Hospital prices crawl out of their dark crypts
May 01, 2005
"Bob, have you wondered why things have been so slow in the hospital lately?"
"No, but don't look a gift horse in the mouth."
"I think it has been great. I get to finish the newspaper without interruption and go out for lunch every day."
"Do you realize that the hospital census is down 70%?"
"So what? A seasonal blip."
"I don't think so. My neighbor told me she was scheduled to come in for an elective hysterectomy last week, but after comparing prices online she decided to go to The Little Sisters of Reasonably Priced Health Care.
"They used to be The Little Sisters of Charity, but what with the Scruggs lawsuit, they decide to change their name. Anyway, how much do you think this hospital charges for a two-view chest x-ray?"
"Well, Scripps Memorial does, but we charge $1519! And what about a noncontrast head CT?"
"Bob, for goodness sake, don't you use a dental adhesive? Because your teeth shooting out like that almost gave me a heart attack. I think they're stuck in the processor. Yikes! Bob, smoke and bits of teeth are coming out of the processor. If you have broken this baby and have to pay for it, you'd better consider a second mortgage on your house, given the markups this hospital uses."
Exaggeration and hyperbole are often elements of humor, but those numbers above are accurate. A complete metabolic panel at San Francisco General Hospital costs $97, while at Doctor's Medical Center in Modesto, CA, it costs $1733. Luckily, Doctor's Hospital does not charge for Tylenol, which may help with the headache of receiving such a bill, but Scripps Memorial marks up a tablet that costs 1¢ wholesale to $7.06!
Assembly Bill 1627, which became effective in California last July, mandates that all hospitals in the state allow customers to view the hospital's chargemaster. In the past, a hospital's chargemaster was a tome that rarely saw the light of day and was never seen by patients. It was a carefully guarded secret, like the formula for Coca Cola, the number of detainees at Guantanamo Bay, and whether Barry Bonds uses steroids. Hospitals did not want their competition to know what they charged, but such secrecy provided a cover for abuse and price gouging. That prompted the current law, which is based on an existing law in Arizona. Is this a trend? Because it is the most populous state and often sets trends that the rest of the country follows, all eyes are turned toward California to observe the impact of this new law.
The majority of radiologists in this country are hospital-based, but they have about as much influence on a hospital's chargemaster as Donald Rumsfeld has on the ACLU. This is unfortunate, because their radiology practices may be adversely affected by the disclosure of these stratospheric charges. Granted, few individuals actually ever pay these charges, but how many consumers realize that when comparison-shopping? The sad fact is that these unrealistic charges are purely a fiction created to "game" the insurance companies by offering them huge discounts. Of course, the real victims are the uninsured, the least able to pay, who end up paying 10 times more than the insured pay for the same care. Many face bankruptcy over what constitute minor hospital visits for others. This is the basis of the Scruggs class action lawsuit over the care provided to the uninsured poor.
Hospitals seem to be responding to what their competition is doing. Those at the high end are bringing their prices down, those at the low end are bringing their prices up, and those in the middle are gnashing their teeth over not having charged more.
But this story is really about the direct and indirect impact of the widespread distribution of information over the World Wide Web and how radiology groups need to start thinking about the effect on their practices. Consumers are already using the Web for answers to medical questions, but soon California consumers will be able to comparison-shop prices. An estimated 36% of Americans use the many "shopping bots" on the Web for this purpose. These are search engines that explore massive databases to find the cheapest price for a product. BizRate.com offers comparisons of quality as well. Will you be next?
Many insurance providers now post hospital and medical report cards online, and many state medical boards post disciplinary actions. Hospitals are being coerced into listing their morbidity and mortality rates. Consumer advocates are pushing for the posting of physician statistics such as the types and numbers of surgeries a surgeon performs and the infection rates. As most hospitals keep track of how many cases a radiologist reads, those numbers could become part of what hospitals must make public for the benefit of consumers. (Would you want your cholecystectomy done by someone who does two a year or someone who does 100? Would you want your mammogram read by a neuroradiologist who reads a few every month or a mammographer who reads hundreds?) Imagine yourself under this type of scrutiny. This is not a bad thing, but groups should be aware of the data that could affect their patients and their referrals.
And you should worry not only about what official sites say about you but also about what your patients say. Disgruntled patients have access to all your current and potential customers through the Internet. Bloggers are taking their grievances public, and people are reading their complaints. Check out www.jmargolin.com/ med/charges1.htm to see the level of sophistication among patients unhappy with their care.
Do you have a Web page? Is it up to date? Does it include enough information about your group? Does your group allow Web-based scheduling of exams? Do you allow your patients to submit questions by e-mail? Do you know what type of information your hospital, insurers, and state agencies are releasing to the public? What are your patients saying about you?
Medical shopping bots that will find the "best" doctor are inevitable. These bots will collect online data about doctors' training, disciplinary actions, lawsuits, number of exams read, error rates, complaints, pricing, and office locations and hours. Will you be at the top or bottom of those lists?
Radiology groups must start thinking afresh about their practices from a variety of perspectives, and that includes the impact of the Web. And even if you don't live in California, it wouldn't hurt to take a look at your own hospital's chargemaster to familiarize yourself with what your hospital charges. I found that Scripps Memorial charges only $19 for leeches, which is a steal, as you'll find that lawyers are going to cost you a whole lot more.
Dr. Trefelner is a radiologist and cofounder of NightShift Radiology. He invites comments by e-mail at firstname.lastname@example.org
or fax at 650/728-5099. He also answers questions posed by readers in the "Ask Eric" column on diagnosticimaging.com.