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More on the High Prices of U.S. Hospitals

May 20, 2012

Last week I wrote about the comparison between the average hospital costs of U.S. hospitals compared to other developed countries. The bottom line is that U.S. hospital average length of stay and total hospital days per adult per year compare very favorably to the rest of the world. But the cost of a stay in an acute U.S. hospital can be four times higher than other developed countries such as France. Two other recent reports shed more light on why this price differential is so marked.

The first is a report from Medicare that shows a wide variance in bills submitted for similar hospitals. One example given were two hospitals in Missouri 15 miles apart whose average bills were $19,247 vs. $15,290.

The second is a report from the Center for Studying Health System Change, which found that many insurers are still able to pass along high hospital prices to employers, which really means the wages of their employees. Hospitals in the studied regions were able to market themselves as “must-have” facilities that insurers and employers were unwilling to walk away from.

When will the payers of healthcare summon the courage to just say NO and walk away from a bad deal?  These hospital systems have successfully scared local employers and employees into paying inflated rates. The hospitals have convinced their local markets that people will die horrible deaths if they don’t use the marquee facilities. The report estimates that private insurers paid hospitals 16% more than their costs in 2000, and that this fear tax has increased to 34% by 2009 (the difference in the true cost vs. what the hospitals successfully charged local insurers).

Please, employers and employees of the rest of the U.S. economy, get a spine, grow a pair, apply whatever aphorism you’d like to mean you will stand up to the healthcare industry in your hometown and insist that prices for hospital care come down to the level of the rest of the world.

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