I’ve commented numerous times in previous articles about the high cost of healthcare in this country. Specifically: facility charges and prescription drugs.

I am not, and never will be a fan or proponent of government regulation, and certainly don’t want to see the federal government set prices for any consumer durable goods or services. But there’s no way that Washington will ever fix the cost of health insurance until the cost of healthcare gets fixed.

There’s a misconception by most people that hospitals lose money solely on Medicare. While Medicare reimbursements vary among hospitals e.g. critical access, short term acute care, non-profit, etc., the reality is that the charges that we see from hospitals are 100’s and sometimes 1,000’s of times higher than their reported costs and Medicare reimbursements. Hospitals must file with the Centers for Medicare and Medicaid (CMS) a report indicating their costs by department. This includes all overhead, depreciation, operations, etc. This report is the basis of their Medicare reimbursement.  When a hospital can charge 500, 600, or 1,000 times more than their cost or their reimbursement, is this fair?  When the average profit margin on Medicare alone of 6.5% to 15% nationally, and they still charge these kind of rates, is that fair? Who can afford this type of charge for a particular service?  What we all need is what’s fair – fair to both the hospital and fair to the consumer.

I had a personal incident where I needed an MRI. At the local critical access hospital, the cost of that MRI was $3,500.  Two hours away – if I were to drive, it would’ve cost $2,000, and if I had driven to Denver (4 hours away) it was about $1,000. Instead I had it done at a freestanding imaging center and paid cash of $360. Why can one hospital charge so much more than another when the cost of the equipment and operating the equipment is roughly the same?  Because they can.

Do you know where your tax dollars are going? Hospitals and other facilities are charging the same high rates and prices to public entities such as schools, municipalities, counties, and other publicly funded entities through insurance companies and their PPOs. My tax dollars and your tax dollars are going to these public-sector groups to pay for all kinds of costs and services they provide including the health insurance that they provide to their employees.

Why should our tax dollars go to pay for the exorbitant and rapidly rising cost of health insurance, which include the services that a hospital has absolutely overcharged us for? Why isn’t that public-sector entity that’s spending our tax dollars do a better job of negotiating with the hospital instead of taking the completely uncompetitive PPO contract from insurance companies?  Because they don’t know what they don’t know.

Insurance companies don’t care about our healthcare costs, they just want to make a profit and will charge the related premiums necessary to do so. There is no way that a hospital can win the battle in the court of public opinion to justify their high charges. Constituents need to better understand and question these charges and make public-sector entities and officials accountable for what they’re purchasing. After all, those officials act as plan fiduciaries.

In my opinion, another thing that needs to occur is communication and education by the public with hospital Board members. Board members are generally business community leaders and in many cases, have no idea of what is being charged to the public by their hospital. And why would they?  As a Board, they are simply giving direction to the operation of the hospital. I have spoken directly to numerous hospital Board members, and they are totally unaware of the cost of healthcare that’s being charged by the hospital in their community. They have no idea of the methodology or have substantiation for outrageous prices. Business leaders need to talk to these Board members so that a course can be charted for more affordable healthcare within their community. It’s not about insurance companies. It’s about the cost of healthcare.

In fact, why aren’t we all challenging the status quo about what a facility charges?  Why is a hospital charging 800% or more of their reported cost or Medicare reimbursement to a public-sector group (or any other consumer for that matter) when they have double digit profit margins on Medicare alone?  Because they can. But it’s our tax dollars – and by informing our public officials that we can’t afford it any longer, perhaps the elephant in the room needs to stand up and be accountable for their charges – which they can’t justify – and will begin the change to charge more fair and reasonable prices.

Sometimes we don’t know what we don’t know.

Want to learn more and how you can reduce your costs?  Contact me at [email protected] or 970.349.7707