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It is unrealistic on how a sponge in surgery costs $45 or a set of 3 small towels (x2) costs $380. Also, the optimizations in health care over the last couple

by cordite 12y ago

It is unrealistic on how a sponge in surgery costs $45 or a set of 3 small towels (x2) costs $380. Also, the optimizations in health care over the last couple decades actually have gotten it to cost more overall, mostly due to processing overheads and bureaucracy. When it comes to getting multiple bills, part of that has to do with their standards with insurance agencies. Usually you have CPT (R) codes, HCPCS, ICD codes and so on (at least in the US, international places do not use CPT often.) There is professional billing, which generally involves physicians or specialists time and expertise. While hospital billing involves staffing, reduction of capacity (like taking up a room or a bed), and all supplies, materials, and labs performed while admitted. Another thing that is standard in the industry is that it actually costs more to consult someone than to refer a patient to them. Part of this has come due to insurance agencies being more supportive of consulting which means that the specialist can benefit more patients with less responsibility transfer and time.

jleader 12y ago
Keep in mind that hospital "costs" are largely fictional. When the bill says $45 for a sponge, the insurance company has negotiated a much lower rate for the whole procedure, and if you go to the hospital and say "I'm a cash patient", they'll typically also give you a substantial discount (though probably not as low as the insurance company gets, and only if you're able to pay the whole amount right away). As far as I can tell, the inflated prices (that almost no one pays) are mostly just so the hospital can report how much they're "losing" treating uninsured patients who can't pay.
- chimeracoder 12y ago
  > As far as I can tell, the inflated prices (that almost no one pays) are mostly just so the hospital can report how much they're "losing" treating uninsured patients who can't pay. Actually, it's because they lose money (on average) on patients on public insurance (Medicare[0] and Medicaid patients), so they need to charge private insurers more to cover the gap[1]. Insurers negotiate "discounted" rates with certain "preferred" hospitals in exchange for sending them more volume, but in this case "discounted" means "still overpriced, but closer to the actual marginal cost". The other private insurers still pay the exorbitant rates. This is why hospitals are completely willing to lower your bill if you are uninsured and paying cash if you ask - they don't care about the money they're getting from you; they care about the money they're getting from the private insurers. The amount of money they make off of patients who are uninsured and paying out of pocket is negligible in this calculus. Many hospitals are not at all secretive about this; executives talk about this pricing model fairly openly. [0] For simplicity, I'm ignoring Medicare Advantage plans here. [1] The ratio of this is HIGHLY dependent on the patient demographics of the particular hospital, but the general trend holds throughout.
  - cordite 12y ago
    Often private insurers will say "We will pay 1XX% of what Medicare pays" and the like, though not across the board. Generally from procedure to procedure.
gaius 12y ago
Here in the UK Accenture billed £10bn to the NHS for a computer system that didn't work and had to be scrapped. The entire healthcare industry, in every country, is full of people who love to play fast and loose with other peoples money.
- danudey 12y ago
  You're confusing the healthcare industry with government in general. As soon as you get a government contract it's a license to print money.
- cordite 12y ago
  Healthcare software does need to be high quality to ensure patients get the best care possible. But that doesn't mean that people play fast and loose within the healthcare industry. Sure, the VA [1] spent so many resources (an unrealistic amount..) on a single component, namely scheduling, that people can easily think this on top of the already existing costs. Wasn't there a post at one point about how working at microsoft was like being on antidepressants? It's probably a magnitude more than that at the government. [1]: http://en.wikipedia.org/wiki/Veterans_Health_Administration_scandal_of_2014 http://en.wikipedia.org/wiki/Veterans_Health_Administration_...

by cordite 12y ago

jleader 12y ago

Keep in mind that hospital "costs" are largely fictional. When the bill says $45 for a sponge, the insurance company has negotiated a much lower rate for the whole procedure, and if you go to the hospital and say "I'm a cash patient", they'll typically also give you a substantial discount (though probably not as low as the insurance company gets, and only if you're able to pay the whole amount right away). As far as I can tell, the inflated prices (that almost no one pays) are mostly just so the hospital can report how much they're "losing" treating uninsured patients who can't pay.

chimeracoder 12y ago
> As far as I can tell, the inflated prices (that almost no one pays) are mostly just so the hospital can report how much they're "losing" treating uninsured patients who can't pay. Actually, it's because they lose money (on average) on patients on public insurance (Medicare[0] and Medicaid patients), so they need to charge private insurers more to cover the gap[1]. Insurers negotiate "discounted" rates with certain "preferred" hospitals in exchange for sending them more volume, but in this case "discounted" means "still overpriced, but closer to the actual marginal cost". The other private insurers still pay the exorbitant rates. This is why hospitals are completely willing to lower your bill if you are uninsured and paying cash if you ask - they don't care about the money they're getting from you; they care about the money they're getting from the private insurers. The amount of money they make off of patients who are uninsured and paying out of pocket is negligible in this calculus. Many hospitals are not at all secretive about this; executives talk about this pricing model fairly openly. [0] For simplicity, I'm ignoring Medicare Advantage plans here. [1] The ratio of this is HIGHLY dependent on the patient demographics of the particular hospital, but the general trend holds throughout.
- cordite 12y ago
  Often private insurers will say "We will pay 1XX% of what Medicare pays" and the like, though not across the board. Generally from procedure to procedure.

gaius 12y ago

Here in the UK Accenture billed £10bn to the NHS for a computer system that didn't work and had to be scrapped. The entire healthcare industry, in every country, is full of people who love to play fast and loose with other peoples money.

danudey 12y ago
You're confusing the healthcare industry with government in general. As soon as you get a government contract it's a license to print money.
cordite 12y ago
Healthcare software does need to be high quality to ensure patients get the best care possible. But that doesn't mean that people play fast and loose within the healthcare industry. Sure, the VA [1] spent so many resources (an unrealistic amount..) on a single component, namely scheduling, that people can easily think this on top of the already existing costs. Wasn't there a post at one point about how working at microsoft was like being on antidepressants? It's probably a magnitude more than that at the government. [1]: http://en.wikipedia.org/wiki/Veterans_Health_Administration_scandal_of_2014 http://en.wikipedia.org/wiki/Veterans_Health_Administration_...