Several weeks ago, while I was travelling in Ohio’s Amish Country, there was an article in the Baltimore Sun by Kelly Brewington and Jamie Smith Hopkins about some research out of Dartmouth College’s Center for Health Policy Research showing that urban teaching hospitals like Johns Hopkins Hospital and University of Maryland Medical Center are far more costly in delivery of care than the national average. There was much huffing and puffing about the article, with administrators at both facilities trying to justify the costs.
But as usual, there are problems with the reporting. The biggest one: the report analyzed the rates paid by Medicare, not the actual costs of delivery. The researchers apparently chose to interpret the rates paid by the Centers for Medicaid and Medicare Services (CMS) as the cost for delivery of care. I challenge that assumption.
One might ask why I challenge the assumption. It’s quite simple, because it is one of my chief complaints about health care in general in the United States: not one consumer has a clear idea of what the prices that hospitals and the services and practices associated with them actually charge.
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You cannot enter a hospital in the United States and ask for a price list. I know of no hospital (or doctor practice for that matter) which publishes “list prices” for procedures and services. That is because our system of health insurance in this country is intrinsically socialist (if not fascist) in nature.
Our health insurance is provided (generally) by our employer or the government. They provided a limited list of plans. The plans, which are really nothing more than large membership groups of physicians, labs, and patients, determine what physicians and labs we use. The plans negotiate what they will pay to these physicians beforehand, just as they negotiate what they will be paid by our employers beforehand.
We have situations where two consumers, both customers of the same insurance company, will pay two different rates for the same services to the same physician or hospital. That is a fact.
Never as the patient are we afforded with a list of prices before the fact. Never. Never are we afforded the opportunity to see and approve an estimate (like we might be with auto repair). Never are we afforded the ability to compare prices OR the value proposition between cost and quality.
So I question the methodology of looking at the cost of health care by looking at what practitioners and facilities are paid.
Furthermore, the study did not look at the fact that the cost of health care delivery in Maryland includes the overhead associated with “bad debt”, or non-paying consumers of health care. This goes beyond the cost of the bill to include finance charges to carry that debt as well as the processing costs – including financial counseling in some instances – to recover that debt. That is because Maryland is unique in the United States in using an “all-payer” system for financing health care, guaranteeing access to all Marylanders (and our sizeable illegal population). While the study compared Hopkins and the University of Maryland Medical Center to the Mayo Clinic, the Mayo Clinic does not have the albatross of Maryland General Hospital hanging around its neck, either.
Personally, I think that hospitals in Maryland should be required to file an annual report that lists – by CMS code – the cost for each procedure, medicine, and service provided. The Maryland Hospital Association, working with the Healthcare Cost Review Commission, should provide a standard format to determine what cost means (typically, it should include materials, facility costs, and labor costs I would think). That would provide health care consumers in this state the opportunity to compare the costs for procedures across facilities.
Facilities that truly have higher costs – but also have better outcomes – can justify those costs if they publish the actual cost. Those that can’t should be closed, or restrict their service list to those areas where their prices are competitive.
Finally, it would have been appropriate for the Baltimore Sun to look at other hospitals in the state. Its not just teaching hospitals that provide health care in the state of Maryland.