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by
Marty Makary
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April 2 - April 27, 2020
The American people are hungry for real prices, not the inflated “chargemaster” prices.
The absence of real prices also fuels the problem of surprise bills and predatory billing.
Critics of real price transparency have argued that patients do not use price information when choosing where to go for their care and, when they do, they may sometimes choose the most expensive service because they are not paying for it.
Sixty percent of medical care is shoppable, representing a large opportunity for competition to reward centers with high quality and fair prices.
The issue is not how many people will look at prices. It’s whether we as a country will empower proxy shoppers to drive value in health care.
Google should consider putting a hospital’s average “markup” on a hospital’s information card when a person searches a hospital.
financial harm should be considered a complication of medical care.
When you go to a restaurant and ask for a menu, you might be alarmed if the waiter or waitress were to respond by asking, “Who’s your employer?” If you then learned that the prices on your menu were much higher than those on menus given to other customers, you’d conclude it’s a dysfunctional market. Yet this is exactly what happens when you need medical care in our status quo system today.
Insurance companies like having secret discounts and networks.16 Those secret discounts are what insurance companies sell to employers who are essentially buying hospital services in bulk through an insurance company. Hospitals, in turn, rely on insurance companies to send them a steady stream of business.
Centers that initiated full price transparency saw a 50% increase in patient volume, a 30% increase in revenue, and an increase in patient satisfaction.17 People are sick and tired of the game.
The Funeral Rule,18 enacted by the Federal Trade Commission in 1984, requires funeral providers to offer itemized pricing information to consumers before they purchase any services.
She got sued—by the same hospital that employed her! The hospital won a judgment and garnished her wages—so her pay went from about $7.50 to $5.00 an hour to pay off the debt.
70% of them are cutting back on food, clothing, or other basic needs to pay medical bills.
“Carlsbad Medical Center is like 95% of the lawsuits here at the courthouse,”
We estimated that about one in five people in that small town had been sued by the local hospital and had their wages garnished. The hospital was holding Carlsbad’s citizens hostage to predatory billing practices.
“Well, how can the judge determine if the prices are appropriate?” The clerk shrugged. “When the hospital alleges that a bill was not paid, it doesn’t have to explain. The judge has little choice but to allow the garnishment.
She could not get basic answers to her questions: Can I get an itemized bill? What does insurance pay? And what am I responsible for paying?
Roswell doesn’t jack up their prices 15-fold, then take legal action to essentially shake down patients for their last penny. I checked to see if Roswell hospital has ever sued a patient and garnished their wages. The answer was no. Two towns, two hospitals—one ruining the lives of the people they serve, the other loyal to the mission of medicine.
Almost every person we talked to in that town had experienced the hospital’s shock-and-awe billing practices.
“I thought hospitals were a refuge for the sick and injured—that’s why I went into medicine,” he said. “But the hospital here is deliberately ruining lives.”
Carlsbad Medical Center was not only overcharging her, they were suing her when she couldn’t pay the bill.
There are two Americas—the one I live in and the one I was now observing. Research shows that six out of every ten Americans have less than $1,000 in savings3 and about half of them have no savings.
the health insurance deductibles so often discussed in our health policy circles may seem inconsequential to wealthy people and to decision makers in the policy world, but they are crushing many Americans.
up by 20% per day? Was medicine ever intended to be like this, where a patient comes to a doctor for medical care and the hospital turns around and sues them, garnishes their wages, ruins their credit history, and even gets the town’s sheriff’s deputy to serve them papers at their home?
As a police officer, he has to appear before the judges in the same court where he was being sued. The lawsuit could ruin his professional reputation, so the couple tapped their savings to pay the full hospital
had no idea their patients were being sued. When I showed the doctors what I had learned about the predatory billing practices, they said they detested what was happening. I realized that if this practice is to change, it will require doctors and everyday Americans to ask their local hospitals to end the practice of suing low-income patients and garnishing their wages.
“You’re the judge and you’ve been sued by the hospital in your own court?” “Yes, and my husband, on separate occasions, for different medical bills. I always thought it was well known in our town that the hospital sues everybody.”
the services provided but the itemized details are redacted. They just see a total amount owed that’s called “bad debt.” That’s not a fair term when it’s an inflated bill that may be in dispute.
