Published in UT San Diego, March 26, 2013
“I’m mad as hell and I’m not going to take it anymore,” said Howard Beale (Peter Finch) in the 1976 movie “Network.”
It takes a lot to get me angry, but a relative’s recent experience with a Los Angeles health care provider made me want to scream because I realized how powerless and helpless most consumers are when dealing with the health care system. This means there is a great opportunity for entrepreneurs who can solve this problem and deliver good customer service and transparency.
The bill that made me scream was $926 from St. Vincent Medical Center for an approximately 30-minute evaluation session for rehabilitation of a broken arm. The bill was reduced to $601.90 because the patient had a high-deductible Aetna policy. What if she had been uninsured? What if she hadn’t had any insurance?
What upset her most was when she checked in for the treatment, she was not told how much she would have to pay out-of-pocket. If she had known, she would have walked out the door.
With the patient’s permission, I called the St. Vincent’s communications department, and their response was that she should have asked. “Upon request, St. Vincent Medical Center will provide the chargemaster for any service before the patient’s treatment. The medical center’s admissions consent form, which every patient must fill out before their visit, includes a section that states the patient has the right to review the chargemaster before the visit. St. Vincent Medical Center is deeply committed to providing the best care and service, even as we operate in this challenging and changing environment,” is the statement that I received from a hospital spokesperson.
Her experience is not unusual and exemplifies the vulnerability that patients often feel in our health care system. What business survives in which “you can ask for the price” is buried in the fine print? When you shop at Nordstrom or Vons, the price is clearly marked. On the Internet, it’s easy to compare the price of a TV at Best Buy and Costco. But pricing for many medical treatments exists only in a black hole that is called the “chargemaster.”
This patient had paid about $350 in co-payments to the outpatient surgery center that set her arm. She thought: How could 30 minutes of physical therapy cost her more than $100? She learned an expensive lesson. Next time, she will definitely ask, but what if she’s in a car accident and an ambulance takes her to the nearest hospital with a pricey chargemaster? And who/what exactly is a chargemaster? This is not someone I want to meet in a dark alley.
The same day that I talked with my relative, I learned about the famous chargemaster — a hospital’s internal price list — from Steven Brill’s excellent story, “Why Medical Bills are Killing Us,” that ran in the March 4 issue of Time magazine. In his research, Brill said he found that almost every hospital has a chargemaster but “there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills.” Furthermore, he contends, “no chargemaster’s prices are consistent with those of any other hospital, nor do they seem to be based on anything objective — like cost — that any hospital executive I spoke with was able to explain.”
Furthermore, each insurance company and Medicare negotiate a discount off the chargemaster, so I may pay a different price than you do. Overall, the chargemaster prices are so high that nonprofit hospitals are compensated as if they were high-risk entrepreneurs, according to Brill.
The health care entrepreneur who devises a transparent system that provides patients with easy-to-access information and comparisons on quality and price is going to make a billion dollars. Send us that business plan.
Rule No. 168
When they have you over a barrel, and you need that barrel, then indeed they have you over a barrel. Until the next time.