Health Care Horror - Employee in Stitches
I’m in the construction business. A few weeks ago, while on a jobsite, an equipment operator decided that rather than walk a hundred yards or so, he’d scale a six foot chain link fence. Bad idea. In fact, stupid idea. Had his foreman seen the act, he would have stopped and reprimanded him. My foreman did not see the climber until he’d ripped open his upper arm on the top of the fence. A co-worker was enlisted to dispatch the man to a local hospital where he received seven stitches. The bills came to me; a total of $1941.90 for the emergency room and to clean and stitch up the wound. Just for fun, I looked up what these services might cost under Medicaid. I found several line items for treating and stitching an “intermediary wound.” With an emergency room fee, the Medicaid reimbursement might range from $219.57 to $516.02. To determine the precise reimbursement, you must be able to differentiate among the several “emergency fee-intermediary wound” selections. On the Arizona AHCCS (Medicaid) web site, there is no such direction.
This little accident points out exactly what is wrong with our health care system. The hospital that treated my employee, because it was a workers’ compensation claim, will be paid its top, inflated rates for the half-hour or so it took to care for my employee - $1941.90. Had he been an indigent Arizonan, they would likely be owed, technically, the least costly reimbursement or $219.57, or 11% of what I must pay. Had the patient been over 65, the hospital would likely be entitled to something slightly more than the minimum Medicaid reimbursement, something in the $300-400 rage. And the hospital, knowing that there is little or no scrutiny of reimbursements, would likely seek reimbursement at something below the maximum, but above the minimum reimbursement, perhaps in the $400-500 range. A private insurance policy, say a PPO or HMO, would likely pay some 40-50% of the top inflated rates, much of which would be passed directly to the patient in the form of out of pocket minimums, emergency fees and co-payments. An uninsured person would be charged the full inflated amount, but might skip out on the bill and pay nothing or settle later for something far less.
Where else in a supposed free market economy can the price of an identical service range from $219.68-$1941.90 and every iteration in between and where those receiving the service pay between zero and (in theory) the full amount?
By the way, my employee did not see a doctor. He was treated and stitched up by a nurse practitioner. And he received one and a half days paid time off. Also, I’ve yet to receive the bill for the removal of his stitches. I’m guessing, that'll be another $600. Oh, and one final note: my worker's compensation provider is a state run GSE.
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May '10
Re: Health Care Horror - Employee in Stitches
This is so bad.
Why go in to business when it seems to be so much cheaper and less onerous to be either a government employee or unemployed?
Aug '11
Re: Health Care Horror - Employee in Stitches
Medicare and Medicaid are simply price controls, which of course, don't work. Never have, never will. Much as many would like to think otherwise, medical services cost money and receiving them requires payment for those costs. We can no more say that because medical care is necessary, it should be free. Food, water, shelter these are all necessary and we accept that these things are not free. The prices we pay for these things cannot be set arbitrarily without regard for their cost.
We must differentiate between charity and entitlement subsidy. The former is good. The latter is corrupting.
Mar '11
Re: Health Care Horror - Employee in Stitches
Douglas Kimball:
Where else in a supposed free market economy can the price of an identical service range from $219.68-$1941.90 and every iteration in between and where those receiving the service pay between zero and (in theory) the full amount?
How about the airline or hotel industries?
Of course, in those cases, the individual customer who is paying out of their own pocket usually pays much less than the business customer who is being paid by somebody else. Those are pricing differences which make sense.
I can imagine a free-market based healthcare service where prices for identical treatments still vary from one customer to another. As long as there is still a market for price-conscious consumers to get a good value for their money, as is the case in the hospitality industries, I have no problem with that.
Aug '11
Re: Health Care Horror - Employee in Stitches
Mendel
Douglas Kimball:
Where else in a supposed free market economy can the price of an identical service range from $219.68-$1941.90 and every iteration in between and where those receiving the service pay between zero and (in theory) the full amount?
How about the airline or hotel industries?
Interesting comment, but not applicable. The difference is that the airlines and hotels set their own prices. Thye understand their revenue/cost model and can enhance their profitablilty as they approach breakeven capacity. Of course their's is also a highly competitive market and they may have other reasons to provide "subsidized" rates (comps for whales in Vegas) or very high rates (Berrmuda in June - the marriage month.) You are not likely to see the 9X+ difference in pricing every day, or even on the same day, if ever.
