Facility Greed

Are you ready for some more hospital greed?   In the past, hospitals bought up doctors so they could control where the patients were being sent.  In other words, all admissions, x-rays, labs, etc. came to the hospital that owned the practice.   Well, since there are a lot of administrators to feed, the hospitals had to find a way to make more money off the doctors (and patients).   Do you know that if the facility where you are treated is part of a hospital network, they can charge facility fees under the federal Medicare rules.  One patient, in this article, had a $145, five-minute, skin tag removal in a doctor’s office located in a hospital-owned building and was charged a $705 facility fee for “operating room service.” Are you kidding me!?!  I am so disgusted right now.  The doctor, by the way, does not get any of this.   I guarantee he or she is on what is called a RVU system and that cryotherapy is less than one work RVU or $40.  So the hospital is trying to get $850.   And that is typical.  My friend Josh over at www.atlas.md showed me his lab costs to his patients.  He doesn’t inflate the costs to gouge them and make a profit.  When you see it you realize that hospitals are charging around ten times the amount it costs for regular labwork.  Back to our story.   The hospital said its fee “covers all sorts of things, such as the scale he was weighed on, the blood pressure equipment he used, the room where the doctor saw him and the clerical staff.”  Now you know why I can’t stand most hospital administrators.   The article goes on to say that class action suits are on their way because these fees aren’t being disclosed.  But so what?  They may disclose them but they won’t drop the price.  The only way that will happen is if docs do more cash pay practices and work with local labs to make deals like Josh did at Atlas.MD.   That is how true capitalism can negate this greed by administrators.   And before you say a national healthcare system would fix this I want to point out that this whole ordeal came under federal Medicare rules, which is a national healthcare system.

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  9 comments for “Facility Greed

  1. Joseph Hough
    September 5, 2012 at 6:44 pm

    Regarding #2 – The hospital I work for just implement this “Provider Based Billing”, the “provider” being the hospital. I find the charges excessive and unethical, but since I’m “just an employee”, I too, have no say. I feel this charge system which charges exhorbitant hospital fees for office calls, devalues the physician because the “physician portion” of the bill is much less than we previously charged. Ultimately, I think it will be one more way for the hospital to decrease our salaries.

  2. ninguem
    September 5, 2012 at 4:36 pm

    Did you see this article, on the same subject?

    After David Hubbard underwent a routine echocardiogram at his cardiologist’s office last year, he was surprised to learn that the heart scan cost his insurer $1,605. That was more than four times the $373 it paid when the 61-year-old optometrist from Reno, Nev., had the same procedure at the same office just six months earlier.

    “Nothing had changed, it was the same equipment, the same room,” said Dr. Hubbard, who has a high-deductible health plan and had to pay about $1,000 of the larger bill out of his own pocket. “I was very upset.”

    But something had changed: his cardiologist’s practice had been bought by Renown Health, a local hospital system. Dr. Hubbard was caught up in a structural shift that is sweeping through health care in the U.S.—hospitals are increasingly acquiring private physician practices.


    If you get blocked at the Wall Street Journal site, then Google ther headline “Same Doctor Visit, Double the Cost”, see the WSJ link, usually right at the top, and click through.

    • Doug Farrago
      September 5, 2012 at 5:04 pm

      Yes. Disgusting, isn’t it?

  3. September 5, 2012 at 2:09 pm

    Your dismissal of a federal comprehensive healthcare system because of Medicare’s flaws doesn’t make sense. The only hospitals they can deal with are parts of corporations, and their only objective is the bottom line. Oh, and the various medical franchises, like the McOptic outlet nearby, part of a chain, that fixed my cataracts. Medicare paid for their too-fancy building, their overstaffed front office, the owners’ profits, etc., none of which was necessary.

    One of my horror stories about corporate hospitals stems from a motorcyle accident resulting in hip problems. The PT dept. ordered a simple canvas strap, added to my Medicare bill, I guess so my wife could catch me if I fell while recovering. Totally unneeded, and they got $110. I found the same strap on line for $10.

    • Pat
      September 6, 2012 at 2:24 am

      Factually wrong, Pat. Even private hospitals or the rural ones in remote areas have to kneel to Medicare’s sclerotic nonsensicality, which adds greatly to their overhead. Even non-profit hospitals have to operate at thinner margins because of Medicare. Fact is, that program is horribly inefficient, and was already out of actuarial stability by 1972, requiring funding expansion. Bad thinking=bad idea=bad action= bad result.

  4. September 5, 2012 at 11:25 am

    Our daughter recently started graduate school. She has a history of a weakly positive TB skin test. The University therefore wanted a current chest x-ray. She had an outpatient two-view CXR. The facility fee was $776 (NOT a typo). Her University health insurance, in another state, gave her a discount of $155.20, leaving her a balance owed of $620.80. I called the hospital CEO, a patient of mine. He had his admin assistant call me back. By changing the facility charge to that offered uninsured patients, and extending a professional discount of 25%, she now owes only $240.
    I called the unaffiliated outpatient x-ray facility located, literally, next door. Their facility fee for a single-view CXR is $76, for a 4-view CXR it is $111. Guess what, no more outpatient x-rays, CT, MRI for my patients at the hospital.

  5. griff
    September 4, 2012 at 3:10 pm

    Agree with Fitzgibbons. The cost is a diversion from the unfunded ICU admission. My real fear is that as the unfunded become “somewhat funded” there will be no cost reduction to the “fully funded” because the hospitals will feel they can still get away with the same prices. “It’s what the market will bear”. Nearly criminal.

  6. Alan Firestone
    September 4, 2012 at 9:45 am

    In our everyday out of the hospital facility world, the Medicare payment for seeing patients and doing procedures is called overhead and is included in the Medicare payment. I have seen and protested the facility fee charged to my mother in law by the practice she sees in New Orleans, which is affiliated with Touro Hospital. Maybe those doctors are given rent free offices with free utilities, but I doubt it. So the facility fee should be part of their rent and not charged to patients.

  7. S. Fitzgibbons MD
    September 4, 2012 at 8:57 am

    Of COURSE the doctor didn’t get any of that “facility fee”; it went to pay a small part of the bill of an uninsured patient who came to the ICU with a big honkin’ stroke caused by his inability to find affordable outpatient care. I live in Texas, where cuts in Medicaid coverage are plentiful and doctors willing to see patients for what Medicaid pays them are not.

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