So What Does A Medical Procedure Really Cost?
July 31, 2014
There is a hospital bill that is causing quite a stir in the social media world. Someone posted their appendectomy bill on the web and people everywhere are wondering a) How the hospital could charge so much and b) Why was the bill then discounted so much?
Welcome to the world of medical billing!
Imagine if you went shopping for a new car and one dealership at the north end of town told you that you could have the car for $20,000, and then another dealership at the south end of town told you it was going to cost $40,000. You would assume that the second dealership would rapidly go out of business. But in the medical world you could not be further from the truth! Both dealerships are going to do just fine, thank you very much. Because both of them have probably still overcharged you for the car you are about to buy!
For the past 18 years I have been handling medical bills, mainly on behalf of people who did not know how to pay their bills.
It is almost impossible for the ordinary person (read Mr. Patient) to find out what a medical procedure actually costs to perform. The truth is most doctors and the clinics and hospitals that they work in don’t have a clear idea on the cost either.
This is all a part of the complete lack of pricing transparency that is the norm within the American medical world.
We all know that if we are traveling on an airline, that it is likely that the person in the window seat is paying a completely different price from the person in the middle seat, who is paying a different price to the person in the aisle seat. But at least we can understand the reason. One person bought the seat from the airline on an Internet special and got a great rate. One person bought the seat the day before they needed to travel and they were grossly overcharged. The third person, the one with the “normal” or “average” price, bought their ticket three weeks in advance and just took what Kayak or Travelocity happened to say was the price that day. At least here we can decipher what happens.
About fifteen years ago, when I was just beginning to understand the chaos of medical pricing, someone in my company was helping a person negotiate their medical bills. It happened that, in conversation with the hospital senior staff, I was introduced to the person who helped set up the hospital pricing system. He told me, without any hint of irony, that there was a 400% to 500% different between the lowest price and the highest price that they charged to patients for the same procedure.
Paradoxically, and I might add without a shred of moral integrity in the system, the person who had to pay the most was the self-pay patient without insurance, who was probably least able to pay.
This is not dissimilar to the medical bill currently doing the rounds on the Internet for this person’s appendectomy. If this young man had been self-pay, he might have been charged the full $55,000. Because he was on his Father’s insurance plan, he was charged a little over $11,000.
Something has to change.
And, at Sedera Health, we are part of the movement to bring transparency to medical pricing and personal responsibility to both the patient and those who are serving the patient through the medical system.
Check back on this blog to learn more about these issues in the days to come – and you are welcome to subscribe to our blog and to my personal blog.