Stop what you’re doing and read this article from The New York Times. In a piece called “As Hospital Prices Soar, a Stitch Tops $500” writer Elisabeth Rosenthal relays multiple stories of outrageous hospital charges. California Pacific Medical Center’s tidy emergency room treated Deepika Singh who had cut her knee at a barbecue and a toddler named Orla Roche who had sliced open her forehead on a coffee table. Here’s what their bills looked like: Ms. Singh’s three stitches were billed for $2,229.11; Orla’s forehead was sealed with a dab of skin glue that cost $1,696.
And great job, investigative journalists, researchers, everyone who’s fed up with the arbitrary nature of pricing. According to government statistics hospital charges represent about a third of the $2.7 trillion annual United States health care bill, the biggest single segment. These charges are the largest driver of medical inflation, too, a new study in The Journal of the American Medical Association found.
Check out this passage from the article:
“A day spent as an inpatient at an American hospital costs on average more than $4,000, five times the charge in many other developed countries, according to the International Federation of Health Plans, a global network of health insurance industries. The most expensive hospitals charge more than $12,500 a day. And at many of them, including California Pacific Medical Center, emergency rooms are profit centers. That is why one of the simplest and oldest medical procedures — closing a wound with a needle and thread — typically leads to bills of at least $1,500 and often much more.”
At first, we might want to get upset. How could anyone get away with this? For one, the way that our insurance system is set up makes this conducive. For those who are insured, these price negotiations go on behind the scenes. It’s hospitals and payers fighting out unknown figures. That brings up the second problem, lack of transparency. As you can see here, these two patients were blindsided by absurd prices and forced to deal with it after the fact. Of course, our model of primary care works exactly the opposite way. For about $600, you could see us unlimited times for a year and these unforeseen procedures would have been far more affordable (free stitches, a $30 X-ray, and a $200 CT-scan). You would also find that you could pay less for wrap-around insurance premiums since the likelihood of even using the policy at all is reduced.
Looking at the games being played and the amount of money at stake here, though, reminds us about American values. Perhaps we have a larger problem as a nation, that we truly enjoy “making money” more than we do “earning money.” Part of our joy in direct care is time to positively impact our patient’s lives. We’d rather do that any hour than fill our paperwork to meet our bottom line. And we definitely prefer stitching up our patients to spread sheets and board meetings figuring out how to overcharge patients for needle and thread.
And, our instinct is confirmed: Economists say the main reason for high hospital costs in the United States is fiscal, not medical. Hospitals are the most powerful players in our healthcare system and the private market offers little or no price regulation (we believe that over the next decade, direct care will steadily impact this, though). The New York Times even compares market cost with line items from California Pacific Medical Center. We’re not kidding when we say it’s the most egregious example we’ve come across. They charge $36 for a Tylenol with codeine pill. Something we charge dimes for here at Atlas MD. They charge $33,000 for a chest x-ray and $5,000 for a CT scan. This is highway robbery.
But do these inflated prices correlate to better care?
No. The New York Times says, “Consumers may appreciate — or demand — features that contribute to bigger hospital bills. But studies have found no correlation between prices and patient outcomes. A California state rating of hospital services by the California Health Care Foundation gave California Pacific Medical Center average scores in most categories…”
Quality healthcare can, and should be, affordable for the masses. Quality healthcare should be treating as many people as possible and sending them back out to productive, healthy lives. It should not include bankrupting people into indentured servants.
And this is just the tip of the iceberg. There are some startling revelations in the article — some out in the open and others more obscured. For one, hospitals in California like California Pacific Medical Center are “non-profits.” That raises an interesting point. They pay no taxes on these hefty charges. Also, some 28 officials within the hospital make over $1 million per year salary.
It appears that a minority of hyper wealthy people are benefitting from the inelastic nature of healthcare demand. And so long as patients keep paying, the people in power will profit. Now we don’t have a problem with earning money and being rewarded for changing society for the better. But how is someone who charges $2,000 for stitches doing anything besides distorting the market in their own personal favor? That’s not something the common good should be grateful for.
What about the red tape?
Oh, the Times didn’t forget the red tape. Evidently, all this speaking up has led to some interesting studies. Now there is data showing what percentage of healthcare spending is merely excess administrative costs — $190 billion of the $2.5 trillion medical bill of the United States in 2009, the Institute of Medicine estimated this year. All money that could have been used for actual healthcare.
In our opinion, every motion towards direct care is a step directly opposing this type of grievous abuse. But then again, maybe you do want to spend thousands on stitches. If so, we recommend an upscale penthouse in a city of your choosing and airline travel for one of our doctors (we aren’t too picky). After all we do perform house calls here at Atlas MD.