- Del Meyer, MD - https://delmeyer.net -

Hospital Charges

by Del Meyer

Last week a patient came in and told me that since his last visit, two years earlier, he had a gallbladder operation. He thought I would be interested in the bill his insurance company received, of which he brought a copy. He was in the hospital for about 23 hours, and the bill was $14,000. That calculates to about $600 an hour, even while asleep.

That struck me as rather strange since the Medicare fee for a five-day hospital stay for a gallbladder operation was $8700 several years ago. How can a one-day stay be nearly twice as high as a five-day stay?

Medicare controls inpatient hospital charges but not outpatient charges. Hence, hospitals have tried to gain the money lost on inpatients by doing as much outpatient work as possible. “Inpatient” stays of less than 24 hours are treated as outpatient by Medicare, and their restrictions, therefore, don’t apply.

The possibility of having a gallbladder or other organ removed without a large incision (requiring a week’s stay in the hospital) came about because surgeons developed a laparoscopic procedure performing the removal through a small tube inserted through a puncture in the abdominal wall. They naively thought they could reduce healthcare costs by reducing the hospital stay from five days to one day. The surgeons tell me that it takes greater skill to remove an organ through a small tube, but their charges didn’t change significantly for this advanced procedure that allows patients to return to work weeks earlier. Hospitals, however, used it as a means of recapturing twice the cost of a five-day bed stay in just one day.

This reminded me of when I was a new medical director of a respiratory care department in the 1970s, and my chief technician noted that the price of oxygen had increased from 75¢ an hour to $3 an hour. He determined the cost to the hospital was about 25¢ an hour. His technicians only recorded the hours the patient was on oxygen. The hospital computer calculated the oxygen charge.

We went to the administrator in charge of our department and he was totally taken aback as to why we were even concerned. Looking at me with a stern eye, he asked “Isn’t getting the money ‘in’ the name of the game?” He then told us that Medicare, Medicaid, Blue Cross and Blue Shield were all paying the $3 an hour and he had already authorized a further increase to $3.50 an hour! He said, “We haven’t even found the ceiling that these carriers will pay.”

Hospitals don’t see this as an unethical problem. They see no problem in charging whatever the traffic will bear. They don’t see costs as the determining basis for the charge. And there is no competition to keep everyone honest.

The name of the game really is “Get the Money In,” or at least as much as possible. A colleague from India told me that her father had a coronary artery bypass surgery at a hospital in Sacramento. He got the hospital bill for $120,000. Being a corporate executive in his country who could easily pay the charge, he consulted his daughter who told him that hospital charges are very inflated in this country and he should offer to pay one-half. So he walked into the hospital business office with his check book, showed them the statement, and said he’d settle the account for $60,000. They accepted the check and marked the bill paid.

In this case, the surgeon who did the operation and managed the life-threatening care received his $6,000, which is about 10% of the cost (or 5% of the original hospital statement). Even a manager of a piece of real estate may get 10% of the revenue. Isn’t managing one’s life/death challenges more valuable than managing an apartment house?

Years ago I was managing the tragic result of a boy who broke his neck in a diving accident. His spinal cord was transected at the third cervical vertebrae. He would never breath again on his own. The internist who was managing the overall care, while I was managing the life support system, told me one day after a month of ventilator support, that it was unreasonable for two doctors to submit a bill to the insurance company. He suggested that he submit a charge one day and I submit a charge the alternate day. In those days, the management of a critical patient, as I recall, was about $40 a day which included the bedside evaluation once or twice a day, plus availability by phone to the nursing staff 24 hours a day. We each continued to see the patient daily and manage our respective care but submitted our $40 every other day. The hospital charge in those days was about $800 a day. Knowing the hospital’s position on trying to reduce oxygen charges, we knew the only way to save money was our own charge.

Healthcare costs have gone out of sight. But many of us are still working at cross purposes. It was managed care, unfortunately, that was required to reduce hospital charges. This was a double-edged sword. It also managed the captain of the ship, causing an exodus from medicine. What a waste of a quarter million dollar education.