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It Doesn’t Cost What It Costs

June 3, 2014

A candidate for the list of most ridiculous quotes:

“When considering the cost of health care, what matters most to consumers is the actual amount paid for their care, not the hospital’s charges.”

This ludicrous statement was made, according to the New York Times, by Sara Virgin, a spokeswoman for Wuesthoff Health System, one of the many hospital systems whose charges have jumped 25% or more since last year.  No, Sara, actually what matters most to consumers is how much they have to pay for their care, and in your system they pay a heck of a lot more than they did last year.

According to the NYT (http://www.nytimes.com/2014/06/03/business/Medicare-Hospital-Billing-Data-Is-Released.html?hp&_r=0), charges for some of the most common inpatient conditions and procedures have jumped significantly in the past year.  If you get admitted for chest pain, for example, the average cost is $18,000, up from $16,000.  At Wuesthoff Medical Center in Florida, if you were admitted last year with a “severe heart arrhythmia” the charge was $25,000.  Now it’s $53,000.  This does not sound like controlling health care costs, does it?  Various hospital administration officials and “experts” have weighed in on why this is happening. Here are some of them:

1. The number of hospital admissions has gone down.  Hospitals have been encouraged to manage diseases as outpatients if possible.  According to the website Modern Healthcare:   “The trends are likely to continue, say analysts and hospital executives, because of the slow U.S. economic rebound; the continued rise of high-deductible insurance plans that constrain medical use; the growth in the number of patients who are held for observation instead of being admitted; and the reforms of payment and delivery models to better coordinate care, improve outcomes and lower costs. The drop in admissions is also related to the U.S. healthcare system’s success stories, such as treating heart patients effectively without hospitalization.”  Medicare doesn’t pay asking price, so the price goes up for everyone else.

2. Technology and Drug prices.  Right.  Because every hospital needs two DaVinci robots and a full stock of Pradaxa.

3. Mergers.  For example, Wuesthoff Health System, the Florida hospital I mentioned above, traces its roots back to 1941 when it opened a community hospital. Wuesthoff was acquired in 2010 by the for-profit hospital giant Health Management Associates, which in turn was recently bought by Community Health Systems.  I’m no MBA but these kind of mergers tend to reduce competition and raise prices.

4. Electronic Medical Records, etc.  At my hospital about 10 years ago, implementation of an EMR in Anesthesia department necessitated the permanent hiring of at least three full-time computer experts.  Multiply this times all the departments in all the hospitals, and you’ve got pretty heft admin. costs for something that’s supposed to decrease health care spending.  Add in the cost of hiring and training a bunch of new coders for ICD-10 and you’re really in the proverbial soup.

5. Lack of accountability.  Here’s what the NYT reporters got when they tried to ask one of the hospitals they cite for comment:   “…a spokeswoman for Baptist [Baptist Medical Center, San Antonio] said the hospital didn’t have the time to analyze the data itself.”  Oh.  But… It’s your data.  Anyone who’s ever been audited by the IRS knows that if you don’t interpret your own data, someone will do it for you, and you won’t like the conclusions they draw.

Notice that virtually none of these reasons has anything to do with the care of actual real-live patients.  Us evil, greedy doctors in the trenches of patient care can’t be blamed for these prices changes, although I’m sure people will try.  No, for this data you have to blame good old Capitalism.  That’s the system we wanted, remember?

 

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From → Health Insurance

3 Comments
  1. Phillip Gale permalink

    It is not capitalism that causes the increase in the cost of medical care. Capitalism is what drives the creative work that produces all the technology and drugs that the medical industry so effectively uses. The twentieth century experiment in socialism and communism has shown that these systems are a disaster to economies, cultures and the lives of hundreds of millions of people. It is the giant pool of money available to the medical industry (not just doctors but all who sell what the medical industry uses) through the health insurance industry , a pool of money made vastly larger by Obama-care, that drives up the cost. Cost rise to what the consumer will bare. The inefficiencies of administration of hospitals and the multiplication of regulations do not have to be addressed as long as the money keeps rolling in from insurance and Uncle Sam. True Capitalism through competition would drive creative solutions for reasonable medical service cost.

  2. Everett Wells permalink

    Phillip Gale is absolutely correct. There should be no third parties in between the patient and any of the for-profit, commercial health care industry. There should be no Medicare for the elderly, no Medicaid for the poor, no VA/Tricare for present and past military, no employer-paid insurance for the lucky employed.

    Just individual patients with cash or individual health insurance policies for which the premiums would be $10-15,000 plus annually if they were young, healthy and without pre-existing conditions.

    Do you think the health care industry would love that? I’m in it and I can assure you that the last thing that physicians and hospitals want are waiting rooms and ER’s full of uninsured patients. In the health care biz, “self-pay” equals “no-pay”.

    That PPACA (Obamacare) was written by the industry. The 5 major elements of which are physicians (not all) represented by the AMA, hospitals represented by the AHA, Big Pharma, AHIP (the health insurance plans) and AdvaMed (the medical device folks). THEY wrote the PPACA.

    And you know what? NONE of them want less money next year than they made the year before–the want more–and that’s exactly what the PPACA gives them, lots more patients with insurance and no cost controls anywhere.

    Capitalism? Capitalism is for open markets where the buyer pays the freight. Almost nobody in the USA pays the cost of their own medical care. You got $300,000+ for a kidney transplant? $50-60,000 for a hip or a knee replacement?

    Now, if by capitalism you mean the “good old days” when patients sat in the waiting room with a chicken or a basket of eggs to pay the bill and about all the doctor had to offer was tincture of paregoric, then yeah, that’s capitalism. When you child or grandchild is burning up with fever, see how much you enjoy it.

    Obamacare is a tragedy because Obama caved into the industry. From a health care standpoint, he’s been a perfect Republican. He turned the henhouse over to the foxed.

    Next, goes Medicaid, then Medicare, then your employers are going to bail out because you’ll be so grateful just to have any kind of job at all, you’ll forego employer benefits.

    So what happens to the injured and ill who can’t afford care without some kind of insurance? Why that’s easy. We just let them suffer and then we let them die. After all, we don’t play golf with those people so why should be give a big rodent’s rear.

    • Look, guys, the definition of capitalism is “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market” (merriam webster). That’s what we have. Private companies and corporations own the goods, and prices are determined by competition. The problem is that there’s no competition, thus no price controls. The “good” being sold is health insurance, not health care. Doctors are not the customers, nor are they the sellers.

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