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Wednesday, August 26, 2009

Cost shifting--is that why hospitals charge so much?

If health care costs go down significantly, as providers order less unnecessary tests, and as tests and procedures come down in price due to the incentives of actual competition (OK, I'm making a rather huge and optimistic assumption) hospitals will see less money coming into radiology departments and labs. When there are more primary care doctors available to see patients, and patients seek care earlier in the course of their illnesses, there will be less patients seen in emergency rooms, and hospitals will see that revenue go down.

Or will they?

If we truly get universal healthcare, the amount of uncompensated care that hospitals have to cover will be dramatically reduced or completely eliminated. Right now if an uninsured young man is brought into the emergency after a gunshot wound, that man will get top of the line trauma care, with specialists called in, multiple imaging procedures, needed surgery and medications, and the hospital will simply eat those costs. It is not clear to me how great of a loss of income hospitals will face if there is comprehensive and cost saving health care reform.

At this point our hospital runs in the black, though not far in the black. When I look at the hospitals charges for tests and procedures I see that they are significantly higher than I think they should be, comparing them to the same procedures done at doctors' offices or the same procedures a few years ago. But hospitals spend huge amounts of money on uncompensated care, or poorly compensated care, and high charges for tests and procedures are part of the income that offsets these losses.

For a health care reform solution that saves significant amounts of money to allow hospitals to survive, there must be universal health insurance, and that health insurance must adequately compensate hospitals for their services.

While everything is on the table, medicare and medicaid payments to providers (doctors and hospitals) needs to be on the table as well. I know these payments are barely adequate or inadequate to pay for a doctor's services in the office, and I expect they are also close to inadequate in their payments to hospitals. In order for patients who are insured with a publicly funded plan such as medicare or medicaid to be assured access to care these programs must pay providers for what they do.


marry said...

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Anonymous said...

This is briliant and informative. I was just wondering why my Isurance paid $ 800.00 for 1 hour emergency room visit when my little daughter needed a small stich. I still think it is way too much money for simple procedure like stich which any trained nurse can perform.

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