John Hood, at the Corner, makes the following statement:
At the same time, medical providers find it expedient to claim, also improbably, that cost inflation is mostly about services they don’t sell, or don’t sell to paying customers, rather than about services they sell too often at inflated prices to third-party payers.
The doctors who are dropping out of Medicare and electing to practice in “retainer practices” and other market settings would be willing to educate him about “inflated prices” but I’m not sure he would be willing to listen.
Medical prices are grossly distorted by the common practice, both of Medicare intermediaries and insurance companies, of boasting of “discounts” obtained while not revealing just how large those “discounts” really are. People complain about $50 aspirin tablets while not realizing that these stories are fiction. In the 1950s, hospitals billed by the day. Insurance companies demanded itemized billing which set off a wild scramble to quantify such intangibles as emergency room care which is a 24 hour per day service that usually runs at a great loss. At one time, emergency rooms were a loss leader, as were obstetric services. The theory was that patients who went to the emergency room or who had their babies at a hospital would become loyal customers for other services. When hospitals, whose accounting services are a hopeless tangle of incentives and hidden subsidies, tried to price services by the individual item, ridiculous “retail” prices resulted. Nobody pays those prices except the unlucky cash customer. The whole story of hospital finance has been distorted and the result is a series of fictions about health care costs.
Those who plan for a wholesale revamp of health care in this country by command and control will be in for a lot of surprises. They may be costly surprises. Some lefties even understand the risks of single payer. Some on the right seem to prefer blaming providers. Contradictions.
“…obstetric services. The theory was that patients who went to the emergency room or who had their babies at a hospital would become loyal customers for other services.”
It’s so funny that you mentioned this, Mike. My youngest sister-in-law just delivered her first child (Maggie Rose – but I call her “Willie” because I was rooting for “Wilhelmina” as the name in honor of… er… me) (*GRIN*) last week and as we visited new mom, dad, and arrival in their “birthing suite” I joked that the hospital was trying to entice them to become frequent customers – next time they might even be eligible for upgrade to a jacuzzi suite!
As to the ER though… (*SHUDDER*)
I had to rush my wife Mary to the ER last year for what turned out to be a required appendectomy.
Let’s just put it this way… THANK GOD we had “contacts” at the hospital.
We have a buddy who used to be the hospital’s head ER nursing supervisor and his wife is a senior RN in the cardiac unit. My buddy made a call while we were in transit and and within minutes of our arrival his wife (who was on duty up in cardiac) had come down to check on us.
Well, let me tell you… yeah, they “allowed” us in to the actual ER in fairly short order, after triage, but besides giving Mary a wheel chair to sit in they basically ignored her. Thank God our friend Claire was there; she took it upon herself to hook up an IV of saline for Mary since Mary was obviously dehydrated.
The whole ER process took about 5 hours – and then Mary was taken in for immediate surgery. During this 5 hours they “worked their way up” in terms of testing – starting with the least expense (also least effective) scanning and working their way up to the MRI. (I guess… right… the big machine?)
At one point – after the initial (pretty much useless from what I gather) testing they were talking liver, pancreas… everything but her appendix.
(And, hey… let me tell you doc… when I heard the word “pancreas” my heart went into my throat; I immediately thought “pancreatic cancer.”)
ANYWAY… to get back to the point… no… when I think “ER” I don’t think “wow, they’re really trying to make a great first impression!”
(*RUEFUL GRIN*)
BILL
I used to conduct rants at surgery grand rounds about junior residents getting CT scans (now it’s MRIs) for routine appendicitis. I guess I lost that battle but it is ridiculous.
I love ranting doctors, especially surgeons.
Years ago, I went to the ER at Newton-Wellesley Hospital for what turned out to be an incarcerated umbilical hernia. My brother-in-law insisted on taking me there, though I thought he was being dramatic.
I was being prepped for surgery within thirty minutes. Fortunately, since I was dragged in early enough (it didn’t hurt *that* much if I didn’t try to stand up straight) a bowel resection wasn’t necessary. He removed my appendix while he was at it, a little bonus.
