I began this rant a few years ago by lambasting corruption and waste in all segments of the health care system, from government to lawyers to doctors to insurers, even the patients themselves. I proposed 15 changes that would need to be implemented if we were serious about fixing what ailed it which I subsequently distilled down to the most critical five. So when an associate sent me a link to Steven Brill’s Time Magazine exposé, “Bitter Pill: Why Medical Bills Are Killing Us,” I couldn’t help but disagree with my colleague’s observation that it should be required reading for anyone in medicine. It should be required reading for anyone not suffering from rigor mortis. I was chagrined to have given such little attention to this superbly researched elephant in the room. This investigative report will take a bit of time to get through, but it’s time well spent.

For years I’ve known about the outrageous charges on hospital bills, the so-called “retail” charges that hardly anyone paid, or so I thought, because the insurance companies knocked them down, and the indigent “self pay” patients were served by programs with deep pockets or walked away from the bills without consequence. I ignored the high percentage of bankruptcies related to health care costs. As Brills points out, “Unlike those of almost any other area we can think of, the dynamics of the medical marketplace seem to be such that the advance of technology has made medical care more expensive, not less.” He dispels the arguments made that the exorbitant rates help pay for the poor. “A closer look at hospital finance suggests two holes in that argument. … [A]t most hospitals it’s not a Saudi sheik but the almost poor — those who don’t qualify for Medicaid and don’t have insurance — who are most often asked to pay those exorbitant chargemaster prices. Second, there is the jaw-dropping difference between those list prices and the hospitals’ costs, which enables these ostensibly nonprofit institutions to produce high profits even after all the discounts.” He goes on to elaborate, “So, what do these wealthy nonprofits do with all the profit? In a trend similar to what we’ve seen in nonprofit colleges and universities … the hospitals improve and expand facilities (despite the fact that the U.S. has more hospital beds than it can fill), buy more equipment, hire more people, offer more services, buy rival hospitals and then raise executive salaries because their operations have gotten so much larger. They keep the upward spiral going by marketing for more patients, raising prices and pushing harder to collect bill payments. Only with health care, the upward spiral is easier to sustain. Health care is seen as even more of a necessity than higher education. And unlike in higher education, in health care there is little price transparency — and far less competition in any given locale even if there were transparency. Besides, a hospital is typically one of the community’s larger employers if not the largest, so there is unlikely to be much local complaining about its burgeoning economic fortunes.”

The “chargemaster” referred to above is a list of charges often ten times the actual cost or Medicare reimbursement for a medication, device, or service. Ironically, while Medicare is able to more effectively limit chargemaster overpayments than many private insurers, special interests have lobbied to limit its ability to limit the excessive profiteering in areas of medications and devices. We, a debtor nation, continue to subsidize the world, which has no qualms limiting the pharmaceutical and device manufacturers’ charges.

To many this will sound like I’m backtracking on my free market ideology. Nothing could be further from the truth. Only in a free, competitive marketplace can the true value of goods and services be found. The government’s meddling, even when the intentions are good, tends to distort the marketplace and create unintended consequences down the line that create larger problems. Where the market is large enough, such as the competition between insurers (when allowing for commerce across state lines) it should be permitted to do its job. When there is a relative monopoly in terms of services, as is often the case when it comes to medical care, especially when it’s emergent, then regulation along the lines of fraud an abuse is necessary and appropriate. The behavior of many of these health care industry CEOs is tantamount to charging a dying man in the desert $500 for a cup of water. It perpetuates an economic milieu where they can “justify” seven-figure salaries by dint of irresponsibly inflated profit margins. The arguments for chargemaster prices and the dubious estimates of the magnitude of charitable services provided alluded  to in the Brill piece should be a wake-up call to us all.

Instead of reaching out to the government for handouts to help perpetuate a corrupt system, the American people must demand change in the system itself. I’ve often stated that the liberal view of government charity for those in need is misdirected. The old saws, “Give a man a fish and you feed him for a day; teach him to fish and you feed him for a lifetime,” and “A rising tide lifts all boats,” has never been truer than today.

It’s time that the American public viewed itself as a special interest.

Next: Some concrete suggestions for change.


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  1. Sue Says:

    Indeed. I thought it an excellent article with a lot of truths and food for thought. Hard to believe that it’s taken this long to see the light of day. Over thirty years ago when I got the hospital’s bill for my husband’s last stay, I was horrified, and in the last three decades that situation has only gotten worse. What kind of country are we when the CEOs have no consciences? When it’s all a game?

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