They talk about things like charging $13,702 for something that retails for about $4000. (A wholesale price would probably be around $3,000 to $3,500)
They have something called a Chargemaster that lists all the prices - but do not let you see them. That's like being given a menu with no prices until you see the bill.
Also note that most people don't pay these prices. Insurance companies negotiate their prices based on Medicare charges, not the Chargemaster prices. As in they have contracts that read "All charges will be 50% higher than the Medicare prices", rather than all charges will be 5% of the Chargemaster prices.
The only people paying these numbers are the uninsured, the under-insured and insurance companies for emergency visits to hospitals they don't have a deal with. Note that if you are uninsured or under-insured, you can hire someone to negotiate with the hospital - even after your services are rendered. They typically cut the bill at least in half.
Why don't they start with that half price? Apparently they like to overcharge the sick whenever they can get away with it. This is wrong. They should not charge the ignorant that much more money.
To my mind, the real problem is not the amount of money, but instead the billing procedures that abuse patients, particularly the ignorant.
What do I mean by this? Well, the hospitals charge outrageous amounts for the things they charge because so many of their services are losses. That is, they offer free emergency service to the homeless. that will never get paid. There are tons and tons of services like that.
My problem is not the total bill, but instead the billing method. When you bill things incorrectly, you encourage waste and limit the ability to save money.
Lets say for example you were running a printer company. You choose to give away your printers at cost, charge ten times normal for the ink, and supply free (i.e. at a loss) paper to your customers.
Guess what? The customers will waste the paper, and do silly things like set the ink to print at 50% darkness.
When the politicians come in, they start passing laws that force you to off ink conserving modes, and to stop you from abusing the system you get blindsided by a law requiring you to continue to provide free paper, and suddenly you are covered with stupid bullshit regulations.
Here are the proposals I would make to fix the situation.
- Right to Know. The Chargemaster (computer program that lists all the things you charge for) must be publicly available to EVERYONE. No hiding your prices. Put it on the Web.
- Right to Compare. The must also list the amount they charge to Medicare next to the price they charge you. (The Medicare prices are in effect reasonable, as they are negotiated, rather than set)
- Optional negotiation. The Hospital can ignore all the rules below, if they offer (and the patient accepts) to charge everything at a stated multiple of Medicare rates, when you enter the hospital I.E. ignore the Chargemaster and pay 1.5 or maybe 2 times Medicare.
- Right to Bring Your Own. Customers are allowed at any time to bring their own products in. That is, if you are stupid enough to charge $13,000 for a drug that retails for $4,000, the customer can pay an express delivery guy to pick it up at a pharmacy down the street and deliver it to you and they must use it. Yes it might not be of the same quality, but it's your body, your choice. This includes food, as long as it conforms to the dietary limits your doctors set.
- Right to Replace. If for some reason the hospital must charge you for something immediately (as there is no time for you to get it), then you can instead choose to replacement in an unopened condition - as long as you give back at least as one more than you used. That is, if they want to charge you $25 for 19 aspirins, you can go to the store and get a package of 20 aspirins for $15 and deliver it to them.
- Right to Buy. If they charge you more than 10% of the cost to them to buy something, they must give you that item when you leave. I.E. No charging you $1.5 (let alone $40) to 'lease' a $15 warming blanket, then keeping the blanked and using it on someone else.
- Right to Pick your Tester. The hospital must use any third party testing service you pay for (and any third party test analysis - i.e. they don't just overcharge to do the cat scan, they then overcharge to have a radiologist look at it.) That is, if the Hospital charges you $7,000 for a blood test, you can pay $200 to have your blood rushed, in a refrigerated container across town to a private lab that will do the test for $500.
- Right to Pick your Provider. If you object to the service prices the hospital charges, the Hospital by law must allow you to pay for a private nurse and/or Doctor that you negotiate payment for in advance, to provide all the regular services for. That is no "He doesn't have privileges here." You can bring in ANYONE you want to provide the services. Or they can offer you a more reasonable price.
- Right to Shop Around. Anytime a customer uses one of the rights I list above, the hospital must a reasonable attempt to get the name and contact information of their provider/supplier and put their name on a list of 'alternative medical providers' available for all Hospital patients.
- Hospitals right not to be sued. The Hospital can require anyone using these rights you to sign a notice stating that the Hospital is not responsible for the quality of care you get from these outside service/product providers.
Most of these proposals stand alone (Although 1 and 2 go together, 9 requires the use of 7 or 8, and #10 only works if you exercise 4, 8, or 9.)
Note, I do not expect many people to actually exercise these rights. Instead I suspect that the hospital will suddenly reduce their prices to something a little more reasonable.
More importantly, note that I do NOT implement any kind of price controls. At no point do I attempt to force the Hospital to lower their prices. I just make it a lot harder for them to charge you something without telling you the price before hand - or to stop you from comparison shopping.
Finally, I don't actually expect most people's total Hospital bills to change. Most people do it through insurance, so this won't affect the Hospital's profit margin all that much (as per the Time article I referenced above, insurance typically pays 35% of the Chargemaster prices). I do expect that the Hospital bill for the room to go up a bit, as that you can't 'outsource'.