Distorted hospital charges make case for reform

May 9, 2013 

Jonathan Oberlander, professor of social medicine at the University of North Carolina at Chapel Hill, gets today’s prize for the latest clear thought about the state of American health care. Responding to data released by the Obama administration that shows wildly varying prices for the same procedures in hospitals in the United States, Oberlander said, “It’s another indication that we have a nonsystem of health care. It’s ‘Alice in Wonderland.’ It just doesn’t make sense.”

His statement is one thing that does make sense. Unlike other industrialized nations in the world, American health care seems driven entirely by money: money for hospitals, for drug companies, for doctors, for insurers. Sometimes it appears patients are defenseless pawns in the game, except of course that it’s their insurance that drives the “nonsystem.”

The News & Observer and The Charlotte Observer last year did a series of stories showing how nonprofit hospitals make huge profits thanks to tremendous markups on drugs and procedures. So extreme were some of the markups that some members of the General Assembly are trying to pass legislation that would force hospitals to disclose their charges, what they get from insurance, from the uninsured and from Medicare and Medicaid. Transparency would help and it might make it easier for patients to understand their bills.

But will it lower costs? It’s hard to see how. Now the Obama administration’s data has revealed the nonsensical variations in billing, and there are some good examples in North Carolina.

A lower limb joint replacement done at Raleigh’s Rex Hospital costs just over $54,000. At UNC Hospitals, which owns Rex, the procedure costs $41,415. Medicare pays UNC Hospitals $20,610 for the procedure, but pays Rex an average of $12,515.

At Presbyterian Orthopaedic in Charlotte, the procedure costs $69,034. At Duke University, it’s $43,551.

It’s hard to understand how anyone could read the previous stories and this one and conclude that health care reform isn’t needed. If anything, more radical common-sense change is imperative. The crazy quilt is enriching some in the medical field, especially hospitals and their administrators and drug companies and their executives, but it’s scaring ordinary people who worry they’ll lose their insurance, and later forfeit everything they have because of an illness.

Instead of stopping reform, as some North Carolina politicians have talked of doing, it’s clear more must be done. How about a system instead of a “nonsystem”?

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