Where's The Money Going?

~ Laura

price

If you’ve ever had to stick up a cut in the emergency room or had an operation or popped out a kid knows that medicial billing, you know that medical billing is batshit crazy. The New York Times has a nice article that details the insanity.

But the article doesn’t answer my big question. Where is the money going? Is it going to the executives? Doctors? To subsidize the uninsured patients?

I have the same questions about our higher education system.

Published by Laura

5 thoughts on “Where's The Money Going?”

  1. I don’t think it’s an answerable question to ask “where the money is going” in the context of the funds generated by one element of the budget (the amounts that a hospital ostensibly charges for particular procedures/equipment). The answer, like with the taxes we collect is that all of the money (or at least the part collected after insurance negotiations, government payouts, and uncollected bills) goes to the bottom line of the hospital.

    If you compare our health care costs to other countries, I think it’s geneally found that Americans pay more for every segment of health care costs, for pharmaceuticals, for medical devices, for doctors, . . . . Doctors, as one, usually protected category, make much more in the US than they do in most other countries.

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  2. My roommate had a very simple mole removal-type outpatient surgery. On the bill, she was charged two facilities fees, two doctor’s fees, etc (all at about $500/each). Why? Because the procedure was billed as two separate surgeries: one to cut her open, and the other to stitch her up. A bit of research found out that this sort of billing is illegal in multiple states, but not in the one we lived in.

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  3. I had an outpatient procedure performed a couple years ago. I was in the hospital overnight, but not actually as an admitted patient; there was some special name for the status. The hospital bill alone was $17,000 (excluding surgeon, lab, anesthesiology, etc.). My primary care doctor, who works for the same medical system, didn’t come close to guessing the hospital bill & called it hugely unethical. (The insurance company negotiated fee that the hospital ultimately accepted was about $2,700.)

    Partly it’s to gouge the uninsured, partly it’s to pay administrators (just as schools get a lot of scrutiny about their ratio of administrators to teachers, so should hospitals), partly it’s a self-reinforcing cycle of hiring billing people to get more charges past the insurance company bill checkers (red queen problem), partly it’s the inefficiencies of having a third party payment system, partly it’s consumer ignorance coupled with our inability to parse the system & fees in advance, partly it’s the separation of charges. Imagine if you went to buy a car, then had to purchase & negotiate separately for tires, paint, windows.

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  4. I once worked for a health care consultancy that specialized in analyzing hospitals’ patient mix and helping them understand how to make more money. They were all about finding fully insured patients. The idea of pursuing efficiencies was generally not entertained. Individual consumers weren’t informed enough to really be able to tell the difference; doctors resented anyone telling them how to deliver care (including advice on reducing infections, for example, but also advice on how to minimize cost); government programs were consistently squeezing so tightly that it made more sense to simply try and avoid having too many government-covered patients.

    In the end, just like with higher ed, it’s people buying a service that’s paid for by others. (Patients obtain services paid for by insurers; students obtain services paid for by their parents, or via mythical student loans.) So there’s no brake on the pricing, no point at which a ridiculously high price will actually deter purchase.

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