The Cost of Care

Do you have a story about a medical bill that was higher than you expected it to be? Or a time when you wanted to know how much a medical test or treatment might cost and couldn’t find out?

Costs of Care, a nonprofit group based in Boston, is offering $1000 for anecdotes like these that illustrate the importance of cost-awareness in medicine. Judges will include former U.S. Health and Human Services Secretary Michael Leavitt, Boston surgeon and New Yorker writer Atul Gawande, and former Massachusetts Governor and Democratic Presidential Candidate Michael Dukakis. According to Dr. Neel Shah, who is directing the contest, “Using everyday examples from across the country, these stories will highlight the need to make healthcare prices more transparent.”

Submissions should be no longer than 750 words and are due by November 1st. More details are available here.

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45 replies »

  1. You have plant a very significant concern. What you said really spoke to me and I hope that I can learn more about this. I am yet to find anything as enlightening as this on the web. I am completely convinced with his thoughts.

  2. In response to “Practice Admin’s” post shown below:
    “Why not do the same thing with the total cost of a car purchased at your local dealership?”
    Posted by: Practice Admin | Sep 14, 2010 10:05:52 AM

  3. I could make a living by getting a cut of what I could save people by advising them, sending them, reviewing bills, etc., but that is not the point.
    We are trying to solve the problem caused by about 300 million people wallowing in a medical cost swamp of totally unforeseen proportions. You have to overlay the political reality of our world onto the situation–so you are not going to have your 3-5 years to straighten this mess out (have you offered your services to Dr. Berwick)?
    What do you propose that can make a change given the political realities this country faces? I am certainly not saying I know, because the public policy changes I might favor have as much chance of happening as your free market.

  4. “and my point is that the mess is so egregious that the free market no longer has any chance of fixing it.”
    I would disagree, the free market could clean this whole thing up in 3-5 years. I could fix Medicare in 6 months. It’s political inaction and incompentence that made and exasperates the problem. Free market hasn’t been given a chance since 1965, how do you know it won’t work?
    “My point is simply that these efforts will not make a meaningful difference in our overall cost structure.”
    Every year I add clients where I cut their cost 30-40%. That is not the norm but to dismiss the possibility of solving these problems for no reason is wrong. Why can’t we take what works in the private market and use it to fix the public mess? Once the public mess stops dragging down the private system they will improve even more.

  5. I know how expensive prescription medication can be. I just want to tell people out there that there are ways that you can save on the cost of your prescription medicine. http://www.Medicationcoupons.com is a website where you can search for your particular medicine and download and print a corresponding coupon. This website is free to join and they list both otc and prescription meds.

  6. Here is a cost of care story:
    Think it will win a $1000? Offer it to the surgeon shot by a patient’s son because the doctor did not fix the mother’s terminal disease!
    This is a poster child for things to come, unless we all repudiate it as what it is: expectation and entitlement gone wild!!!
    People get sick and will die. This story pisses me off for several reasons, the biggest being family members who think they can dictate the course of care! Pay attention to this crap, colleagues, cause there will be copy cats until proven otherwise!

  7. If the doc documents the patient refused to follow-up, then how is that not removing the risk? Self-pay upfront, recommendations documented, and if the patient follows them fine. If not it is on the patient–not the MD. Where is the personal responsibility anymore? It is like a bunch of children in adult bodies.

  8. Nate–I have as much history as you-maybe more. Agreed that public policy created this mess–and my point is that the mess is so egregious that the free market no longer has any chance of fixing it. The market’s chance of operating with any potential for efficiency went out the window long ago. There is nothing wrong with shopping for the best deal, as your anecdote shows, and I also agree that many are insensitive to the costs. My point is simply that these efforts will not make a meaningful difference in our overall cost structure. We have too many physicians prescribing too much care in the wrong places, and likewise too many hospitals attempting to provide too much inpatient care at too many locations. The market might change this by the end of another decade, but it might not. As an example, in the Northeast, critical access hospitals receive significant reimbursement incentives from Medicare and Medicaid to continue providing inpatient care with an average daily census of less than 10, while other inpatient facilities are only 20-30 miles away. Critical access designation makes sense in IA or ND or MT, but not in the crowded and dense Northeast. Just a tiny example of policy that is flawed. The whole payment system only insures that the mess continues.

