Ridiculous and seemingly arbitrary price increases are a defining feature of the US $ 4 trillion health care system, and a key reason Americans pay more for treatment than anyone else in the world.
But seeing price increases of up to 675% imposed in real time, automatically, by a hospital’s computer system still takes your breath away.
I was able to see this for myself after a former operating room nurse at Scripps Memorial Hospital in Encinitas shared with me screenshots of the facility’s electronic health record system.
The nurse asked me not to use her name because she now works at a different medical facility in Southern California and is concerned that her job may be in jeopardy.
His screenshots, taken earlier this year, speak for themselves.
What they show are price increases ranging from 575% to 675% automatically generated by the hospital’s software.
The staggering increases are so routine that the software apparently even displays the formula it uses to convert reasonable medical costs into billed amounts that are much, much higher.
For example, a screenshot is for sutures, that is, medical thread, also known as stitches. The Scripps system put the basic “cost per unit” at $ 19.30.
But the system said the “calculated charge per unit” was $ 149.58. This is the amount that would be billed to the patient and their insurer.
The system included a useful formula to reach this amount: “$ 149.58 = $ 19.30 + ($ 19.30 x 675%)”.
You read well. Scripps’s automated system took the actual cost of the sutures, imposed a seemingly preset margin of 675%, and produced an amount billed that was orders of magnitude higher than the actual price.
This is independent of any additional charges for the doctor, anesthesiologist, X-rays or hospital facilities.
Call it an institutionalized price increase. And it is seemingly widespread because other hospitals across the country, including UCLA, and around the world use the same or similar software.
The former Scripps nurse said she decided to take photos of the system as she watched skyrocketing price hikes being imposed while a patient was still on the operating table.
She said one of her jobs in the operating room was to keep a running tally of all supplies used during a procedure. As each item entered the system, it automatically entered the actual cost and tabulated how much Scripps would bill for it.
“I understand that hospitals have overheads,” the nurse told me. “But marking something like 675% sutures is insane.”
Another screenshot showed the price of an antimicrobial solution to clean the patient’s wound. The cost per unit for Scripps was $ 73.50. The amount billed was $ 496.13 – “$ 496.13 = $ 73.50 + ($ 73.50 x 575%)”.
The blades of a cutting tool used by the surgeon had a unit cost of $ 98.53. The price billed by Scripps was $ 665.08 – “$ 665.08 = $ 98.53 + ($ 98.53 x 575%)”.
“I started asking questions,” said the nurse. “They told me that if we don’t mark things like that, the insurance companies won’t give us what we want.”
This is evidence through the looking glass of something that I have repeatedly written about.
Healthcare providers routinely ignore the true cost of treatment when calculating bills and instead concoct nonsensical figures to increase reimbursement from insurers.
For the millions of people without health insurance, those sky-high prices are what they have to pay (although most hospitals, including Scripps, tend to offer discounts in such circumstances).
I recently wrote about a Valley Village woman who was billed $ 809 by a UCLA-affiliated clinic for a plastic boot for her broken foot. He found the exact same boot on Amazon for $ 80.
In other words, you were charged a profit margin of almost 1,000%.
But talking about it in the abstract or after the fact is one thing. Seeing that a hospital’s computer system causes these price increases while treatment is being administered makes the practice all too real.
A dose of Floseal to limit bleeding for a surgical patient had a base cost of $ 142.81, screenshots from Scripps show. Hospital charge: $ 963.97 – “$ 963.97 = $ 142.81 + ($ 142.81 x 575%)”.
I shared the screenshots with Scripps and asked why such seemingly staggering price increases are built into the hospital’s automated system.
Janice Collins, a spokeswoman for the hospital, declined to respond beyond confirming that the higher amounts shown in the screenshots reflect the hospital’s “cargo manager,” the inflated list prices used to haggle with the insurers.
Collins sent me a statement characterizing Scripps as a victim of circumstance, a reluctant gamer in a healthcare system “that was established decades ago and is out of date.”
“Health care providers, including Scripps, negotiate with health insurance companies what we will be paid for these services,” the statement said.
“Health insurance plans determine separately from health care providers what they will cover versus what patients will pay,” he said. “Neither the insurance company nor the patient usually pay the list price.”
None of this is inaccurate. But Scripps’s response simply danced around the edges of the problem at hand – that is, a major medical facility deliberately and consistently imposing huge margins that in no way reflect its true costs of treatment.
The Scripps software is from a Wisconsin company called Epic, which says its programs have compiled medical records for more than 250 million patients around the world.
Epic’s healthcare systems include MyChart, the patient portal used by many hospitals, as well as a wide variety of applications for clinical settings.
Epic’s clients include UCLA, UC San Diego, UC San Francisco, Stanford University, Johns Hopkins University, and Yale University.
“Automate revenue and coding of clinical activity to reduce administrative expenses, avoid lost charges, reduce A / R days, and increase total revenue,” says the company’s website. (A / R is short for accounts receivable, the time a payment is pending).
I asked Epic if individual customers, including Scripps, request that the company tailor its software to their own needs by setting margins up front.
“We do not comment on our clients’ proprietary systems,” a spokesperson responded.
When asked to comment on his own hospital’s Epic system, Phil Hampton, a UCLA Health spokesman, was just as reluctant.
“We know that health insurance, billing and costs can be complicated,” he said, “and we encourage patients with questions to contact our agents for clarification, facilitate resolution with insurers if necessary, and receive financial assistance”.
Scripps’s use of Epic’s software sheds new light on my last column about the hospital, which involved Scripps billing a patient nearly $ 80,000 for a procedure that Medicare said should cost less than $ 6,000, a margin of more than 1,200. %.
The bill included a charge of approximately $ 77,000 for “medical services,” which Scripps said covered “charges for technical services” such as “installation, surgical room, equipment, support staff.” That is, the routine costs of running a hospital.
No single facility can be held accountable for America’s dysfunctional profit-focused healthcare system. The issues raised here apply to all medical facilities in the country.
But a common aspect of all US hospitals is the desire to keep their prices secret, to prevent patients from knowing how badly they and their insurers are being scammed.
Perhaps now that a pinch of sunlight has been let in, we can have a more honest conversation about how to fix things.