Re "After ER trip, it's hospital bill shock," Column, May 10 and "Medical rates range off the chart," May 9
David Lazarus' column on a child's dog bite that resulted in an emergency room bill of $1,721.75 exposes a flaw in the business of healthcare.
Hospital officials who were quoted in the news article do not claim that they know the actual cost of each service rendered. They don't know the amount of time a nurse spends on a particular patient and do not have a way to account for the costs of a particular procedure. Prices are a result of what they think will produce the most revenue.
Few businesses would venture to control their costs without having a cost-accounting function. Until now, hospitals and clinics have found that too burdensome. I've worked with more than 30 California hospitals on reducing their costs, which is a challenge because we have only indirect measures.
Maybe finding out real costs will be a benefit — if unintended — of healthcare reform.
The writer, an adjunct professor at the USC Viterbi School of Engineering, teaches classes on productivity improvement for healthcare.
Lazarus is right that transparency is needed in medical pricing. Posting prices would allow patients to decide what they can afford and to buy insurance for what they cannot.
But the current system isn't insurance. It's a payment scheme in which every visit is adjudicated by insurers, inflating costs.
Lazarus was unfair to the emergency department at Encino Hospital. Patients don't pay for that bag of saline alone; they also pay for the thousands of dollars an hour it costs to maintain a 24-hour emergency room, not to mention the subsidy for patients who cannot pay.
A soda might cost 50 cents at a big-box store but $2 or more at a fancy restaurant, which has to cover its higher costs. If the restaurant had to serve diners who couldn't pay or had to deal with insurance claims for every meal, charging $20 for the drink wouldn't be unreasonable.
Thomas Einstein, MD
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