  9. “Often times it is the patients that bear the brunt of Health Care expendentures.”
    You don’t read much do you Gary? in 1965 americans paid 50%+ of all their healthcare bills. in 2007 it was down to 18% or less. It has been decreasing constantly, so no gary it is not the patient paying the bill. They pay premium and next to no bill.
    As an example of how Neel’s thought does actually play out I suggest to someone they order their very expensive MS drug through Canada. Originally their Cleveland Clinic doctor went nuts making up all sorts of BS. When it was explained to him that to fill it in the US cost 5000+ per month and through Canada was only 1800 and it was a choice of not getting it or Canada he became more suportive and agreed to try it. Its very easy when your detached from cost to champion the best option, when you see all the facts though it makes a difference.
    botetourt you seem to lack any history of healthcare, it was strong public policy that created the curve the last thing we need to fix it is more.
    Margalit, go to any of the other 99.9% of doctors who do take self pay. Your argument is like asking if I should give up dating becuase Jessica Alba won’t take my phone calls.

  10. Simple. Pay by credit card or cash upfront and then you get service. No problem.

  11. “My wife was just refused an appointment with a specialist for a consult because we are “self pay”.”
    “My office will not usually accept “self pay” patients-. ”
    Considering these statements, would any “free-market/personal-responsibility/consumer-driven” advocates care to explain how exactly is the advocated solution supposed to work?

  12. Barry–you are spouting things that won’t happen, and don’t make a lick of difference. Price competition will not bend the curve when the supply of healthcare in every corner of this country is so overwhelming (a few exceptions, maybe). If market forces were legitimate in this industry, the curve would have “bent” years ago. Bending the curve will take very tough public policy changes that are still many years away. What does transparency mean–charges? costs? insurance reimb amounts? net or gross of co-payments, deductibles? What about other bills in the pipeline-might affect deductible or co-payment? They haven’t invented the computers that it would take, and only a small fraction of health purchase decisions would be made using these data even if were producible, available, and affordable.

  13. Docserious;
    Wow, what do you do with patients with an HSA and high deductible plan? I have a 10K deductible, for instance, and my HSA is pitiable enough so I just pay for most stuff out of pocket and yes, I do question tests ordered. So far I have not had trouble; perhaps because I am an M.D. and maybe the docs think that makes me both reasonable and able to pay. (: I do think a physician should be able to articulate a reason for ordering a test before I will agree to have it. (For instance, what about follow up with re-x-ray in a few months for the pulmonary nodule if they won’t have a CT scan, with careful documentation?)

  14. My office will not usually accept “self pay” patients-.
    They often refuse to go for extra tests like CT’s when necessary (noncalcified pulmonary nodule) leaving you liable if it turns out to be malignant. If you need a consult many specialists will not see them, leaving you treating something (a fracture or arrhythmia)that you are not comfortable treating.
    Most of us feel it is too risky.

  15. Mark,
    I think the problem is usually self pay=no pay so the MD isn’t willing to take the risk. Maybe if you paid upfront then you would get service. Good luck.

  16. I think doctors are well aware of the cost of medical care. My wife was just refused an appointment with a specialist for a consult because we are “self pay”. I am assuming that they have high charges and that they don’t think we can afford to pay them or we might complain and ask for more reasonable charges.

  17. To bend the cost curve, we need to educate both patients and referring doctors to care about costs even when insurance is paying all or most of the bill. To do that, we need robust price and quality transparency tools available to patients and referring doctors as well as narrow network and tiered in network insurance products. Such an approach should help to steer business away from hospitals and large physician groups whose costs and reimbursement rates are high because of their market power and not their care quality. If the high cost providers lose enough patients, they will be forced to either lower their rates or eventually go out of business. At long last, employers are finally showing more interest in narrow network insurance products whether their employees like it or not. It’s about time.