Jul '11
Re: Health Care Horror - Employee in Stitches
That is a pretty accurate set of stats for someone not in the business. The lack of transparency in cost infuriates me. The system is a rigged game. By the way you forgot to mention the illegal who uses a common name and a bogus SS# who walks out never intending to pay. Contrast that with a hard working poor Hispanic man who has his uninsured boy sewn up and gets stuck with full price. Really it is just insane.
Aug '11
Re: Health Care Horror - Employee in Stitches
In AZ we have the problem of the unwed mother, a persistent problem of the white and black underclass. This problem is spreading among Hispanics, legal and otherwise, who choose to remain unmarried so that wives and children can get housing, Medicaid, school lunches, welfare - the entire gamut. The system is gamed. Daddy is on-off part of the family, while providing cash support.
Of course, attempts to root this out are seen as racist and niggardly.
Edited on Dec 27, 2011 at 10:32amMar '11
Re: Health Care Horror - Employee in Stitches
Douglas Kimball
Mendel
Interesting comment, but not applicable. The difference is that the airlines and hotels set their own prices. Thye understand their revenue/cost model and can enhance their profitablilty as they approach breakeven capacity. Of course their's is also a highly competitive market and they may have other reasons to provide "subsidized" rates (comps for whales in Vegas) or very high rates (Berrmuda in June - the marriage month.) You are not likely to see the 9X+ difference in pricing every day, or even on the same day, if ever.
Agree with everything except the last sentence (I worked several years in the "hospitality" world and witnessed 10x differences in prices being paid on the same day).
My point is that varying prices for the same service are a common feature of the free market, and those of us who argue for a free market in healthcare should not pretend that any given medical treatment will suddenly cost the same for everyone once the market is liberalized. We should rather embrace supposedly "unfair" price structures as the most efficient method of delivering the most services to the most people.
Aug '11
Re: Health Care Horror - Employee in Stitches
Mendel
Douglas Kimball
Mendel
My point is that varying prices for the same service are a common feature of the free market, and those of us who argue for a free market in healthcare should not pretend that any given medical treatment will suddenly cost the same for everyone once the market is liberalized. We should rather embrace supposedly "unfair" price structures as the most efficient method of delivering the most services to the most people. · D
I'm with you on this. There are an unlimited number of ways that medical care can be priced - all negotiated at arms length between the provider and the payer or recipient. People and insurance companies should be able to shop around and find the best deal. Look at cosmetic surgery - that's an entirely competitive model. Prices there run the gamut. Of course, medical services are nearly infinite in their complexity and iteration, so it's tough to shop around. That's why it's best for the inovative free marketplace to find the best solution. Price controls have given us the mess we have and cannot be tweaked to make it better.
Aug '10
Re: Health Care Horror - Employee in Stitches
Have you ever considered it was the fence's fault ?
Have you forgotten your friends at OSHA ? Isn't there a pending investigation of this hazard ? And what about his co-workers, weren't they traumatized by this ? Shouldn't there be some on-site counseling for their hurt feelings ?
Heck,I'm just getting started.....
Re: Health Care Horror - Employee in Stitches
Where else in a supposed free market economy can the price of an identical service range from $219.68-$1941.90 and every iteration in between and where those receiving the service pay between zero and (in theory) the full amount?
College Tuition!
Dec '10
Re: Health Care Horror - Employee in Stitches
Third party payers are the problem in the variation in price. Though, as they negotiate with hospitals and providers, all end up with contractually agreed upon rates for services. That is not anti free market but it gets even more complex when fees are set as multiples of medicare rates and even they vary by region. I guess I do not have a problem with price variation for similar services as long as they were agreed upon beforehand.
I do think the solution to healthcare costs is making the first $2,000-$10,000(or more) come out of the patients own pocket with catastrophic policies to cover additional costs and prevent financial harm. That takes into account human nature and allows a return to patient-doctor relationships where costs are taken into account when practicing cost effective and defensive medicine.
Feb '11
Re: Health Care Horror - Employee in Stitches
Douglas Kimball
In AZ we have the problem of the unwed mother, a persistent problem of the white and black underclass. This problem is spreading among Hispanics, legal and otherwise, who choose to remain unmarried so that wives and children can get housing, Medicaid, school lunches, welfare - the entire gamut. The system is gamed. Daddy is on-off part of the family, while providing cash support.
