospitals did what Reinhardt would have expected: nothing. Two – Hahnemann University and Cooper University hospitals – did not return phone messages. After several transfers, Albert Einstein Medical Center eventually sent two separate calls to a voice-mail account that was not working. Abington Memorial Hospital refused to discuss the price of a birth without detailed financial information about the caller’s income, a move an official later said was meant to avoid scaring poor, uninsured people away. [Bold added.]
“But it was the four hospitals that did provide prices – Pennsylvania, Bryn Mawr, Temple University and Virtua West Jersey – that really opened Pandora’s box. Their answers shed the most light on how absurdly complicated unearthing cost figures is and how challenging it will be to bring true price competition to health care. They also raise questions about how to treat the uninsured fairly.
“The quoted prices for a colonoscopy ranged from $900 to $8,000. Pennsylvania, the only hospital that would price a delivery for the anonymous caller, said it would cost $8,500.
“Most callers would not know this, but hospitals typically get less than $600 for a colonoscopy and about $1,300 for a delivery for Medicare patients. Private insurers usually pay a little more than Medicare.
“It turns out that, with the exception of Temple, the prices given by the hospitals’ billing employees – who were quite helpful and courteous – were what hospitals call “charges.” These are nothing like what the grocery store charges you for milk. They are more like the sticker price on a car – if it was two, three or even four times what anyone was actually expected to pay.
“In addition, the hospitals could only talk about their bills. So, they pointed out, there might also be bills from a variety of doctors. One – Virtua – it might offer discounts.”
Here is truth about hospital prices for the uninsured: the hospitals are making so much money off of their own system of confusion, obfuscation, price gouging and deception (no one knows what a reasonable price for any medical service is, nor can you read their bills) the hospitals do not want to reform themselves, nor are they capable of doing it, nor does Congress have the courage or even knowledge to do anything about it.
There are some really simple things Congress could do: 1) remove the hospital anti-trust exemption; and 2) force hospitals to print on every hospital bill for the uninsured what the Medicare payment to the hospital would be for the uninsureds’ treatment; 3) post all Medicare payments for every procedure on the web, accessible by looking up each hospital in each state.
This would give real knowledge, on an individual basis, to the uninsured, and when a $82,000 bill is presented, and Medicare only pays $14,260, it would be something everyone can understand.
But when Senate staffers carrying water for the hospitals hear the idea of printing the Medicare price on every uninsured person’s hospital bill, they go into full defense of the hospitals mode, and do everything possible to perpetuate a system that, as anyone can see from the multiple reports like the one above, is unfair, is driving health care inflation and cannot be reformed on its own.
Why are the hospitals not playing by the same rules as the rest of the U.S. economy that has price transparency forced on it at every gas station, Home Depot or web site selling any other product or service?
The hospitals do it because they can.
Here is an excerpt from the recently published book, America’s Health Care Crisis Solved, on the findings of two of the largest purchasers of health care in the United States:
“The California Public Employees’ Retirement System (CALPERS) and the Pacific Business Group, which buys $10 billion in health care services among the employers who are its members, jointly commissioned a study in California of hospital prices, which was published in January 2008. Their public statement summarizing the results of the study begins: ‘A new study designed to uncover the key to understanding hospital prices confirms what large purchasers have long suspected: A disturbing number of hospitals appear to be grossly overcharging and not being held accountable.’”
Peter V. Lee, Chief Executive Officer of the Pacific Business Group said, ‘This report underscores what we have long suspected: that some hospitals are basing their prices to private insurers and patients on what they can get away with.’”
There is no competition, no price clarity — who else other than Medicare and the hospitals know what a fair and reasonable price is?
CalPERS, in its media release about their study says it exposes only the “tip of the iceberg” and closer study “could help expose the wrongdoing.”
The only political institution that has had the courage to confront the hospitals, and begin to force price transparency on them is the White House, under this President.
President Bush signed an Executive Order “Promoting Quality and Efficient Health Care in Federal Government-Administered or Sponsored Health Care Programs, which has resulted in the Medicare price for the most common 51 procedures performed being posted on the web by the U.S. government. These prices can be found by state and by hospital in each state.
Here is the Centers for Medicare and Medicaid’s media release about recent and dramatic improvements to their hospital pricing website.
Hospitals will be forced to confront this entire issue, and by refusing to meet the demand of the uninsured and other who want to know the price of a service, they will force the pressure to build to the point they will be forced to do it, sooner or later.
America’s Health Care Crisis Solved has as Appendix A, the testimony of Dr. Gerard Anderson before the Energy and Commerce Committee of the U.S. House of Representatives which I recommend reading. Dr. Anderson, who is a Professor at the John Hopkins School of Medicine, has written another article which may also be of interest, From ‘Soak the Rich’ to ‘Soak the Poor’: Recent Trends in Hospital Pricing.