If you have ever gone to a hospital for even a few stitches, it is likely that you would have been charged thousands for a minor injury that may cost a few hundred in a walk-in clinic.
Between facility fees, inpatient fees and a host of other fees that you are charged for an inpatient stay, hospital prices are absurdly high, even when you are insured.
MedCity News recently published a well-documented article making the case for why hospitals are the largest driver of healthcare costs.
In NJ, hospital systems have merged and become much larger due to Horizons Omnia which created tiers. In the end, the hospitals, many of whom have added wings and higher-end amenities that had been in the planning stages for years are now adding these large facilities to their overheads and passing the costs on to us, the consumers.
Doctors who are not immune to the squeeze placed on them financially by large insurers have either merged their practices into larger ones for protection or sold their practices to hospital systems. The doctors are relieved of the administrative headaches by the hospital are also incentivized to refer their patients to hospital-based facilities who charge more. This practice prevents leakage which is when patients go out of the hospital for services, and the hospital loses revenue as a result. Since hospital services are charged against the other side of your insurance, they work against your yearly deductible rather than your copayment.
Hospitals are huge and inefficient places with large amounts of employees. In some areas, they have become the largest employers in the area and as such, have a huge amount of influence in their communities. They also fund political campaigns as well which has helped shield them from scrutiny.
Hospitals are big business and are difficult to rein in without having a political cost. Because many of them have monopolized the regions they occupy, insurance carriers are having a more difficult time negotiating fees for their services, and as a result, we pay more. The only health plans that can negotiate with hospitals is Medicare and Medicaid.
Hospitals are also having to deal with high deductibles and often, these deductibles are deducted from their reimbursements. Many underinsured patients have high deductibles and hospitals are having a difficult time collecting those fees after the services were provided. As a result, the insurance model of deductibles is costing everyone more when hospitals are charging us more to make up for the lost revenue.
Obamacare was applauded for the way it reduced the uninsured and indigent populations through the use of Medicaid. Unfortunately, Medicaid badly underpays hospitals, Medicare is in the middle and the commercial insurers are being charged more to make up for Medicaid. Our high insurance costs are partly because we are robbing peter to pay paul. Would we be better off with just Medicare while eliminating Medicaid? Would that lower our premium for commercial insurers or are insurers more profitable because hospital costs drive their costs up and the increase in premiums actually allows them to increase the percentage of what they make.
Check out the article below. While there are no easy answers, bigger is not better in healthcare, since it reduces competition and insurance companies have used their clout to also reduce competition. In the end, we are paying more than the rest of the world does for healthcare with hospitals being the largest driver of costs.
How hospitals help to drive up healthcare costs
Data shows that hospitals are by far the biggest cost in our $3.5 trillion healthcare system, where spending is growing faster than the gross domestic product, inflation and wage growth.
By ELISABETH ROSENTHAL
As voters fume about the high cost of healthcare, politicians have been targeting two well-deserved villains: pharmaceutical companies, whose prices have risen more than inflation, and insurers, who pay their executives millions in salaries while raising premiums and deductibles.
Although the Democratic presidential candidates have devoted copious airtime to debating healthcare, many of the country’s leading health policy experts have wondered why they have given a total pass to arguably a primary culprit behind runaway medical inflation: America’s hospitals.
Data shows that hospitals are by far the biggest cost in our $3.5 trillion healthcare system, where spending is growing faster than the gross domestic product, inflation and wage growth. Spending on hospitals represents 44 percent of personal expenses for the privately insured, according to the Rand Corp.