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Thursday, August 23, 2012

Why is health care so expensive?

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My monthly Reader's Digest came in yesterday, and as I was thumbing through it, I came across an article titled" Why Hospital Bill Costs What it Costs" by Kimberly Hiss. You old timers know that whenever  we wanted to sound intelligent, we would quote something from the Reader's Digest.

Although I'm clueless when it comes to medical stuff; cost stirs my interest.

The author told a story of a radiologist whose son needed, foot surgery, so he started shopping around for the best prices. The first hospital that he called gave him a quote of $37,000, and then he asked them if that was with his in -network discount and was told, no and they would get back. Someone from the hospital called back later with a recalculated price of $15,000 to $25,000. The radiologist asked a surgeon if he operated anywhere else. The surgeon said that he often used an outpatient center charging $1,515. The radiologists correctly pointed out that with two or three phone calls he saved almost 90%.

We all like our doctor and generally people tend to be pretty trusting of the medical system. When we get our bill, we usually pay our 20%. Sometimes our faith is left in the hands of the medical coders because most doctors cannot explain the complexity of medical billing. For example, the cost of a MRI may factor might be based on buying or leasing the machine, staff salaries. Climate controls electric bill, a competitive pricing, or overhead costs like malpractice insurance. All these coders are trained professionals certified by the American Academy of Professional Coders and  they operate on three sets of universal codes, but the system is so complex that many times it's left to their interpretation. The patient may end up paying for a transposition error.

As technology advances those charges rise. There was a patient from Louisville Kentucky who received a bill for $45,300 for prostate surgery and an overnight stay. Why so much? The hospital used the new robotic procedure, so their bill was structured so that the first users were helping to recoup the equipment's initial costs.

The hospitals are not always the villains because they're usually overridden by negotiated contracts they made with the insurance companies and fixed payments by Medicare and Medicaid. Generally, hospitals will try to shift some of the costs not paid by the government to commercially insured patients.

Then there is the outrageous, or it may be a typical billing charge but I thought I would list an example of some hospital costs that may appear on your detailed billing:

1. The marking pen to mark the right body part for surgery...........$17.50
2. Adult blood pressure cuff.................. $20
3. Charge for the nurse to hand your medicine taken by mouth.....$...87.50
4. Pulse Oximeter Probe (pieces put on a finger to measure oxygen)......$100
5. Warmer air blanket..........$113
6. Operating room..........$200 per minute

I barely hit the surface in summarizing this interesting article which should be read by the skeptics who don't think we need to do anything about the rising cost of health care.

My company made me aware of the rising health care costs 10 years ago, so I knew when health care cost became 18% of GDP, it was not sustainable. I knew it would lead to bankruptcies, under utilization, and eventually death for some who are uninsured. I heard an economist say that the "rising health care cost is the Plutonium inside the U.S. “Debt Bomb.” The government already pays for over half of the medical costs in the United States and 10,000 seniors are moving into Medicare every day.

We're going to have to start using the only weapon left at our disposal; we're going to have to start making criminals of those who abuse our medical system. That doesn’t mean that we can’t do our part by requesting detail billing and reporting discrepancies.


Edith Ann said...

The new meds for seniors to help stave off Alzheimer's are astronomical!

My Daddy's Exelon patch is $12.40 a day. His Namenda is about $6.00 a day. And, sadly, they are only moderately effective.

Mike said...

Don't get me started on a pharmaceutical industry. The pharmaceutical industry relies on government imposed monopolies that allows it to make huge profits. When my conservative friends talk about $10 billion to $20 billion for family assistance programs, I always reminded them of the $270 billion a year we pay in higher payments for the pharmaceuticals patent protected drugs.

And just think what your dad would be paying without Medicare.

As I have said before I was the administrator of my mom's will,(only because I lived in Victoria) with the duty of paying off her medical bills after Medicare..I kept noticing her doctor's name appear on the bills time after time for hospital visits in her final days. As a family, one of us were at hospice 24/7 but we never saw him. Osmosis visit?

born2Bme said...

Not to mention all of the duplicate testing done with senior citizens.
Everytime someone changes doctors, the same tests must be run again, even if the doctors have the test results from the last doctor.
It's a racket and it is probably one of the main reasons Medicare and Medicaid are in so much trouble.
Then, you have to look at past hospitals compared to hospitals of today. The older county hospitals had hard tile floors, and had the bare basics. Today, patients have to cover the cost of all of the plush surroundings that have nothing to do with treating patients.

Mike said...

That's true and this report stated that in some instances supplies are pulled for procedures like an echocardiogram before the patient arrives. If for some reason like a cancellation, no-show etc, then the supplies should be returned and credited to the patients account. But sometimes the staff will use it on another patient instead leaving the charges on the wrong account.

The system is only getting more complicated according to the report because as science generates new diagnoses and treatments, the American Medical Association issues more codes. In October 2014,the government will institute an upgrade of ICD-9 codes to ICD-10 bumping the number of diagnosis to more than 144,000 codes (biblical..?) from the present 13,600 codes...Another reason each procedure should receive a block payment i.e. heart attack,$30,000 one night stay $1000 and let the hospital make their plans on that.

Legion said...

I mention some of my moms charges on one of my blogs.

Others have come in since then.

While at Methodist in Houston, she would be seen by at least 5, and up to 10 different doctors a day, and she wasn't in ICU. Each one billed Medicare and her supplemental insurance. One doctor submitted a bill for a visit twice in one day... at the same time.

Medicare kicked the second visit back...and he appealed it! He lost again.

At least Methodist was transparent, up front they said the room charge is $270 a day, they did offer to move mom to the 8th floor suites were Barbara Bush stayed, for $2700 a day, we said no. lol

Detar never quoted a per day price, bud did submit a over $60K bill, not ICU, to Medicare for TWO days... that was rejected too.

Mike said...

Wow,those are some outrageous prices..No wonder they are able to stay in business.

Martha Stark said...

This is an eye-opening article, Mike. I have shared it with my network of contacts.

Mike said...

Thanks Martha

born2Bme said...

Just thought of something else. When my dad died in 2008, he had a lot of doctors bills right before he died. He had lung cancer and heart trouble.
We were getting bills for him up to 3 years after he died even though those bills had already been paid my both Medicare and his supplemental insurance. If I had been a bad records keeper, I wouldn't have had the proof that those bills were paid. Of course, healthcare providers count on things like that so they can charge again. I can probably say that at least 10 times, I had to scan the payment statements and send them in to verify that those bills had been paid.

lenny said...

I must say that everything, not only healthcare, is rising these days. Commodities, clothing, gasoline and some medicines are rising. But the irony comes when our monthly salary stays the same.

Mike said...

Yes,income inequality and the stagnation of wages and benefits for the working middle class is another pet peeve of mine..Thanks for responding.

born,you are correct we have to stay on top of things because computers don't really know how to check up on the inputters....I filled out a change of address form with the post office so I could continue to receive bills like you mentioned but fortunately there were none but I did notice a brand new credit card with a line of credit of $2000..I just shredded it.

born2Bme said...


I hope you checked on that credit card to see what was up with it.
If I get a credit card I didn't apply for, all sorts of warning flags go up.

Mike said...

born,I didn't give it much thought at the time (6 years ago) but I did think it was rather odd for a CC company be sending a card to my mother with a $2000 line of credit...I thought those stories were for the newscasters to end their program on.

I hear you.