  18. Im agree with Dr. Shah comment
    Why not do the same thing with the total cost of a car purchased at your local dealership?

  19. We are much too late in this broken system to try to make sense of costs v. charges v. reimbursements. There is no sport in finding “abuses” to post to a website. Lynn–the whole issue of costs vs. charges has never been handled properly (going back to early 70s) because the true costs of inpatient care were never acknowledged by the system. Even in the late 80s, hospital “room rates” in most places were a few hundred dollars per day. Fully costed, those rates would have been well into the thousands. Hospitals at that point were well into shifting costs internally to outpatient diagnostics. This has accelerated and compounded over the years (and now outpatient charges are well over 50% of revenue for most hospitals), so the charges most see are ridiculously overstated relative to cost on an individual basis (e.g. CT, MRI). Even now, HMOs are paying many hospitals well under $2000/day for med-surg patient days. The final point to this whole mess is that in spite of this ridiculous charge structure, most community hospitals are lucky to scratch out a 2% operating margin. Patients see only a small part of this broken system when the get an MRI or CT, or go to the ED–and assume, like many of the people posting, that hospitals and physicians are making out like bandits. Everyone forgets that our government payers are paying well below their programs’ COST–not just less than charges. In my state many hospitals receive less than 60% of cost for Medicaid patients, and maybe just over 80% from Medicare. The commercial/HMO patients and their employers make up the difference. There is no grand plan to rip off patients by hospitals or doctors–just a bunch of dedicated people trying to keep the hospital afloat while wrestling with a broken payment system. One other question to ponder–one that would reduce costs in the long term–why do we have and need so many inpatient facilities? We will drive an hour without hesitation to a shopping mall, football game, or other entertainment venue without a second thought–but we all want our local hospital to be within a short drive, even though we may never be admitted to a hospital. As lengths of stay and admissions decline, inpatient facilities are becoming true white elephants, and we spend a lot of capital and operating expense keeping so many underused facilities afloat. This is a public policy issue completely absent from current “reform”. To “bend the curve”, we need to provide patient care in fewer places (and ask Americans to assume much greater responsibility for their own health). I am getting off track from the main subject, so I know I have said enough.

  20. Most of the time the quality or the cost doesn’t really matter for some people as long as they see the results on their health problem.

  21. @Lynn – thanks for pointing out that prices, charges, and costs are different (and not even necessarily correlated). Although we are strongly motivated by the societal cost of healthcare, we have found that doctors at the bedside find macroeconomic cost considerations too abstract. Instead we are trying to reframe the cost debate in terms of how the decisions a doctor makes impacts the patient directly in front of them.
    @Margalit – it is true that some irrational and expensive costs are not within the control of the doctor. However, doctors have a tendency to order many tests that do not help patients get better (see my interview today on NPR http://t.co/NZ8Zk1c about why doctors do this). According to the Congressional Budget Office this accounts for $700 billion in wasted money each year. At the same time, we know that medical bills are the leading cause of personal bankruptcy. Our goal in helping doctors become more cost aware, is to reduce the amount of tests doctors order that don’t help patients get better – not to take away care that patients need, nor to reform the insurance system.

  22. Lynn……thank you for your post. Finally some facts about charges, prices, reimbursements, and costs.

  23. I don’t quite understand what the purpose of this is. If the treating physician is shown that what he is about to order will cost the patient, say, $5000 because he is not insured, or he is out of network, as opposed to $200 for a patient that has insurance and is in network, are you expecting the physician to go ahead and order for the well insured and perhaps find a second best option for the uninsured patient?
    What was that doctor in jd’s story supposed to do? Go back and search the ED for an in-network doctor?

