Medical Larceny

I don’t usually share the family mail, but this letter from my son Ben to the CEO of the curiously named “Daughters of Charity Health System” illustrates two important issues: (1) how inadequately covered many insured people are, and (2) how the medical system shamelessly gouges us. Yes, we need universal health insurance, and United Professionals, the new organization I helped create, energetically advocates for it. But universal health insurance won’t work, at least not for long, if the medical system treats it as an open vein gushing with profits.

The odd thing is that many politicians and pundits believe that the only way to control health costs is to get consumers to limit their consumption of health care – as if an appendectomy, for example, was a kind of self-indulgence. In my son’s case, we have someone who is vividly aware of his health care costs, if only because he bears so much of them. His letter is not only an individual complaint but an act of good citizenship. We all need to be prepared to blow the whistle on medical larceny.

But where are the regulatory agencies that should or could be watching for this kind of thing? How can we build price controls into universal health insurance in a way that does not limit necessary health care, or fall unfairly on the poor? Obama, Hillary, John and the rest of you: Do you have some answers for us?

As of today my son has received no response from Mr. Issai.

Robert Issai
President and CEO
Daughters of Charity Health System
26000 Altamont Rd.
Los Altos Hills, CA 94022-4317

Dear Mr. Issai:

I recently suffered from appendicitis, and was admitted to the emergency room at Saint Vincent Medical Center in Los Angeles on November 10 of last year. I underwent an appendectomy and was released from the hospital on the morning of November 12. I have no complaints about the quality of my care. My surgeon, Dr. Charles Hunter, was excellent, and with very few exceptions all of my encounters with hospital staff were as pleasant as they could be under the circumstances. But I received a profound and unpleasant shock shortly after returning home. The bill arrive, account number XXXX, if you’re curious.

I was charged — am being charged, I should say, as I have not yet paid — $15,833 for the care I received during the 40-odd hours I spent at Saint Vincent. I then received additional bills from the surgeon, the anesthesiologist, and the emergency room physician for their respective services. (The latter is asking for more than $800 for the approximately three minutes he spent at my side.) I am a freelance journalist, and I am fortunate enough to have health insurance at the moment. Blue Cross covered $12463 of your bill. But $3370 is still a considerable sum of money, so I telephoned the billing office and asked for an itemized account of the charges.

I hardly know where to begin. Perhaps with the $21 I was charged for each of ten 10 ml saline IV flushes. I do not know the going rate for a 500 ml bottle of saline solution at CVS, but considerably less than $105, I am sure. I was charged $80 for each of three 50 cc doses of .9% sodium chloride, a few spoonfuls of table salt, and $154 for each of twelve one-liter bags of sugar water. For my pajama pants — of such flimsiness that I would be hard-pressed to find their equivalent at a 99-cent store — I was charged $35. Given such absurdities, it seems hardly worth mentioning that I was charged $982 for an hour and three quarters spent unconscious on a gurney in the Recovery Room and $1768 for each night of room and board. Rents are high in Los Angeles I know, but that is nothing less than an outrage.

A few weeks later, I was doing a little research to find out where to send a friend who had broken her ankle in New Mexico and needed surgery in Los Angeles. One of your own orthopedic surgeons advised me to use another hospital. "Saint Vincent is notorious for overcharging its patients," he said. This was not news to me. Another example: my friend was charged $1.05 for a 2 ml dosage of fentanyl at the ER in Albuquerque. At Saint Vincent I was charged $71 for a 250 mcg injection of the same. Assuming a standard 50 mcg/ml concentration, you overcharged me by a factor of approximately 28. I can only congratulate you for your chutzpah.

Mr. Issei, if you were in any other line of work, no one would hesitate to call you a thief. I understand the complexities of our healthcare system better than most do, but this is inexcusable, and all the more so in an institution that masks itself with the gospel of charity. Medicine is a noble profession. You render it shameful. I am sure you have better insurance than I do. I wish you good health, and poor sleep.

Yours sincerely,

Ben Ehrenreich

Comments

[Anarcissie]

BE: '... The odd thing is that many politicians and pundits believe that the only way to control health costs is to get consumers to limit their consumption of health care – as if an appendectomy, for example, was a kind of self-indulgence. ...'

It isn't the work performed that is the indulgence, it's the money spent on it. Someone, somewhere, somehow has to limit the money supply for any product or service, or the price will expand without limit. If consumers / clients / patients won't or can't do it, then the role will pass to authorities like insurance companies or the government. But the insurance companies and government personnel often have more in common with those taking the money than with those putting it up, as we can see from the grotesque charges mentioned in your story, and our insurance bills. This is why many people fear government medical insurance: it's Blue Cross with guns. You can choose not to buy the insurance, but you can't choose not to pay taxes.

[Hattie]

Our family is on the slipshod Kaiser plan. By today's standards it is not expensive, but we have to monitor everything they do.

