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Hospital Charges: Do they make sense?

Posted Jan 11 2010 6:05am

My local hospital is getting questioned on its charges and on one level I think this is an appropriate question for the community to ask.  On the other hand, I've received this question often over my career and feel like a broken record.  So, a few thoughts below:

1)  Cottage Hospital is in an area with inappropriately low Medicare reimbursement rates due to an error made years ago.  The medical community has tried to appeal to reason, but I don't know if anything has been resolved.

2)  This is the healthcare payment system we have from the early beginnings.  Supplies, equipment, medications and procedures are billed at a rate that includes a portion of the overhead and costs of regulation -- just as other businesses have always done.  Yes, it sounds like an unreasonable cost until you really look at how much work goes into "giving a patient a pill." 

3) And, since DRGs and managed care,  hospitals are reimbursed at a percentage of their charges so you don't want to be on the low end unless you are eager to close down your hospital.

Now, I don't work for Cottage and don't have sufficient information to give an assessment of their charge master.  What I do know is that all of the talk about health reform isn't addressing this particular issue.  If anything, get prepared for even higher cost for antibiotics given in any hospital.

What I can offer is a cost comparison tool for common surgical procedures ( in CA).  However, this tool has its own faults and the results need to be placed into context.  It is, however, a starting point for a discussion with your surgeon and local hospital.


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