Isaak Dinesen said there are three times that we can know happiness and one of them is the abrupt cessation of pain. Yeah, I had sutures, but that stricture I’d been experiencing was totally gone. I was euphoric.
That was before the days of hospitals billing the insurance company $400.00 for my Symbicort inhaler. Itemized hospital bills are an education, one which the insurance companies will evade if at all possible.
One of the many insanities: my husband’s insurance would cover an expensive hospital-based colonoscopy (over $700.00, not counting the gastroenterologist’s fees). However, if my husband elected to have the $300.00 procedure done in the doctor’s office, they wouldn’t cover it at all. They couldn’t give me a reason other than “those are the rules”.
The hospital bill has little to do with reality. Almost all hospital care is contracted and the retail bill the patient sees is nonsense. The only person who pays a retail bill is the unlucky cash customer. That’s a major problem with HSAs. Unless you run your bill through the insurance company bureaucracy, you don’t get the discount price but by doing so, you have eliminated the cost saving.
The colonoscopy story is how we first got inflation in cost. I thought there was no insurance company left that would allow this incentive to still exist.
Re: Michael Kennedy; July 29, 2009 at 1:12 pm —
“The colonoscopy story is how we first got inflation in cost. I thought there was no insurance company left that would allow this incentive to still exist.”
OK… so… my mother died of stomach cancer when I was 9 years old. At least one of my uncles suffered colon cancer. So… at 40 years old I ask my doc to give me a referral to a gastroenterologist.
Fine. I go. First a consult. Next. Schedule the procedure(s). I got the scope down the stomach one visit, the colonoscopy the next.
So… first ever colonoscopy… it’s the doc and his nurse sticking the camera/laser up my bum while I’m hooked up to a Valium drip watching the pretty pictures (live feed) on the monitor as my doc and his nurse flirt up a storm.
After we’re done… after I’m “sober” again… into the office. The doc tells me he zapped something like 19 polyps. He tells me he’ll let me know what the lab results show when they come in and in the meantime to set up an appointment for another colonoscopy a year hence.
(Test results… normal.)
Next year… same deal (only this time no stomach scope). Me on a Valium drip… doc and nurse doing their thing. This time they only had to zap three or four polyps. (Don’t know if they were “new” or “missed” from the last time.)
NOW HERE’S WHERE IT GETS INTERESTING…
Three years later…. I’m in for my latest “internal exam.” We’re back to square one – gonna get both the stomach scope and the “rear” option.
(*WINK*)
Only now I’m covered by Oxford. (I had previously been covered by Blue Cross/Blue Shield I believe.)
THIS TIME… they’re gonna put me under. THIS TIME… there’s the doc… there’s the nurse… AND there’s the anesthesiologist. (Hey… young guy wearing a beanie… had to be good – right?) (*GRIN*)
Best I remember the bill pretty much doubled from my first two non-anesthesiologist assisted procedures to my third now anesthesiologist assisted procedure.
Sure… this time they did an “all in one service” with both the stomach scope and colonoscopy done in the same visit, but still…
(*SHRUG*)
So… Mike… what was the deal? Defensive medicine? Padding? Did it simply come down to what each plan was willing to pay for…?
(*SHRUG*)
BILL
I cannot vouch for the sanity of insurance companies. I do UR for workers comp, and a few HMOs. Today I had a case where the doc wanted to treat a forearm pain problem with ketoprofen cream. Ketoprofen is an NSAID, like Motrin, but it is not FDA approved for topical use. So I suggested he use another NSAID called diclofenac, which doesn’t have the complications that topical ketoprofen causes. I approved substituting the one for the other.
Now, we have other docs auditing these reports and a new doc caught my substitution. It was reversed by the medical director because we aren’t allowed to do this. It is common sense and the patient is intolerant of oral NSAIDs. So the doc will have to submit a new request, which will be reviewed at a cost of $200 per review on a $25 product.
What is sobering is the thought that government will be worse. I want to go back to patient care. I’m working on doing some geriatrics. I don’t have to make much money; just enough to pay some tuition for a couple more years.