1. Jack Ferstel

    The medical industry will bring the aging middle class in our society in the next couple of decades to their financial knees with ever-rising medical costs! It is highly unfashionable to call it what it is; GREED! But there it is!

    Jack Ferstel

  2. Ron

    What you have left out of this article is where the problem with rising medical costs begins in a hospital setting. So this will be somewhat long, but I will try to keep it as short as possible.
    1. Excessive administration cost run up by rising salaries for CEO’s and other administrators that used to make 5-6 times an RN and now make 50-60 times what an RN makes.
    2. 24-7-365 staffing in departments regardless if there is a patient or not. The ER, Lab, Radiology etc all have to have minimal staffing to cover and “expected” workload. In some cases, this may not materialize, but the cost is still there.
    3. Healthcare is 60-70 percent salaries and benefits and shortages of key staff members create a rising salary level.
    4. Providers have to provide the latest technologies to attract qualified physicians and to cover the asses when an insurance claim comes up. “Is that the acceptable medical treatment provided by most all providers?” If it is not, the claim becomes greater.
    5. Acceptable margins after discounts and expenses is usually 5% which is used to replace plant and equipment.
    6. And this is the main culprit of idiotic medical bills. The government, through the Medicare cost report, requires the hospitals to bill for services on a line item basis. This is then used to determine the cost to charge ratio by department and that is then used to determine how much it “cost” to provide services to Medicare and Medicaid patients. Over the many years this has been required, every provider has looked for anything they can that is chargeable to increase revenues. And the kicker is Medicare and Medicaid have not reimbursed providers by the cost determined on the cost report since the mid 80’s for inpatients and 90’s for outpatients.
    7. Any attempt to bill patients on a flat rate system where the bill is based on the discharged diagnosis (ie Normal Delivery $XXXX.XX or Hip replacement $XX,XXX.XX) will be rejected by CMS and the provider will be told to continue with the line item billing.

    So instead of a hospital being able to determine what each diagnosis group costs and then add 5% or each ambulatory payment group costs plus 5%, hospitals will continue to bill like car companies used to charge for autos in the 60’s.

    And this will promote “some sharp-elbowed accountant” identifying more items that providers can charge for in order to generate the profits to pay for equipment that physicians require to do their jobs with the latest and greatest technology.

  3. Michael Young

    Simply stopping by to say that a family member’s Part D coverage leaves thousands of dollars of prescription medications uncovered.

    Any of you out there planning on retiring and counting solely on Part D to make it work are in for a stunning shock.

  4. Durl

    One real problem is that there is no real ability for a consumer to compare prices. What costs $100 at one hospital costs $1000 at another. And there is no published list of services with prices that a consumer can compare.

    Capitalism works well when the consumer can pick and choose services based on cost and quality.

    • Ron

      That goes right back to the way government requires hospitals to bill. I tried when I was finance director at a medium sized NC hospital to get our billing on a one line item basis. Everything packaged with all test bundled into one charge. Patients could call as ask how much and we could say $XX.XX. Medicare said NO!!!! You have to bill for each service utilized, so one patient with one doctor had certain procedures and another patient had different doctor who used different procedures. And some patients with the same doc’s had different procedures, Depended on the patient’s needs, but there was no way in hell to tell anyone how much their hip operation would cost or their normal delivery would cost. All we could do was estimate and then when it was higher than the estimate, the patients was pissed off. Complain to CMS, Medicare, your congressional rep and senators and specifically identify CMS’s requirement for line item billing by department as the problem!!!!

    • Bookscrounger

      Well, here we get into fuzzy information. We are enamored of mass production and identical products and services (which is never completely true; I find it fascinating that Detroit still struggles to stamp out identical sheet metal parts). Google ‘cosmetic surgery gone wrong’, and then reflect on the fact that everything about medical care is custom-made. So ‘What is the cost?’ is one problem. ‘What is the value?’ is another which really defies many economic principles.

      • Durl

        I understand that something as complex as a knee replacement cannot have a fixed, published price. But, there is no reason that prices cannot be published for a chest x-ray, an MRI (yes, I know there are many flavors), a Tylenol, et al. There ARE many products and services that are pretty much fixed for any type of patient.

        • Bookscrounger

          Actually, the prices shouldn’t vary much in a market, the insurance companies see to that. To my mind, the central problems are a) the quality of the care, and b) the commitment to reducing costs. Good data is hard to collect, hard to find, hard to analyze.

          • Ron

            And that is a argument that I failed to use with DURL concerning flat rate billing. All insurance companies pay based on a discharge diagnosis so why not bill the same way?

            Yes, cost analysis can be tricky. Some providers have excellent cost analysis tools to determine their cost of services by diagnosis, doctor, etc and others are still stuck in the 80’s technology because they refuse to invest in technology that will provide them with that information. And then we have the issue with staff to run those systems and when you mention increasing FTE’s to a hospital CEO, they about stroke out.

        • Ron

          DURL..why can’t knee replacement have one charge? You do a cost analysis of many replacements over a period of time and determine your average cost for that service. Then you add to that whatever you need as “profit” (in a non-profit Net revenue over Expenses) and that is your charge. And the charge is based on the discharge diagnosis so those with complications are calculated at a different rate than one without complications.

          Why do we have to charge for each item or service used by the patient? You do not see an auto invoice with every nut, bolt, steering wheel, seats, tires, rims, engine, radiator, etc etc so when someone has something done in a hospital, why do they have to bill that way?

          • Durl

            It SHOULD! I was just trying to give the Bookscrounger some room since he seemed to think that costs for everything can’t be fixed since people are different.

            I can see that a generic term like “Brain Surgery” would be inadequate as some are quick and easy and others are very complex and time consuming.

            But more commonplace things like a knee replacement, a bone set and cast, a Tylenol administered in a hospital room, etc. SHOULD be fixed AND available to a consumer who wants to shop for their medical services.

          • Ron

            Durl…There are around 500 inpatient groupings based on the diagnosis and condition of the patient, If my memory serves me correctly, there are 10-12 different diagnosis groupings for brain surgery. This is one of those that have multiple diagnosis compared to orthopedic procedures that have no more than two for specific body parts. (One for patients with complications such as heart problems or diabetes and one for patients without complications).

            My point in this monstrosity of charge masters in hospitals that contain over 10,000 charges for a medium sized facility and more for larger facilities is the fact that the government is the one screwing up the system. Insurance companies long ago began paying on groupings and not individual charges for inpatients and many of the outpatient procedures. Even medicare pays based on discharge diagnosis, not charges. They just have thousands working in Baltimore reviewing a yearly report that all hospitals have to complete and that report is no longer used for anything significant other than keeping government workers employed.

            And the discharge diagnosis that is used for reimbursement by insurance companies is that which is assigned by the coders in medical records, not the ones assigned by the clerks in departments throughout the hospitals that are High School graduates trained on the job to search for one of those 10,000 charges that applies to the service performed in their department. That is one of the reasons for such high error rates in charging. If the bills were based on medical record coding, the error rates would be significantly less since that is based on medical data and not revenue data.

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