[Megan]

Like Hattie, my family and I have found that we have to closely monitor all bills from our insurance company (Aetna for my parents, a branch of Aetna that covers university students for me). What infuriates us is that often a simple inquiry, like what I assume your son did initially to obtain an itemized bill, results in dropped charges. Like if you push them at all, all of a sudden their story changes. Which just makes me feel like I, and all the other clients (individuals and hospitals), are perpetually being ripped off. Which we probably are.

[Anarcissie]

It is not probable, it is just about certain. Several years ago when I went to pay for a minor medical procedure, they asked me if I was paying for it myself or using insurance. When I said "myself" they cut the bill to one-third of the nominal amount. I didn't fight it too much.

The question is what we're going to do about it besides say "Bad, bad."

[Stephanie Anagnoson]

A friend of mine had an appendectomy at a different hospital in LA last year for a mere $30K. I wonder what the itemized charges looked like.

[Chris B]

It is astounding that more people do not realise that they are getting a bad deal - somehow the line (from the AMA and others) that 'public health care will cost more' is allowed to stand in the face of the irrefutable evidence provided by Europe/Canada etc. Until the people are able to challenge this entrenched assertion, and counter the big money that is spent propagating it, there can be no change.

[Anarcissie]

The evidence from Canada and Europe can be refuted by pointing out that Canada and Europe have different cultures, internal conditions, and especially different "social contracts" from the U.S.

[Tim Worstall]

"One of your own orthopedic surgeons advised me to use another hospital."

That's why you don't want a single provider system like Canada or the UK. With competition between providers you actually do have somewhere else to go.

[barbsright]

Bens' bill sounds more like a new car 'sticker' that has a load of 'fake' items to push the price up. Mr. Issei must have started out as a new car salesman!

[Anarcissie]

Tim Worstall: 'That's why you don't want a single provider system like Canada or the UK. With competition between providers you actually do have somewhere else to go.'

That doesn't seem to work very well either, as the discussion here shows. Although we can't necessarily import the Canadian or German system, the fact that the people of those countries pay half per capita what we do for better service is a telling critique.

The situation is somewhat mysterious because one would think competition between providers of medical care and insurance would lead to better, cheaper products. But one should not forget that there is a great deal of authoritarianism in the form of state intervention and mystification in the medical system. That's how you find a bottle of saline solution costing $105, and pay for it, too. (You may not be buying it for yourself, but you're buying it for other people if you have insurance or pay taxes.)

[realpc]

Barbara E. wants to leave everything up to intelligent, wise, enlightened government adminstrators. Find some smart, greed-free individuals and let them figure out the correct prices. Simple.

She thinks the free market is evil, so we can't rely on that.

I know of examples where these problems did not occur, where insurance covered most of the bill. As long as hospitals are private and do not have a monopoly, patients can avoid the ones that cheat.

As the letter says "One of your own orthopedic surgeons advised me to use another hospital." Doesn't that answer her question:

"But where are the regulatory agencies that should or could be watching for this kind of thing?"

The regulatory "agencies" are freedom and information, and laws preventing monopolies.

[realpc]

I agree with Anarcissie, only competition can help prevent these abuses. The evil free market is the lesser of the other evils.

[Ron Davison]

We have no free market forces to lower prices. We have no government regulation or oversight to lower prices. Rather, we have insurance companies that chase after individuals who generally care little about comparing prices and are not in a position to do much about it if they could. (And of course, folks without insurance.) It is as though we’ve designed a system that takes the worst from market and regulations and pasted it together. Odd.

But we must be doing something right. We're in terrible shape and yet living longer than we have at any time in history.

[chris]

An American friend of mine developed cancer while living in England. After an initial diagnosis and considerable counseling on what to expect from the British socialized medical system, my friend and her English husband came to the US for treatment.

They made this decision despite having NO HEALTH INSURANCE. They had money in the bank. But no insurance.

They met with every doctor who treated her and explained the situation. They asked for each doctor's most favorable rates for each procedure.

In the end, her surgery and post operative care cost them $140,000. That figure was about HALF the retail cost. HALF.

Every doctor accepted compensation below his/her stated rates. They challenged every hospital bill.

Healthcare is expensive because Americans want every conceivable ailment covered in full. Yet MOST people between the ages of 15 and 65 don't have too many serious health problems. And we don't reward good preventative health practices -- like no smoking, minimal drinking, healthy eating and exercising.

It was hardly a shock or surprise when a colleague of mine keeled over dead a couple of years ago. He was way overweight, a huge drug and alcohol abuser who never exercised and he smoked. He was about 45 when he croaked.

Fortunately, he didn't run up a lot of healthcare bills on his way to his sudden death. He simply croaked and that was that.

[A Canadian]

The Canadian healthcare system isn't perfect but if I need medical care I know that the cost to me will be minimal. I may have to pay for a private/semi-private room, but that's about it. The only drawback to the Canadian system is that you are put on waiting lists for surgery etc., and the wait can be pretty long. My friend was postponed at least 4 times for surgery for breast cancer. No system is perfect, but at least in Canada ALL OF US have access to health care regardless of whether you have insurance or not. Of course we pay for it with taxes (which are pretty high, especially in Quebec where the money is spent on the language police rather than on "important" things like health care and education). Either way i'm willing to pay the price for peace of mind when I get sick.

