From appendectomy to walletectomy; Why you need to act like a consumer with medical costs.

From appendectomy to walletectomy; Why you need to act like a consumer with medical costs.

Why does medical care have to cost so much? Is it because they just make it that way or is there a justification to the high fees of hospitalization, emergency room visits and doctor charges?

Most of us who have visited a hospital or an emergency room for things as simple as stitches have been handed egregious bills for the facility and an equally ridiculous bill for the doctors 20 minutes of care. If you were able to understand and shop this to get the best price for an equal service, and found that the price in the ER was $950 for the hour but at the local clinic which was run by former ER doctors would do the same service for around $200, would you still go to the ER. What if you required an simple appendectomy and the local hospital with doctor fees and the three night stay was going to charge you 39 thousand dollars, while another hospital which was about an hour away would charge $16 thousand for the exact same procedure and hospital stay. If you had been in an insurance plan, the 16 thousand dollar bill may have been whittled down to 7,000 including the doctors fees. You may however find that the bills continue to come because some of the doctors were not in your network.

I even had a situation recently many of you could relate to, where I had a cavity that required a cap and a root canal. The cap was not cheap, but the hour’s worth of work by the endodontist who took me under duress because I needed to get the work done that day charged $1600 for the hour, cash, check or charge thank you! Even though he was up front with his fee, I was sitting in the office with a numb mouth and needed to get it done, because when you run your own business like I do, it would cost me much more not being able to work and this guy knows it.

The problem with pricing health care is that when things go wrong, we rarely use our consumer instincts and price things down. The system, including doctors and the hospitals have no transparency to allow us to be good consumers. If you require proof, try pricing out the camera you wanted. Many merchants will list their price and you can do your research and buy. With regards to health care issues, with you in discomfort and perhaps fear, try going on to your computer and doing the same thing; you can’t.

To make matters worse, unless you belong to a PPO or HMO, and stay in their network, you have little control unless you negotiate the cost up front. This is hard to do when you are scared or sick.

To be fair, there are many doctors who do try to price their services reasonably, which is most common with primary care providers. Perhaps this is because generalists have competition from the local walk in clinic down the street, or perhaps they really do care, and have longstanding relationships with their clientele. In the business of chiropractic, we have always priced ourselves at levels that are financially affordable for most people. What I cannot understand is why the local specialist who only looks at your symptom, and ignores the rest charges so much for so little. Most of you who have had this experience will likely agree with me. Why would we ever need managed care networks if there were true competition between specialists? Perhaps this a reason almost all civilized countries have a single payer system, since they know that in order to keep the costs in check, there has to be a standard for medical fees based on the work provided and the costs involved. Actually, there was, and it was created by medicare. It was called the RBRVS system. Generalists liked it because they were paid more. Specialists hated it because they were paid less. Would more specialists become generalists if that was where the money is? While this is getting a little off track, the NY Times examined the problem with hospital pricing.

It is becoming abundantly clear that more and more, we need a single payer system with a payment system that is appropriate for the work performed and the costs involved, an area where the current system has largely failed. It would protect the public at large and also, because this would eliminate medicaid, which chronically underpays hospitals and healthcare providers, there would be less cost shifting from medicaid to us. It would also make the dreaded transition to the new icd 10 coding system much easier because health care providers would have one set of opinions, interpretations and rules. This will be a bloody transition for many healthcare providers (who dread the thought of allowing insurers to interpret it) and I am sure the insurance companies will use it to further harm providers financially since they have done it repeatedly in the past.

Here is the article that was in the NY times. It is clearly food for thought.

The Confusion of Hospital Pricing




When Augie Hong awoke with severe abdominal pain nearly two years ago, he went to the hospital emergency room closest to his home in San Francisco. The diagnosis was acute appendicitis, and doctors removed his inflamed appendix.

Mr. Hong had health insurance, so he wasn’t too worried about paying. Then the bills started to arrive.

“That’s when I got nervous,” said Mr. Hong, 36, who has insurance through his job at an investment firm.

In all, Mr. Hong was charged $59,283, including $5,264 for the doctors. According to the Healthcare Blue Book, that amount is six times the fair price for an appendectomy in Northern California, which is $8,309 (including a four-day admission) for the hospital and an additional $1,325 for the doctor. Even after Mr. Hong’s insurer paid the hospital $31,409 and Mr. Hong paid the doctors $4,034, the bills kept coming.

A new study suggests that Mr. Hong’s experience is not unusual. Hospital charges are all over the map: according to the report published Monday in the Archives of Internal Medicine, fees for a routine appendectomy in California can range from $1,500 to — in one extreme case — $182,955. Researchers found wide variations in charges even among appendectomy patients treated at the same hospital.

Continue reading here