A View of Healthcare Costs from the Inside
courtesy of Modern Creations
When I began my medical career more than a decade ago, people were already very concerned about the skyrocketing cost of healthcare. However, as much as everyone knew medical costs were high, no one in my profession seemed to know why. None of my colleagues could answer even simple questions about what, specifically, was costing so much. This seemed to be a real problem: how could we begin to control these costs, if even the people in the field didn't know what they were?
Why didn't we know? To start with, unlike any other business in America, almost all of the financial transactions in healthcare are hidden from the providers as well as the patients. We order tests, procedures and medications to manage our patients, but very few doctors, or other healthcare providers, have any idea how much any of those things cost. Patients only rarely pay directly for these services and payment for any service varies substantially from different payers. Hospitals have separate billing departments that are far removed from anyone ordering or performing tests or procedures. No one directly involved with patient care has any notion of the charge or reimbursement for their service. Even most private doctor's offices contract billing companies, who just send them a check each month from the total amount collected, leaving them no notion of the actual charge or reimbursement for an individual service they provided.
This is a big problem -any cost that is hidden or confusing is easy to inflate. Because of that (and because I hate not knowing what's going on) I began gathering information on how much my patients were charged for their medical care. It was not easy. As an example, to find out how much someone would have to pay for a medication I would often have to phone the pharmacist and provide all of the information regarding the patient, drug, dose, directions and number of pills before even the pharmacist knew the price. I've also spent years collecting information from individual insurance companies regarding reimbursement rates, phoned radiology departments, laboratories, billing departments and even had patients bring me their bills. When anyone has to put this much effort over so many years into finding something out, you have to ask how much trouble someone has taken to hide it.
Like everything, the information is out there. It's just buried so deep that it's very hard to find. The purpose of this website is to dig it up and lay out as much of the information about medical costs as possible. With this information, I'll try to explain how and why most of the costs are hidden and suggest ways in which you can avoid being overcharged.
Different sections of the site deal with the cost of different aspects of healthcare: medications, office visits, hospitalizations, tests, procedures and insurance (click on the link at the bottom of each page to get to the next section). Sometimes exact costs are elusive because of the many factors that go into the cost of, for example, an MRI or an X-Ray or an office visit, where only advice is sold. In these cases, I'll give the typical formulas for billing and insurance reimbursement as an indication of value.
Expect this site to keep changing. I intend to continually collect and enter data (and, when possible, explain it) because I strongly believe that the only solution for hidden costs are to reveal and explain them.
I promise that each section on each type of medical cost will have a lot of information that seems bizarre. It seems bizarre because it is. Remember that when people talk about the "US healthcare system," they often like to point to it being a "free market system." What's bizarre is that nothing I'm going to describe looks very much like a market at all. As I said, no one appears to know what anything costs--not the people buying (the patient), not the people selling (the doctors and hospitals). The cost of a product is a central feature to any market system. If no one knows what these costs are, how can this "market" be "free"?