Hospitals Want Their Money

Here is one story I would like to share with you about a hospital lawsuit:

A jury awarded Centennial, Colo.-based Centura Health $766 in a lawsuit seeking more than $229,000 from a former patient.

Here are six things to know about the lawsuit:

1. In 2014, Lisa French had surgery on her back at St. Anthony North Health Campus in Westminster, Colo., part of Centura Health. Her employer had a self-funded Employee Retirement Income Security Act insurance plan, and she was told prior to surgery she would have to pay $1,336 out of pocket for the procedure. She immediately paid $1,000, according to

2. The hospital billed Ms. French’s insurance plan $303,888 for the surgery and two presurgical consultations. Including the patient’s copays and payments from her insurance plan, the hospital was reimbursed $74,597, which an audit found was the “reasonable value of the goods and services” the hospital had provided Ms. French.

3. In 2017, Centura Health sued Ms. French in an attempt to collect the additional $229,000 it had billed for.

4. The hospital used its chargemaster billing schedule to determine the amount Ms. French owed. Her lawyers argued those charges were unreasonable and that the contract Ms. French had with St. Anthony was ambiguous because it did not contain a price.

5. The jury agreed with the defense. After a six-day trial, the jury answered “no” when asked whether Ms. French’s bills were reasonable. They agreed that Ms. French was obligated to pay “all charges of the hospital” under the contract she had with St. Anthony. However, the jury determined that those charges were “the reasonable value of the goods and services provided,” not those included in the hospital’s chargemaster.

6. The hospital’s lawyers said they will file post-trial motions and appeal the verdict, according to the report.

This is how hospitals get a bad name.  Appealing this verdict?  Why?  Greed?  Now combine the above with this article in Medical Economics by Craig Wax, DO.  He talks about the history of American hospitals.  Here are some highlights:

  • As taxation increased throughout U.S. history, conferring a tax exemption on hospitals caring for the poor seemed compassionate and just.
  • But this tax-favored status has been compounded with a nexus of government subsidies and privilege and thus modern hospital operations can seem more like patronage pits instead of volunteer houses of healing.
  • One of the lesser known policies that opened the taxpayer spigots was the Hill-Burton Act. Passed in 1946, the legislation provided government subsidies to hospital construction, laying groundwork to decades of other government-granted special favors for these institutions, to the detriment of less expensive, independent office-based care.
  • Medicaid from its inception until today provided reimbursement that didn’t cover the costs of care, so hospitals raised their asking list prices, called chargemaster pricing. In this way, they could recover a higher percent reimbursement from Medicare, private insurance, and self-pay patients.
  • And the disparity of the non-profit status combined with facility fees have encouraged hospital predatory acquisitions of independent physician practices.
  • These shocking stats lead to an obvious question: Why should hospitals get a special tax exemption when other healthcare entities that offer more affordable care, like physician offices and independent labs, don’t?
  • So, hospitals dodge taxes, overcharge patients with inflated chargemaster prices, pay executives millions, and leave the state taxpayers holding the bag. It is time for hospitals to post prices, compete on price and quality, cancel their cronyism with government, and pay their fair share of taxes.

All I ask is that you keep your eyes open when hospitals cry about poor mouth because now you know most of the facts.

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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] 

  6 comments for “Hospitals Want Their Money

  1. Michael Ciampi
    June 30, 2018 at 8:22 am

    This is why I no longer refer to hospitals as non-profit. I always call them tax exempt now.

    The local medical center, which is always crying poor, yet paying at CEO between one and $2 million a year, is now building a $500 million addition.

  2. Ellen Luse
    June 27, 2018 at 1:32 pm

    Amen, amen, amen! As a retired pharmacy director who was required to raise my prices to cover nursing costs to administer medications, I was as unhappy as the patient and payors for the $4.00 (1980’s price) aspirin as they were. I was told by administration that we had to recoup funds where we could and to do as I was told! I’m glad that I no longer have to participate in that scandalous behavior!!

  3. SK
    June 27, 2018 at 10:26 am

    We have a couple prominent local hospitals that are perpetually crying poor, particularly in relation to the Medicaid population. They demand more tax dollars…while actively advertising competing to attract more Medicaid patients. Excuse me, what? You cry poor but actively seek more Medicaid patients and actively encourage their overuse of the medical system. All while paying 7 figure administrative salaries.

  4. Seneca
    June 27, 2018 at 7:25 am

    When any hospital cries poor mouth, the first question should be, “How much is the hospital paying in executive salaries?” The public would be astounded, but you never see anything about this in the press.

  5. bbneo
    June 27, 2018 at 6:28 am

    Shakespeare said it. First kill all the lawyers.

    • Perry
      June 27, 2018 at 7:42 pm

      Next, hospital administrators.

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