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A Closer Look at Health Care Fees

If you have ever walked out of a hospital and wondered why you have to pay thousands of dollars for a simple procedure, you are not alone. The costs of health care in the United States have never been higher. There are a number of factors that go into the cost inflation ranging from administrative to external influences.

There’s a Lot of Tests

Hospital CostsEach time a doctor makes rounds to see a patient in a hospital they routinely suggest certain tests. Many of these tests, however, serve no purpose to helping the patient heal or recover. Instead, they are a laundry list of fees that the hospital racks up. Some doctors admit that they only order the tests because it is tradition or because they know the hospital is trying to cover themselves in a lawsuit prone society.

The Big Book Of Markups

Every hospital in the country uses a system for charging patients based off a filing system that is decades old. Each filing system is different, but the vast majority originated on a single decision made not by a doctor or a supplier but by an accountant within the hospital. These figures are increased annually to account for inflation, yet are tremendously lucrative. A single gauze pad, for instance, may cost seven dollars, while an aspirin may cost twenty dollars. These markups all add up quickly since there is no accountability for price increases and almost never price decreases, even if a hospital can get the products for less cost.

Non-Profit No Longer Applies

While everyone believes that much of the money that goes into a hospital pays the salaries of doctors, this is only part of the truth. While a surgeon may command nearly a million dollar salary, this can pale in comparison to the hospital administrator or CEO, who can earn several million dollars annually. Most of this is based on a bonus system of how much money they can bring in. A prime example, recently in the news was Michelle Obama’s $316,962 salary to  handle “community affairs” for the University of Chicago Medical Center. Since many hospitals are non-profit, they are able to avoid a large amount of taxation while still raking in huge profits.

Insurance Is Willing to Play Along

Since the high costs of hospital bills are often reduced by an individual’s insurance, people with insurance are less interested in reforming health care costs. The reality, however, is that their premiums are high for the same reason that hospital bills are high. In a strage twist of reality insurance companies actually like high hospital bills because it encourages more people to buy insurance. Then the insurance company negotiates special rates for its customers or has limits that hospitals can charge so the rate the insurance companies actually pay is lower than what the hospitals charge.

You Can Negotiate Your Bill

Many people who do not have insurance or do not have adequate insurance are unaware that a hospital bill is not a binding document in the same way that the bill from a restaurant is. Many hospitals have staff on hand in the event that a patient wants to negotiate their bill, yet the overwhelming majority of health care patients do not bother to do so, usually because they are unaware the practice exists. It also pays to read your bill carefully because you will often find that you are charged for things you never received. Many attorneys offer negotiation advice and services after a sky-high hospital bill in order to help a client get their medical payments down to a lower level.

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Image courtesy of cooldesign / FreeDigitalPhotos.net

Comments

  1. Jim Plante says:

    Negotiate the bill.
    My wife was admitted from the ER for an overnight observation. The front-desk lady asked me to come to the front an put “something against the bill.” I asked what the total bill was. “$13, 300,” she said. I laughed in her face. “I’m not going to pay you that much. Have your finance people call me Monday (it was a weekend.) We’ll decide then what a fair price is.

    Wife’s insurance is $5,000 deductible, but only if she’s admitted for a whole day. She was discharged in 23 hours–not enough hospitalization to trigger coverage. Finance gal called back Monday, all in a dither because “Your insurance isn’t going to cover ANY of this!”
    “Yep,” I said, it’s $5,000 deductible even if they do, and that’s more than I’m going to pay you in total.” (I had decided, for the services rendered, that $3,000-$3,500 was about right.)

    “Well,” she said, “since you’re self-pay, you get an immediate 50% discount. Then there’s (another) discount, and if you pay within 14 days, you get another 10% off that, so the total bill is $3,300. You’ve already paid $200 against it, so you owe us $3,100.”

    “I’ll be down in 10 minutes to pay you,” I said.

    You may want to negotiate even if you’re insured. Had the insurance company become involved, I’d have been on the hook for $5,000.