The Mystery of Medical Bills

When you get your car repaired or your kitchen remodeled, you expect to receive an estimate in advance. Should you also be able to obtain an estimate when you go into the hospital for routine surgery such as gallbladder removal?

California passed a bill requiring hospitals to publish their average charges for the most common procedures on a state website.

The LA Times reported this week that “relatively few (hospitals) take the extra step of listing prices on their own websites, where people are more likely to be looking for pricing information..”

The hospital site, run by OSHPOD, a state health planning agency, allows you to search for hospitals by zip code, then check costs of specific surgical procedures. It does not include the fees charged by surgeons and other physicians.

According to Times story

David Dranitzke, 40, of San Francisco, recalled his frustration when he tried to get prices on a battery of blood tests for his 15-month-old daughter from three different hospitals and lab companies.

He gave up after spending more than 10 hours calling, waiting on hold and faxing information, all the while having to decipher arcane medical terminology and billing codes.

“It’s more difficult to get a price on blood work than remodeling your kitchen,” said Dranitzke, a visual-effects producer. “At some point you just throw in the towel.”

The Times contacted the California Hospital Assn. and they responded  ”An auto shop can give an estimate for a brake job, but people are not cars. It’s very difficult to get a random call from someone saying, ‘I need gallbladder surgery, so tell me what it costs.’ ”

The article found that some hospitals do provide helpful information.

On its website, Huntington Memorial Hospital in Pasadena allows people to select several common procedures and get an instant price quote, including an estimate of the patient’s share after plugging in their deductible and coinsurance. But even those numbers exclude the thousands of dollars that physicians, anesthesiologists and other specialists would tack on for most surgeries.

As healthcare IT professionals know, most hospitals have advanced software that is regularly analyzing their patient flow and determinging the revenue generated by procedure and by department. Cardiac surgery, for example, is a usually a big moneymaker, while most pediatric units lose money (many kids aren’t insured). So it shouldn’t be too hard to make cost estimates for prospective patients.

This issue is going to grow in importance as more and more people opt for high-deductibe health insurance. We are going to see more middle class professionals, like the man cited in the LA Times story, who actually do try to shop for medical procedures.

Compare hospital pricing with fess charged for dental work, plastic surgery and laser eye surgery. These procedures are commonly paid for in cash. Dentists, ophthalmic surgeons and plastic surgeons frequently advertise their prices in newspapers and other forms of marketing. The result is significant competition which tends to keep prices much lower.

Could our nation achieve similar free-market competition in gall bladder surgery?

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