How Much Do Things Cost at Hospitals?

How many times do journalists have to expose the lunacy involved with hospital pricing?

Under a Trump administration rule that took effect in January, nearly all hospitals must make their prices public, a move the industry sued to block

Of course they did but now the information is coming out and it is mind blowing. Here is the article in the WSJ but I will give some highlights:

  • A Sutter hospital in Modesto, Calif., revealed rates for one billing code representing complex cardiac procedures in fragile patients that varied from $89,752 to $515,697, depending on the insurance plan. The hospital’s discounted cash price for those who pay for the service out of their own pockets: $325,703. Sutter said the actual cash price varies by patient, and that most uninsured patients would qualify for charity care and pay nothing.
  • When a woman gets a caesarean section at the gleaming new Van Ness location of Sutter Health’s California Pacific Medical Center, the price might be $6,241. Or $29,257. Or $38,264. It could even go as high as $60,584.
  • Hospitals typically rely on privately insured patients for their margins. One study looked at the profits of more than 2,800 hospitals over a decade and found hospitals that boosted margins didn’t cut costs, but instead raised revenue by increasing the rates they charged to commercial insurers. Other studies found hospitals under revenue pressure do manage costs more tightly to protect margins, but where hospitals have market power, they raise prices.
  • For hip- and knee replacements, Medicaid and Medicare plans paid the lowest prices at the Modesto hospital, $3,264 and $16,349, respectively. The lowest price paid by a commercial insurer totaled $51,895. The highest rate reached $81,617, again for patients whose insurance didn’t include the Modesto hospital in-network.

And my favorite quotes from the insurers, which sets off all types of BULLSHIT alerts:

  • A UnitedHealth spokesman said that its plan may have lower rates “because we work with high-performing providers to lower healthcare costs through improved health outcomes, data sharing, and a more-coordinated care experience.”
  • A Cigna spokesman said it supports price transparency, and the limited example examined by the Journal “is in no way indicative of value nor cost competitiveness.”

The real issue is that the free market is not allowed to work in healthcare. It can (see direct primary care and cash surgical centers). But the powers that be are preventing it from working and so we continue to live in the bizarro universe.

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