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Explore This IssueApril 2013
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The late night comedian Bill Maher ends his weekly shows with a segment called, “New Rules.”1 These consist of a series of Maher’s opinions and commentaries on current events—some erudite, others caustic or a tad obscene. Though they are written to generate laughter, many of these rules belie a deeper analysis of some complex issues. In homage to Maher, here is my version of some new rules for our ever-changing world of healthcare.
New Rule: Let’s Get Rid of Hospital Sticker Shock
Have you ever tried to decipher a medical bill? It might be easier to break the encryption codes used by the Allies during World War II. Using sleight of hand and some clever math (where numbers can be added but never subtracted), hospitals deliberately obscure the true cost of tests and procedures. With the anticipated major redesign of healthcare delivery, it is time for hospitals to wake up to the realities of the 21st century. Comparing prices for medical procedures is impossible because there is no transparency about cost. As Professor Uwe Reinhardt, a noted healthcare economist at Princeton University in New Jersey, observed, the pricing of hospital services is best described as “chaos behind a veil of secrecy.” Descriptors are often inaccurate and the charges can be mind boggling. For example, I have seen up to four separate charges listed for a single corticosteroid joint injection, including the professional fee, a facility fee, a technical charge, and the medication cost. A recent cover story in Time magazine depicts many egregious examples of price gouging in painstaking detail.2
Researchers from the University of Iowa in Iowa City highlighted the difficulty encountered when patients attempt to compare hospital charges for procedures.3 Using a standardized script, they surveyed more than 100 hospitals nationally and requested from each hospital the lowest complete “bundled price” (hospital cost plus physician fees) for an elective total hip arthroplasty for a 62-year-old, otherwise healthy woman. In this scenario, the patient did not have health insurance but had the means to pay costs out of pocket and was seeking the lowest complete price for the procedure. The question seemed fair enough. Isn’t this the way we shop for cars, computers, and cell phones? Shouldn’t medical shopping be the same? Get several price quotes, investigate those facilities that seem most capable of providing quality care, and book an appointment to meet with the team. You are probably not surprised to learn that the authors struggled to get price information for the procedure and what they observed was an 11-fold variation in the prices that were quoted. They ranged from a low of $11,000 to over $125,000! By comparison, Medicare and other large insurance payers usually pay hospitals between $10,000 and $25,000 for primary joint-replacement surgery.