  24. Cost of care? What you requested are stories about charges for care, which are the prices most people/patients see on their bill. The first bill is usually a summary of subtotals by major area such as room and board (general nursing), x-ray or imaging, OR and recovery, pharmacy, medical supplies etc. Patients must then request a detailed bill. This is not what health services costs.
    The well known secret in healthcare is that no one knows what care actually costs, we just sort of know what Medicare methodology says is the charge to cost ratio. This allows hospital managers to “guess” what their costs are.
    So the first thing I would like to know is in fact what specific healthcare services and goods “cost”. There is a difference between prices, costs and charges. Prices are what the patient sees. Charges are what the third party discounts. Costs are what providers expend for labor, capital, and operations. As a health economist this may seem trivial but it is important.

  25. twa, keep taking your cheap shots to get dissenting views to go away so the choir of “hear the lie enough” can win out!
    This is a lame post. Just try to keep the spotlight on the minority doctor population who are greedy and then try to shine it on the rest who aren’t. Well, there seem to be some of us who are shining it back on you charalatans!!!
    You can’t fix a system without having all the participants be involved in responsibe changes. Politicians are at the bottom of the list, and yet they think they are at the top demanding the changes.
    All of you who support this mentality are idiots! As I have said before, you deserve the misrepresentation you return to office. November 2 won’t cure the problem, but it hopefully will be the bolus first dose for effective change.

  26. Dr. Shah,
    Why not do the same thing with the total cost of a car purchased at your local dealership?

  27. After reading your web site, it seems that you are looking for stories to use to educate clueless doctors that the decisions they are making actually cost people money. However, all of my stories are of conscious decisions by doctors, hospitals, labs, etc. to overcharge and over bill. They are stories of deliberate greed, not of unconscious, inadvertent and inconsiderate overuse of medical care.
    I don’t think my stories would find a very receptive audience with your doctors.

  28. Unfortunately, I have a lot of stories of abusive overcharging in just the few short months we have been back in the US. The URL links to one “simple” story of my sole encounter with the health care system but I also have a bunch more involving my wife which I will submit (with her permission) to this web site.
    We have been charged between 4 and 9 times the Medicare rates (where I have been able to decipher the bills). Other bills are just inscrutable. Medical billing seems to follow the “greed is good” mantra with charges from hospitals, doctors, labs, consultants all at absurdly and seemingly arbitrarily high levels.
    I am reminded that capitalism is a contest between the greed of the seller and the gullibility of the purchaser. With health care, the lack of transparency and high level of obfuscation put the purchaser at a distinct disadvantage. Greed is rampant.

  29. The issue isn’t just how much we are charged, but what we get charged for. I have had medical bills that no one could explain to me, not even the provider. I have had bills that started out in the thousands and then upon request of further clarification magically began to decrease. So it is not a question of “percieved” over-charging.
    We have a long way to go to get to the kind of transparency that allows consumers to make rational decisions about care options.
    ExhaustedMD – get off your high horse and go take a nap. You remind me of my 3 year old son when he gets over-tired. Cranky and not thinking clearly.

  30. @Margalit, we are not attempting real-time price adjudication based on the belief that exact dollar and cents figures are not necessary to change provider ordering behavior. Instead we will provide reconciled order-of-magnititude estimates, organized according to clinical workflow (chief complaint, differential diagnosis, etc.)
    This information will be disseminated with a mobile application as well as in order-entry systems with the hope it helps drive more cost awareness among providers.

  31. The unfortunate reality of US health-care system is that patients end up paying for many different administrators and bureaucrats on top of the doctors and nurses. Sad reality is that insurance companies spend more money on lawyers, adjusters, auditors and lobbyist to try to deny patient benefit rather than spending that money to pay the doctors and nurses. The cost is passed on as high insurance premium for the patients.

  32. A hospital bill must be subjected to deductions, but it requires that everything be audited—all medical records and charges, including a charge master. it’s worth the time and effort to review hospital bills carefully.

  33. I believe the whole health care bill that is being promoted is an absolute scam!
    Reading about it quite extensively, it’s a complete rip off, on the American people.

  34. This is such a nice thing to see that they care about people’s lives. But I have to add, is it too little with $1000? I mean, how many people is going to get enough benefits from this while the high authority is getting millions from tax money?