My team’s discoveries in New Mexico motivated me to launch a national study of predatory billing and wage garnishment to see just how common it was. Carlsbad Medical Center violated everything doctors consider sacred about making hospitals a safe haven for the sick.
Carlsbad Medical Center was owned by Community Health Systems. According to its website, this enterprise owned 119 hospitals in 20 states.
hour south of my home. In 2017 alone the hospital sued more than 4,300 patients and garnished the wages of 1,756, the court records showed.
single uninsured mother being sued, an army veteran harassed by collection agencies, an elderly widow being dunned for her deceased husband’s medical bills.
People in rural areas were just as vulnerable as those in urban and suburban parts of the state. Our study showed where the patients who had their wages garnished were employed. At the top of the list was Walmart, with about 450 employees from Virginia who had their wages garnished in
Hospitals are marking up their bills by 2 to 23 times what Medicare would pay for the same services.4 Further, our research showed that hospitals playing the pernicious markup game were also the most likely to sue.
these bills that lead to lawsuits are peanuts for the hospitals. For many hospitals, it represented less than 1% of their overall revenue. Suing patients did not appear to be associated with a hospital’s need for cash. Advocate Aurora Health sued many patients the same year that their CEOs’ salaries doubled by $11 million.
the obvious sign is the white coat. If it’s waist length, that’s a medical student. Midthigh or knee, you’ve got a resident or doctor.
From there, my eyes go to the pockets. If they’re stuffed, it’s probably a resident carrying around paperwork, prescribing pads, and pens. If there’s a banana or one of those little bottles of 5-hour Energy in the pocket, that’s a resident. If the pockets are empty, it might be a surgeon. If there’s a stethoscope, that person is probably in internal medicine or a cardiologist. A dermatologist carries a penlight.
“These are our patients,” I explained. “These are not the patients of our hospital billing departments. These people came to us as doctors because they were sick or injured, and we should respond in the spirit of the Hippocratic Oath.”
urge state legislators and governors to do what four other states have done and ban wage garnishment for unpaid medical bills. My team has argued to members of congress that an IRS tax-free designation is not appropriate for hospitals that provide no charity care and instead sue low-income patients for inflated bills.
Honest, hardworking Americans feel helpless against a ruling class who use power and access to their favor, creating fine print and laws to give themselves the upper hand.
“Everyone is fed up with a system where people use their power to take advantage of the little people.” Some respondents saw hope in President Trump’s anti-establishment style, which helped me better understand how he swept elections.
Without even knowing whether their hospitals sues low-income patients, many hospital executives from around the country condemned it, and would even come up to me to tell me they were personally repulsed by the idea.
Throughout the 1960s, the Internal Revenue Service gave tax-exempt status to nonprofit hospitals on the condition that these hospitals provide free or highly discounted care to patients that could not afford
1969, the IRS became less clear on what qualifies a hospital for tax exemption.6 It created the “community benefit standard,” which recognizes the “promotion of health” as in and of itself a charitable purpose.
I visited another hospital system that touted its merciful approach with patients. Before the gathering the hospital’s C-suite leaders told me they care for people the way Jesus Christ did. When patients struggle financially, they work out a payment plan, they said, or even forgive the bill. I felt inspired. Then we looked up the hospital’s legal filings and found that this hospital system had sued hundreds of patients. We looked at one of the judgments against a husband and wife whose debt ballooned because of interest and court fees. It went from $783 for the principal, plus $291 for
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While many hospitals have a 3 or 4% profit margin, his had been in the range of 10 to 15% over the past several years.
There is pretty much one price per procedure, which anyone can look up on his hospital website. He offers every insurance company a minimum discount of 4%, no exceptions: “We don’t play that game where one insurance carrier gets a secret 20% discount and the other one gets a 5% discount.”
Mike reduced his costs by keeping his middle management to essential personnel while investing in the people who worked there with good pay and benefits.
“Any nonprofit hospital should spend about 5% of its money on taking care of people who can’t pay. Our goal is to spend a bit more than that.”
It’s one thing for a hospital to eat the cost of someone who comes into their emergency room. But it’s another when a hospital approves elective surgery when they know the patient will be unable to pay. That’s real charity care.