Of course, attempts to root this out are seen as racist and niggardly. · Dec 27 at 9:53am
Edited on Dec 27 at 10:32 am
Same problem here in Texas
Dec '10
Re: Health Care Horror - Employee in Stitches
"Contrast that with a hard working poor Hispanic man who has his uninsured boy sewn up and gets stuck with full price."
Strawman Alert!
I never use insurance, or Workers Compensation. I talk to doctors and their office managers and get my best price, then pay for it. Then, I may submit something to see about any reimbursement I may have coming. That's how it used to be and I don't see any reason to change that. My parents paid my medical bills, then occasionally got some reimbursement. Then they taught me not to hop fences.
Somebody else paying the bill is the problem. Government, insurance, it doesn't make much of a difference.
Re: Health Care Horror - Employee in Stitches
Fascinating post!
And I agree with CJ 100% Insurance has taken competition out of the market, which is the problem.
I too paid my doctors directly for a few years, and saved a fortune not paying for insurance.
Dec '11
Re: Health Care Horror - Employee in Stitches
katievs:
Why go in to business when it seems to be so much cheaper and less onerous to be either a government employee or unemployed?
Excellent question and as a business owner, my answer (however misguided) would be:
I still believe I have greater control over my own destiny than if I was employed by somebody else.
With that said, I do not own a business that has extraordinarily high risk workers' compensation rates. DK is a brave warrior, indeed!
Jul '11
Re: Health Care Horror - Employee in Stitches
CJ Run
The race of the uninsured working poor doesn't matter but since I was contrasting that with an illegal alien I thought I'd use that race. Hispanics also happen to be the predominant minority where I live. I would hardly call it a strawman statement since I have seen the end results of medical bills from ER's , hospitals, and other medical entities and how the uninsured working poor get the highest cost. Many emergency situations do no allow for negotiation and most of the individuals do not have the savvy to enter in to them anyway. I wish there was just stated prices for services rather than such murky costs.
You are spot on in advocating price discussion and negotiations as well as overwhelmingly correct regarding the problems with the bills going away from the individual receiving the service.
Edited on Dec 27, 2011 at 5:48pmApr '11
Re: Health Care Horror - Employee in Stitches
Paul A. Rahe: Where else in a supposed free market economy can the price of an identical service range from $219.68-$1941.90 and every iteration in between and where those receiving the service pay between zero and (in theory) the full amount?
College Tuition! · Dec 27 at 3:50pm
This. Partly for similar reasons. I've worked on contracts in an Iraqi context where some similar price disparity was required for similar goods. Enough subsidies, regulations, taxes, and mandates can mess with anything.
Jun '10
Re: Health Care Horror - Employee in Stitches
One problem with negotiating for the best price when dealing with hospitals...most are owned by the same company. Only small doctor owned hospitals will offer more competitive pricing. Guess what, those are being outlawed by Obamacare.
Sep '10
Re: Health Care Horror - Employee in Stitches
First off, such minor injuries need not be treated in hospital ER's with costs of round-the-clock coverage, CT's MRI's etc. A walk-in clinic or doctor's office is as effective and much cheaper. I bet it is workmen's comp that requires an ER visit in the first place.
Secondly, hospitals must at least attempt to collect 'charges' from uninsured individuals who are not covered at contract rates. To the best of my recollection, federal and state insurance regulation requires it (lest the government or insurance fee schedule decrease further!) Since the government often pays less than the cost of care, to stay in the black, hospitals shift costs to other payers, especially those who pay cash.
This is yet another example of how government regulation/interference in a market creates all the wrong incentives for all concerned.
Apr '11
Re: Health Care Horror - Employee in Stitches
Seven years ago this week, my daughter had orthonoathic surgery, to correct a congenital issue. We were steeling ourselves for the possibility that it would not be covered under our insurance. Our oral surgeon urged us to apply for pre-certification, saying it was a crapshoot. His fee was $11,000, and we were prepared to get a second mortgage and negotiate a reduced fee for cash payment. His fee covered several preop visits, panoramic films, etc, and a 3 hour procedure which involved cutting and repositioning upper and lower jaw bone (gruesome). She spent one night in the hospital. Upon dismissal (or the next day, it is fuzzy), he met us at his office on Christmas Eve (the office was closed) to check on her and fix her rubber bands. All in all, I think $11,000 was a bargain, given his time and artistry (although $$$ to us). Blue Cross did pay - $3500, which I didn't think was enough, but that was the negotiated rate. It certainly changed her life. My physician friend said that just shows how much he loves his work. But think, if we negotiated a payment of $5000, he would have come out ahead.