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That is because it is largely a work of fiction. The vast majority of a hospital's costs are fixed, not variable, so when they have to divide it up into individ
by grandinj 3y ago
That is because it is largely a work of fiction. The vast majority of a hospital's costs are fixed, not variable, so when they have to divide it up into individual "items", the amounts allocated are to each "item" or "service" are fairly creatively arranged.
Think about it - most of the stuff has to be there "in reserve" so to speak, with a fair amount of surplus to cater for surges of different kinds of sickness, so there is very little ability to match demand and supply.
The actually variable stuff (e.g. drugs, saline, other consumables) is a fairly small part of the overall operating cost.
- EligibleDecoy 3y agoI don’t disagree about the hospital bill being a work of fiction but hospitals are hardly the first business to have high up front capital investments and inventory requirements. Veterinarians, multi-modal shipping, leisure resorts, airlines, etc don’t seem to have a problem getting mostly fair and itemized billing. The problem with medicine is that the incentives are misaligned all over the place, not that their business model is somehow too hard to do.
- grandinj 3y agoThose other lines of business you mention are able to do some degree of negotiation with their customers around what level of service they provide which mitigates a large chunk of the problem. I'm not saying you're wrong - most hospitals in my country (not the USA), do in fact manage to produce itemised bills, but as someone who has worked close to (but not in) hospital billing, I'm just saying that I have some degree of sympathy for the hospitals.