Four Thoughts about THAT Time Magazine Article on Healthcare Costs

In an age when periodicals are shrinking to the thickness of grocery store flyers, TIME magazine last week unleashed more than 20,000 words (the length of a short book) attempting to unravel the mysteries of healthcare pricing. In “Bitter Pill: Why Medical Bills Are Killing Us,” the magazine released a torrent of examples attempting to prove that the healthcare provider billing system and processes are broken.

Much of the article is an indictment of healthcare industry chargemaster management systems. The author, Steven Brill, presents numerous anecdotes that show that healthcare costs are the equivalent of the infamous $400 hammer back in the 1980s. CDM, he says, is responsible for the $24 for a tablet of niacin, which you can buy in the store for five cents; the $84 liter of saline solution that sells for $5.16; the $77 gauze strip that one can buy for pennies.

For healthcare providers, we’ve seen these stories countless times before, although rarely with the vehemence that has been aimed squarely at what is in essence an accounting and billing system.

Brill’s solutions  to our high cost of healthcare?

1. Tighten antitrust laws to force hospitals with no competition to lower costs.
2. Tax hospital profits (or in the case of not-for-profits, surpluses) at a 75 percent rate and impose a tax surcharge on all non-doctor salaries above $750,000.
3. Outlaw chargemaster.
4. Stop pharmaceutical companies from reaping high profits on the drugs they create.
5. Reform tort laws to limit malpractice claims.

Needless to say our conclusions after reading this article are somewhat different, but no less valid. The book-length investigation does raise several valid points regarding healthcare billing that should serve as a call to action for healthcare providers. Among the areas that should be focused upon:

1. Improve transparency in healthcare pricing. Chargemaster is an internal pricing system, but the financial view presented to patients via their bill must be more transparent and reflective of the costs they incur. Transparency, however, will never resolve the high price of healthcare, so sticker shock by patients over medical costs will be with us forever.
2. Pass laws preventing patients from being under-insured. Several of the anecdotes highlighted in the Time article dealt with patients who were under-insured and found that during a medical crisis they did not have the funds or assets to cover their contracted portion of medical costs. While the Patient Protection and Affordable Care Act (ACA) will resolve the level of fiscal risk accepted by the newly under-insured, many insurance plans will be grandfathered, meaning that high-deductible, high-risk policies will continue to be available.
3. Continue to simplify charity care applications. In one example cited by Time, the patient had qualified for charity care but had failed to fill out the requisite paperwork (the patient claimed they had, but could produce no proof they had done so). Many healthcare providers are becoming more sophisticated and are developing tools to automate charity care applications (e.g., see this case study by Texas Health Resources, “Transforming Uncompensated Care Via Data Analytics”).
4. Increase public awareness of scofflaws and other cheats. Patients who are able to pay but refuse to do so are the source of much of a healthcare provider’s bad debt, which in turn has to be passed onto those patients who do pay. The public needs to be made aware of the drain these individuals place upon healthcare providers (without, of course, encouraging other patients to turn into scofflaws).