Monday, August 26, 2013

Remember When I Said that It's Not the Cost of Healthcare, It's the Price of Healthcare*

Well, the New York Times just looked at the price of a 1 liter bag of saline solution, and it ain't pretty:
It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater.

Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1.

Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York.

Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.”

And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution.

It is no secret that medical care in the United States is overpriced. But as the tale of the humble IV bag shows all too clearly, it is secrecy that helps keep prices high: hidden in the underbrush of transactions among multiple buyers and sellers, and in the hieroglyphics of hospital bills.

At every step from manufacturer to patient, there are confidential deals among the major players, including drug companies, purchasing organizations and distributors, and insurers. These deals so obscure prices and profits that even participants cannot say what the simplest component of care actually costs, let alone what it should cost.

And that leaves taxpayers and patients alike with an inflated bottom line and little or no way to challenge it.

………

But even before the finished product is sold by the case or the truckload, the real cost of a bag of normal saline, like the true cost of medical supplies from gauze to heart implants, disappears into an opaque realm of byzantine contracts, confidential rebates and fees that would be considered illegal kickbacks in many other industries.

………

The charges included “IV therapy,” billed at $787 for the adult and $393 for the child, which suggests that the difference in the amount of saline infused, typically less than a liter, could alone account for several hundred dollars.

………

Eventually the head of the family, an electrician’s helper who speaks little English, complained to HealthFirst, the Medicaid H.M.O. It paid $119 to settle the grandmother’s $2,168 bill, without specifying how much of the payment was for the IV. It paid $66.50 to the doctor, who had billed $606.

Ms. O’Neill defended the markup as “consistent with industry standards.” She said it reflected “not only the cost of the solution but a variety of related services and processes,” like procurement, biomedical handling and storage, apparently not included in a charge of $127 for administering the IV and $893 for emergency-room services.

The patient, a financial services professional in her 50s, ended up paying $100 for her visit. “Honestly, I don’t understand the system at all,” said the woman, who shared the information on the condition that she not be named.

Dr. Frost, the anesthesiologist, spent three days in the same hospital and owed only $8, thanks to insurance coverage by United HealthCare. Still, she was baffled by the charges: $6,844, including $546 for six liters of saline that cost the hospital $5.16.

At White Plains Hospital, a patient with private insurance from Aetna was charged $91 for one unit of Hospira IV [saline] that cost the hospital 86 cents, according to a hospital spokeswoman, Eliza O’Neill.
The charges all stem from a case of food poisoning  in upstate New York, where people were collected by ambulances and sent to emergency rooms.

This is why price controls are necessary.  When you are, "lying on the ground barely conscious," the market ceases to function.

*Here, and a lot on the Stellar Parthenon BBS as well.

4 comments:

  1. My wife visited an emergency room at san antonio, tx for food poisoning. She stayed there less than 2 hours. The hospital charged her over 4000 dollars. The hospital charged her 1024.81 dollars for CBC, CMP (noamylase or CK) tests (Rev. code 272), and 2168.72 dollars for emergeny room (Rev. code 450), and 726.91 dollars for IV therapy (code 260), 68.15 dollars for IV solutions (code 258), . Do you think she was overcharged? The procedures are listed the below:

    Procedures performed:
    Infusion, Normal saline solution, 1000 CC
    Injection, ondansetron hydrochloride, per 1 mg
    Supplies&materials above/beyond prov by phys/QHP

    Test performed
    CBC
    CMP (no amylase or CK)

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  2. You can thank a lawyer and to a certain extent Medicare/ Medicaid for that. All prices are based off of Medicaid (Lyndon Johnson and his Great Society) and since Tort reform is so difficult the hospital must do unnecessary things the cover their ass. Ask what this would have cost in 1960 in todays dollar terms before all that nonsense was around. Lastly, tell the hospital you will pay cash and they will give you a far better deal. Going to the ER is like ebringing your car to the dealer for repair ... and everyone bitches about that but does not ask the govt to do something about it. It cost me 195 dollars to get my oil changed at the dealer. Jiffy Lube does it for $20. COMPETITION is the answer and it is right there in front of our face, but still people vote for the Communist Clan

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  3. There have been the studies on "Tort Reform" based on real world examples, most notably Texas, which has the most aggressive legislation, and tort reform does not have a meaningful impact on cost. (In fact, the most costly healthcare market in the nation is in McAllen, Texas, and the least is around the Mayo clinic in Minnesota, which is an effective monopoly functioning as a public trust.

    As to competition, the problem is that you cannot price shop when you have to address a sucking chest wound.

    Our system is the most "free market" in the industrialized world, and not only do we pay more for healthcare than the rest of the world, we pay more taxpayer dollars on healthcare than the rest of the world.

    ReplyDelete