I blog about free markets in medical care and transparent pricing.
A friend of mine just called. An employee of his required a CAT scan of her abdomen. She was charged by a local “not for profit” hospital $4400. This is $3600 more than the independent facility to which I refer patients charges. After her insurance paid $2200, she was billed $700 and the hospital wrote the rest off as a loss.
What’s my point? Just down the road, a facility with a better radiologist that would like to have more business than they have, would have done the scan for $800. The insurance company didn’t want the patient to go there. You wonder why health care is so expensive? Then there’s this other little nasty bit. If you have followed this blog you are familiar with the phrase “uncompensated care.” You can check out the details of this scam here if you are interested in knowing how the payments to hospitals are calculated. Basically, my friend’s employee as a patient was forgiven the $1500, but not as a taxpayer. This $1500 uncollected amount goes in to the “uncompensated care” pool for the purposes of the calculation that will result in a car dealer like rebate to the hospital at the end of the year’s hospital-government shell game. Actually, current year “losses” result in future increases in payment so the losses are always seen as “now” without acknowledging the future, offsetting payments. This, of course, allows the big hospitals to constantly poor mouth it, while knowing that future loot based on their reported losses is on the way courtesy of the taxpayer.
This is what I call the reverse Enron accounting method. Rather than overstate your earnings, overstate your losses. This fictitious loss translates into big bucks for our cost-shifting, price-gouging hospital friends. I couldn’t make this stuff up if I had too. Can you see from the formula above, that it is the spread between “billed” and “collected” amounts that determines the rebate? Isn’t it therefore obvious that the patient who clearly can’t pay, is the patient most likely to receive the most exhorbitant bill? This explains why the uninsured get blistered by the hospitals and see bills the giant size of which other patients never see. The hospital actually doesn’t want them to pay! The hospital also needs this red ink to maintain the fiction of their non-for-profit status.
All this said, isn’t it clear that little-to-no charitable care is rendered at all at these hospitals? They collect one way or the other.
Health care reform? Yeah, we need it. We need to get the government out of this business. The government and their crony hospital friends will bankrupt all of us if we let them.
G. Keith Smith, M.D.