Two recent publications prompt me to ask this question.
The first, forthcoming in JAMA Internal Medicine, is a study by Jaime Rosenthal, a student at Washington University in St. Louis. Rosenthal and her colleagues set out to obtain pricing data for total hip arthroplasty from 20 top-ranked orthopedic hospitals and 102 representative general hospitals (two from each state and Washington DC). Rosenthal, posing as the granddaughter of a 62-year old woman without health insurance, contacted each hospital numerous times to inquire about the total cost of the procedure. Only 45% of the top-ranked hospitals and 10% of other hospitals were able to provide a complete bundled price; price estimates were obtained at 15% of ranked hospitals and 53% of other hospitals by contacting the hospital and physicians separately. And perhaps most startlingly, the prices quoted for the procedure ranged from $11,000 to $125,798. The authors’ conclusion is a modest one – that patients “may find considerable price savings through comparison shopping” – but I believe its impact is far greater. In part because of the way health care is financed in our country, the average American consumer has little awareness of how much any given medical procedure actually costs. But who can blame the consumer in this market, when those who provide the services themselves have no baseline against which to set costs?
This brings me to the second piece — Steven Brill’s excellent article in Time Magazine, “Bitter Pill: Why Medical Bills are Killing Us,” which my co-blogger Patrick O’Leary blogged about last week. ). Brill spent half a year trying to understand why some nonprofit hospitals seem to function like prosperous businesses – with brand-new facilities, impressive executive compensation, and high profit margins. He approached this problem by analyzing patients’ medical bills from hospitals, physicians, drug companies, “and every other player in the American health care ecosystem.” Brill offers a scathing commentary on a system where patients are billed $18 per diabetes testing strip that can be purchased in boxes of 50 on Amazon.com for about 55 cents per strip. Another example: one patient was billed $7,997.54 for a CT scan stress test that Medicare pays $554 for; and $3 for a reusable pen that marked where an incision would go. These prices, Brill explains, are based on the chargemaster, a master document of prices kept by every hospital that is the basis for insurance negotiation reductions. Nearly every executive he spoke with said that the chargemaster prices are irrelevant because “nobody gets charged those prices,” but Brill’s research suggests the contrary. Those without insurance, as we in the health law and policy community have long known, are charged more that those who are covered by insurance. Brill’s article also follows medical billing advocates who negotiate patient bills down dramatically for patients who are willing to pay their fees; however, not every patient is so lucky.
The findings in Rosenthal’s and Brill’s articles are startling. Few consumers, I would image, participate in the health care market with the understanding that the costs they might pay vary widely from institution to institution; that the prices they are asked to pay for a given procedure are far in excess of how much federal health programs believe the procedure is worth; or that they can “bargain down” their charges through skilled negotiation by someone with inside knowledge of the system. Readers of this blog might chafe at the comparison between the market for health care and the market for used cars, but perhaps it is the used car dealer who should feel offended. His customers, at least, can rely on the Kelley Blue Book.
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