Category Archives: Ethics

Health Affairs studied the cost to charge ratio in U.S. hospitals.  They found:

the average ratio of hospital charges for services (gross revenues) to payments received (net revenues) has grown from 1.1 to 2.6. This reflects a transition from predominantly cost- and charge-based payment systems to regulated and negotiated fixed payments. Hospitals have been able to squeeze additional revenues from remaining charge-based payers and services by sharply increasing charges, negatively affecting the uninsured.

Note that in the U.S. those least able to pay, i.e. those without health insurance are charge more, many times more in some instances, than those with insurance.

While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges. Because it is difficult for patients to compare prices, market forces fail to constrain hospital charges.

The Washington Posts lists the hospitals and discusses the issue:

All but one of the facilities are owned by for-profit entities and the largest number of hospitals — 20 — are in Florida.

And:

Understanding hospital pricing and charges is one of the most frustrating experiences for consumers and health-care professionals. It is virtually impossible to find out ahead of time from the hospital how much a procedure or stay is going to cost. Once the bill arrives, many consumers have difficulty deciphering it.

Medicynical Note:  Our money driven non-system of health care emphasizes revenue over health care quality, efficiency and value.  Overcharging patients is the norm and frankly the daily goal of hospital CFO’s.  Hiding the cost until the presentation of the bill is a little like the Mad Magazine cartoon from the fifties…Great Moments in Medicine.  While satire, it does represent the reality of American health care today. 

The LA Times notes the wide disparity in charges for joint replacement surgery in the LA area.

New Medicare data show that Inglewood’s Centinela Hospital Medical Center billed the federal program $237,063, on average, for joint replacement surgery in 2013.

That was the highest charge nationwide. And it’s six times what Kaiser Permanente billed Medicare eight miles away at its West L.A. hospital. Kaiser billed $39,059, on average, and Medicare paid $12,457.

They also note:

The average charge nationwide for a major joint replacement operation was $54,239, according to federal figures.

This is an industry unaware of value and efficiency, intent on charging whatever it can, without regard to actual cost.  Revenue rules.

Medicynical Note:  Insurers can negotiate the actual price with the hospitals and doctors but individuals are at a huge disadvantage.  Without insurance they will pay what’s billed or negotiate a lower price which will be still more than the insurers.   And if a consumer can’t pay cash he/she will incur financing charges and/or go bankrupt.  It’s a scam,  but in this case it’s run by the most distinguished (sic) institutions in our communities.  

Another in the series on health care costs by Elizabeth Rosenthal in the New York Times—The Odd Math of Medical Tests.

Over use and over charge seem to be the watchwords of American healthcare.  Why?  read below.

Testing has become to the United States’ medical system what liquor is to the hospitality industry: a profit center with large and often arbitrary markups. From a medical perspective, blood work, tests and scans are tools to help physicians diagnose and monitor disease. But from a business perspective, they are opportunities to bring in revenue — especially because the equipment to perform them has generally become far cheaper, smaller and more highly mechanized in the past two decades.

Read the article for more details.

Medicynical note:  There are interesting contrasts between the U.S. approach and the experience elsewhere in the article.  The end result is that we pay much much more for the same services….that are done many many more time/unit of population.  Our costs are double most other industrialized countries.  Sustainable?  No.

Why?  In the U.S. there are no restraints on gouging the “system.”  Everyone is in the business to make money for themselves and stockholders—its their “fiduciary” responsibility.  Quality patient care and appropriate use of technology and medical care is really not their concern. 

Medicine over the years has become increasingly entrepreneurial and money driven.  Health care, efficiency and value have become secondary aims  being overshadowed by the quest for money.   In health care, the product you are buying is not usually discretionary, predatory billing is common and an uninformed naive patient can literally lose his shirt.  These patients experiences while extreme are not unique.

Before his three-hour neck surgery for herniated disks in December, Peter Drier, 37, signed a pile of consent forms. A bank technology manager who had researched his insurance coverage, Mr. Drier was prepared when the bills started arriving: $56,000 from Lenox Hill Hospital in Manhattan, $4,300 from the anesthesiologist and even $133,000 from his orthopedist, who he knew would accept a fraction of that fee.

and

Patricia Kaufman’s bills after a recent back operation at a Long Island hospital were rife with such charges, said her husband, Alan, who spent days sorting them out. Two plastic surgeons billed more than $250,000 to sew up the incision, a task done by a resident during previous operations for Ms. Kaufman’s chronic neurological condition.

Read the article for more details.

Medicynical Note:  Medicine is simply following the lead of a deregulated culture that seems to believe that anything  goes and that in time the problem will sort itself out.  In health care that policy has left a trail of people who are “uninsurable”, neglected medical problems, medically related bankruptcies (we lead the world), exploding  costs and a non-sytem of  care whose primary focus is generating revenue. Some drug costs have increased 1000 percent in the past 30-40 years…has your salary kept up? 

The Affordable Care Act is already helping but we should not underestimate the reactionary forces that believe the money driven non-system is the “best in the world.”

We’ve talked about America’s high costs.  One reason is our overuse of ER’s for outpatient care.

The medical mafia makes a big deal about the “sacred” patient doctor relationship.  My experience the past several years is that first, there is nothing sacred going on here and second that the relationship is a somewhat romantic figment of our imagination–it no longer exists.

You realize, of course, that the solo practitioner has gone the way of dinosaurs.  For virtually everyone your family doctor (of one sort or another) is part of a group practice.  When you become ill more often than not you family doc, the guy/gal you have the sacred relationship with, is normally fully booked and you see another practitioner/nurse/physicians’ assistant.  Your doc may or may not even be aware that you have had a problem.  If you are hospitalized your care is turned over to yet another provider, the hospitalist.  Another doctor you have never met.

It’s even worse than implied above.  If you should have an emergency of one sort or another, real or not so real, you are advised to go to  the ER.  That shifts the responsibility for your care elsewhere and quite remarkably escalates our costs to unimaginable levels.  The “sacred” relationship is nowhere to be found.

Elizabeth Rosenthal of the NY Times discusses ER costs here.

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.

Medicynical Note: Read the article for the gory details.  But it is a fact that hospitals like other players in the health care game have little to no interest in fostering efficiency and cost savings–except to benefit their bottom line.  In regard to patient’s charges, their goal is to maximize them.  They inflate their charges to unimaginable levels then cut deals with high volume insurers.  Should you be uninsured they will  stick you with the full non-discounted amount.  To the little guy it’s as confusing as dealing with a used care dealer (no insult intended) and is nothing more than a legalized scam.  Horrifying as it is, that’s what’s become of my profession and American medicine. 

Health reform while not perfect is a start on rationalizing costs, providing universal coverage, and opening up the mystery of health care costs.

The U.S. is the only industrialized country without a national health care insurance scheme for  it’s citizens. We have more uninsured than the rest of the industrialized world combined.  We leads the world in costs by a large margin–it’s not close. And finally we lead the world in bankruptcy from health care related debt.

Meanwhile with the notable exception of the elderly, who are covered by a government program, Medicare. our health statistics are in the middle of the pack so to speak when compared with other industrialized countries.

We seem to have institutionalized a system that assures excellent revenue and incomes for the health industrial complex but costly mediocre outcomes to patients.  We can and should do better.