Hospital Malfeesance – Fees for Services, Fees for Items,  Fees for Facilities, Fees for Physicians

I like to be in America!

OK by me in America!

Ev’rything free in America!

For a small fee in America!

Stephen Sondheim(born 1930), West Side Story

Steven Brill made quite a splash when, in a 2400  word article in the February 20 issue of Time,  the most lengthy in the history of the magazine.  Brill accused hospital executives of ripping off Americans. 

How?  By using  a billing mechanism known as chargemaster accounts to charge exorbitant fees for everything from use of hospital rooms, to operating rooms, to recovery rooms,  to ICU rooms  to Tylenol to cotton balls to band aids.   The proble? Chargemaster accounts are so complex, convoluted, and arcane that nobody seems capable of figuring them out or unraveling them.

Alleged fee abuse  may even more complicated than that with hospitals hiring physicians in record numbers  and then upping the physicians fees and charging “facility fees” for use of operating rooms and other specialized facilities using physician  services.  As employees of the hospital,  physicians no longer have any choice  for setting their fees or controlling facility fees.

Yet it is easy to understand why hospitals impose  these various fees.  Hospital occupancies are dropping;  Obamacare cuts $256 billion out of Medicare funding for hospitals over the next decade;  hospitals are required  to  care of all comers even if they can’t pay;  and hospital executives are not hired to lose money.   It’s hard to criticize hospitals for trying to make up for the loss of income.

Small wonder that hospital inpatient fees are up sharply.  Once cannot blame physicians.  As John Commins points out in a March 20 Healthleaders Media article:

“Hospitals look at themselves as healthcare companies and there are a bunch of reasons why they are aligning with physicians. And it is not just their desire to do so. Physicians are also facing this new market where they are being asked to do more with less with regards to capital investment and health information technology and developing a quality infrastructure platform and malpractice and other typical costs that make it difficult for them to continue to practice in that two- or three-doctor practice."

Brian Klepper, an independent health care analyst, gives  another reason .   He followed the Brill piecein the  March 22 issue of The Health Care Blog “Why Only Business Can Save America from Health Care, ” with this commentary:

“Why haven’t America’s business leaders united to be a counterweight to the health care industry’s massive influence? After all, only one group is larger and more influential than the health care industry, and that’s everyone else.

Part of the answer lies in the health care industry’s masterful divide-and-conquer tactics. Every community’s most prosperous and influential business leaders sit on local health company boards. No Chamber of Commerce will organize efforts that oppose the egregious practices of its largest members, the health plans and hospitals. Business health coalitions that welcome drug and device firm subsidies are loathe to mount efforts that might offend their benefactors.

So far, business has not displayed much appetite for galvanizing on this issue. But the fact remains that, unless the business community and its champions come together, health care will almost certainly continue to have its way with Congress and the national largess, planting the seeds of financial instability and undermining the nation’s future.”

True enough, but the answer may also be deeper than that.  To coin a phrase from James Carville, who said, “It’s the economy, Stupid!” ’It’s structural and cultural, Stupid!”

We live in a capitalistic society where individual fees for individual acts are expected and the norm. For hospitals, these fees are for service lines,  such as orthopedics,  general surgery, cancer and imaging; and for individual items charged to patients; and for individual facility use – operating rooms, recovery rooms, private rooms, and ICU rooms.

Individual  fees are built into American culture and business structure., and rest on the premise that people can be trusted to do the right thing or they will cease to be a competitive force.   Obamacare proposes to change all of this by converting fees-for-individual things  into bundled and capitated  fees for all illness categories,  episodes of care,  types of patients classified by payer, such as Medicare.  Hence, the Accountable Care Organization.  For cancer care, for example,  Ezekiel Emanuel, MD,  Obama’s former chief medical advisor and now vice provost of the University of Pennsylvania, says one way to do this is:

Over the next few years, a payment system needs to move away from fee-for-service to a system of bundled payments, in which doctors are paid one fee for all the treatments needed in care for the patient.(“A Plan to Fix Cancer Care, “ New York Times, March 24, 2013).

Lots of luck, Ezekial.  Changing the fundamental structure of health care economics will not be easy. Why?  Because of the immense variations in individual doctors,  individual hospitals, and individual patients. I suppose one can minimize these individual variations by consolidating everything into one big bundle and using reinsurance to compensate for variations.  But it won’t be easy.  There will be economic losers, who will hire lobbyists to minimize the damage and protect the entrenched self-interests in the hospital and the surrounding communities.

To conclude.

Do not equate hospital fees with malfeesance,

With societal, business & hospital malfeasance.

Fees are part of our   capitalistic U.S. culture,

Individual  fees is part of  our infrastructure.

One could charge bundled fees.

For all procedures and diseases.

But that will take radical restructuring

And societal and business destructuring.