  35. This is such a nice thing to see that they care about people’s lives. But I have to add, is it too little with $1000? I mean, how many people is going to get enough benefits from this while the high authority is getting millions from tax money?

  36. This is such a nice thing to see that they care about people’s lives. But I have to add, is it too little with $1000? I mean, how many people is going to get enough benefits from this while the high authority is getting millions from tax money?

  37. This is such a nice thing to see that they care about people’s lives. But I have to add, is it too little with $1000? I mean, how many people is going to get enough benefits from this while the high authority is getting millions from tax money?

  38. It is the most sensitive issue .On how to lower the medical costs. Our health-care system in its current form is not up to that job. The report shows that while Americans were tightening their belts and conserving their funds, the federal government was spending more and more money.

  39. Neel, other than the essay, can you describe what Cost of Care is planning on doing? I looked at your website and I don’t quite understand the model.
    Are you going to present costs to the patient, or hospital if the patient is uninsured, for various treatments in the ED, just before they are performed? Are you expecting physicians to check costs in emergency situations, or is the patient supposed to check them?
    Is this similar to a formulary check for prescriptions, or is it a real-time pre-adjudication process with the payer, where deductibles, copays and networks are considered?

  40. Jonathan (JD) – thanks very much for your astute comments. Your out-of-network story is exactly the type of example we are trying to capture with this initiative. Would you be willing to share it with us? Submissions are typically about a page and should be sent to contest@costsofcare.org
    In terms of disseminating the stories, you are right – this will be the most important part. We will indeed use the internet, but will also organize a high profile live event this Spring featuring commentary from a group of thought leaders that will focus on the finalist submissions.

  41. Not a surprise: Partners is conspicuously absent from the list of sponsors.
    I wish you the utmost success in building this awareness, and I hope you have some tricks up your sleeve for disseminating the stories in a broad and attention-grabbing way. I suppose the internet is the most likely venue.
    The biggest problem in my experience, is out-of-network costs. It happens all the time that a person thinks they are seeing an in-network provider and they aren’t (out-of-network physicians at in-network hospitals) or they know they went out of network but didn’t expect to get hit so hard by balance billing or retail prices.
    We recently had an extra $2,000 in charges for an emergency room visit for our daughter when the physician who came to treat her was out-of-network. Of course, this being the emergency room of an in-network facility, we didn’t think to ask.
    Contrary to what Gary implies, insurers don’t usually win when this happens. They still pay as much as if it was in-network much of the time (including our case). The only sure “winner” is the doc who earns in the top 1% of Americans…and even he loses if the patient is so broke or gets so mad they don’t pay.

  42. What is the purpose of this posting?
    So you have examples of what people PERCEIVE as overcharging? How about doctors giving examples of being under-reimbursed for life saving interventions?
    Seems to cancel each other out in the end, EH!?

  43. I have to admit that No one really knows what the number of levels there are in prying money from the Patients cold dead Hands. Health insurers and providers have contractual agreements that literally have Hefty discounts that limits and /or eliminates their contribution.
    Often times it is the patients that bear the brunt of Health Care expendentures.Being further exploited as the Cash Cows of Modern Medicine.
    I believe that most people find medical Bills excessive and I doubt any doctor could satisfactory justify medical expenses to their patients.
    Furthermore I would be surprised if most doctors have a clue regarding the cost associated with their procedures and services. I think the doctor should bill the patient at the time of service,As a reminder of what is being Charged.
    Still it would be beneficial for everyone to be cost conscious. Most patients have to be or they will be paying for years for a simple visit.The consequence for being cost conscious in the short term often ends in major costs associated to delays in seeking services.
    We have insurance and are penalized for using it. We delay proceedures because of our reluctance to owe for excessivly inflated procedures.
    Everyone has a budget and Health Care is a Budget Buster in the friendliest since of the word.Of Course it would be wrong to undermine the profession as a whole.When it is the Bloated and excessive collobrations of numberious branches of the Health Care Industry,That inflates the cost of Care,proceedures and products.
    Health Care has more reasons to hide than given any real thought about transparancy.