[Steve St-Laurent]

Canada's focus is not on having a single provider of health care. Increasingly it's on having a singler payer, which is where the benefit of scrutiny comes into play. Interesting to note that a kidney transplant costs less here than an appendectomy does there. And the daily rate for a bed at St. Paul's [Vancouver, BC] is about half that at St. Vincent's, fully paid by the public system. I guess you have to pick your saints carefully – and thank heaven I was lucky to be born in a country that sees something as basic as health care as too important to be left in the hands of the pathological "free markets."

[Anarcissie]

Ron Davison: '... Rather, we have insurance companies that chase after individuals who generally care little about comparing prices and are not in a position to do much about it if they could. ...'

People could do something about it -- the middle-class ones, at least, could form cooperatives to operate HMOs, or even make the market work for them on the private insurers. But not more than a small minority seem willing to break out of the passivity, ignorance and dependence of the patient's role in the present medical system. The kind of people who will ask why a bottle of saline solution costs $105 and make trouble about it are few and far between. But the price of saline solution will rise until someone does make trouble about it, or at least stops buying it.

I don't see how having the state act as the single payer is going to solve this problem.

[AnnS]

"$154 for each of twelve one-liter bags of sugar water"

Those are maade by Baxter Travenol - they have about 95% of the market in the world.

The price for those when my husband was in house counsel with them several years ago was $1.98. Giving them some for inflation, BT would now be at about $2.65 a bag. That is the delivered to the door of the hospital and stocked price.

I once had a client who lacked insurance and was being sued by the hospital. As part of discovery, I demanded an itemized bill. I then demanded and recieved the wholesale cost of the items which the hospital had paid. I then informed the hospital's counsel that we would go to trial over the amounts charged since when one went in the door, one did implicitly agree to pay a reasonable amount for services but that did not mean $35 for a Tylenol nor $15 for box of kleenex or $100 for an IV bag which cost them $2.

To say that my opposing counsel was terrified of the idea of trying to explain such charges to a jury was an understatement. They promptly agreed to settle for basically 15 cents on the dollar - and take very low payments for the next 5 years.

____

By the way the idea of the consumer 'negotiating prices' or comparison shopping for healthcare is a joke in most areas of the country. How does one 'negotiate' with the only hospital within 70 miles about the cost of a broken ankle or appendicitis?

[Anarcissie]

AnnS: '... By the way the idea of the consumer 'negotiating prices' or comparison shopping for healthcare is a joke in most areas of the country. How does one 'negotiate' with the only hospital within 70 miles about the cost of a broken ankle or appendicitis?'

Through collective action beforehand -- by forming, for instance, a cooperative medical insurance company or HMO. What built and administered the hospital was a form of social organization. It can be replaced by a different kind of social organization.

[Joanna]

I believe that some hospitals pad their insured patients' bills to pay for the costs they incur from treating uninsured patients. Then, of course, there are the massive salaries and junkets for board members (recently revealed in a number of cases here in Minnesota).
The idea that someone who has to go to the ER for appendicitis, or symptoms of a heart attack for that matter, can comparison shop beforehand, is a sick joke. What happens in fact is that people without health insurance DO comparison shop: go to the doctor or eat? go to the doctor or pay for child care? then we end up bearing the costs when their illnesses have to be treated through the emergency room.
When my daughter, who has Spanish citizenship, has needed emergency health care in Spain (stitches, a broken bone) or routine care for ear and throat infections, we have always received prompt, excellent care for free. Free. Spanish care is so good that Swedes are known to establish Spanish residence in order to get knee replacement surgeries done there because it is better. Yes, there are issues of waste, or complaints to be made there as here, but if you are unemployed in Spain you do not need to WORRY about your health care. Think what a difference that would make to the lives of so many millions of people here.

[KateCoe]

IF Ben was "researching" surgery for his "friend", why did she end up getting free care at an overburdened County-USC emergency room? How long did she wait between breaking her ankle and her "emergency"? Here's his op-ed in the LAT:
http://www.latimes.com/news/opinion/la-oe-ehrenreich14feb14,0,6987237.story?coll=la-opinion-center

[J. X. Rodriguez]

I believe he said the girl friend didn't have either the money or the insurance (several thousand dollars?) to cover the medical care involved. Not much of a mystery there.

[Mel]

I had the same sort of experience recently. It never occured to me to write to the hospital and complain. I guess hospitals bank on people like me who just accept the fact that a hospital can charge us 10 even 20 times the retail value of things we can get at the pharmacy. In my case, it was a pregnancy test costing in the three digits. :(

[realpc]

Why are insurance companies willing to pay inflated hospital prices?

[Anarcissie]

They don't. _You_ do.