By: Lucian Newman, III, M.D., F.A.C.S.
One of the most interesting but poorly understood topics in medicine today is “why does healthcare in the United States COST so much?” The answer to this question has many angles of explanation. There are technological changes that we have access to that impact care. However, the reality is that healthcare delivery is VERY labor intensive, taking a large team of human interaction to accomplish what we want. In the early 1900’s, although the United States was one of the world leaders into a more modern approach, healthcare was actually not far ahead of the dark ages. Antibiotics did not exist as we know them now, anesthesia and surgery were risky at best, hospitals were generally unmonitored, and medical training was spotty, relying on apprenticeship models or travel to European centers for exposure. Fast forwarding to today, the deficits of just 100 years ago have been corrected. All of this costs a lot of money. Additionally, for all of the exorbitant costs, healthcare is available to essentially EVERYONE. Someone has to pay the bills for the many who cannot. (I am not making a political statement here, only addressing fact.) In the 1960’s, healthcare for retirees was initiated and funded by a percentage of working American paychecks. Unfortunately, the number of those paying no longer covers our expenditures in any given year. Something has to change.
Further inspection of the bills reveals that they are not always what they seem. With private insurance, the rates seem to go up yearly, and the co-pays and deductibles do as well.
A hospital bill that a consumer sees can be outrageous. However, the hospital receives a much lower amount negotiated with the insurer based on a diagnosis being treated or a procedure being done. Outpatient surgery is generally paid by a fixed amount, and inpatient days are paid on a per diem rate. With Medicare, the DRG system predicates the reimbursement based on coding used to describe the problems addressed during the hospitalization. Medicaid uses both approaches but does not cover the costs of care. Physicians who used to be around 50% of the costs, are now between 10% and 15%. Hospitals are forced to purchase the devices used by doctors, and very often the costs are more than the reimbursements. An example of this would be joint replacements. Prices of joints alone can be three thousand dollars to ten thousand dollars. A patient with BCBS (which reimburses inpatient days in Alabama on a per diem at around twenty-five hundred dollars per day, depending on the market) may stay three days. The bill submitted may be fifty thousand dollars to one hundred thousand dollars, but the reimbursement is not on that level. An outpatient hernia may reimburse twenty-four hundred dollars, while the mesh used can be one thousand dollars to fifteen hundred dollars, and the devices to affix the mesh can be four hundred dollars or more. Although this conversation could be endless it is meant to make you think. Medicine is expensive, and we have many battles to fight to be able to pay for what we want. However, remember the bill you see is often not what is paid!!