Steven Brill’s taboo-busting X-ray of the US medical system, “Bitter Pill,” has a chance to reframe the way we think and talk—and report—about healthcare costs.
In a penetrating, systemic, and long (36 pages) look at medical care, US style, for Time magazine, with tale after tale of the financial miseries befalling the system’s victims, with number after number bolstering his analysis, Brill zooms in on the nation’s unrealistic and destructive healthcare costs—why they exist and persist.
Brill, a journalist and an entrepreneur, offers the media a rare chance to move beyond the fence that usually corrals this discussion. High healthcare costs are spawned by a powerful ethic in American medicine that is too often nurtured by the press, an ethic that dictates that the medicine men—doctors, hospitals, and drug companies—sit at the right hand of God and deserve all they can get. Brill’s article crashes right through that fence, in fact, and provides the stuff for further productive reporting.
“When we debate health care policy,” he writes, “we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?” Precisely. Brill gives us some answers, too, not based on quotes from the self-serving players we hear from so often in this dreary debate, but based on serious investigation.
The waste at nonprofit hospitals: Waste in the US system is the recurring theme throughout Brill’s piece. The sacred cows he slaughters are the country’s nonprofit hospitals, which he holds largely responsible for much of the overspending. When McKinsey, the consulting firm, examined hospital financial reports with the help of a Bank of America survey, it found, as Brill put it:
The 2,900 nonprofit hospitals across the country, which are exempt from income taxes, actually end up averaging higher operating profit margins than the 1,000 for-profit hospitals after the for-profits’ income-tax obligations are deducted. In health care being nonprofit produces more profit.
Brill dissects some of these nonprofit places of healing—from the world-famous MD Anderson Cancer Center in Houston to less well known facilities, such as Stamford Hospital in Stamford CT—by showing, with real live bills from patients, the absurdity of some of their charges. For example: a $77 charge for one box of sterile gauze pads. Or consider this: $18 for a single diabetic test strip. Amazon sells a box of 50 for $27.85, about 55 cents a strip. In hundreds of small and midsize cities across the country—the American health care market has transformed tax-exempt ‘nonprofit’ hospitals into the towns’ most profitable business and largest employers, Brill reports. (Indeed, that latter point often makes it tough for local reporters to tackle these institutions.)
But Brill goes beyond the obviously absurd charges and examines where they come from—the chargemaster, an uber-list of prices each hospital keeps for every possible treatment and service. It governs what patients are actually charged and what payers actually pay. The chargemaster is phony and utterly flexible; it bends according to the negotiating leverage of hospitals and insurance companies when they joust for the final prices.
Brill describes the elaborate games that hospitals and payers play in determining who gets what discounts from the chargemaster, which result in an inequitable patchwork payment system. The leverage of the biggest of the big hospitals and insurers determines which patients are charged more or less depending on their carrier’s negotiating skill. As Brill demonstrates, that leaves plenty of room for hugely inflated prices, which in turn make it possible to pay over-the-top salaries to hospital executives.
Few patients know about the chargemaster and its amazing flexibility. Even hospital execs profess ignorance. When Brill asked for a chat with the CEO of Stamford Hospital to find out more about a patient’s bill, a spokesman replied that he doubted the CEO “has even seen the list in years. So I’m not sure why you care.” Most top hospital execs refused to talk when Brill inquired about their charges. Instead he got blah-blah comments from communications operatives.
I read Brill’s article fully and carefully, and I’ve read your analysis, which is mercifully briefer than Brill’s. As a consumer whose only dog in this fight is her minimal use of healthcare in retirement, I come back to an assertion that just floors me:
I’m sorry to be so reductionist here, but aren’t the reasons the bills are so high utterly tied up in who’s paying those bills? Isn’t that what your analysis and Brill’s end up saying? If the payments are via fee-for-service or capitated, through private or public insurance, or through the tax code and legislative fine print, aren’t those distinctions without a difference? And isn’t the functioning of an ostensibly free-market system here egregiously shrouded and knowable only as through a glass, darkly?
#1 Posted by Bel Campbell, CJR on Tue 5 Mar 2013 at 04:48 PM
"’Im sorry to be so reductionist here, but aren’t the reasons the bills are so high utterly tied up in who’s paying those bills? Isn’t that what your analysis and Brill’s end up saying? If the payments are via fee-for-service or capitated, through private or public insurance, or through the tax code and legislative fine print, aren’t those distinctions without a difference?"
If I am following your argument, then your are mostly correct. It greatly matters who pays, because as he even shows in "Bitter Pill," Medicare, which is Single-Payer, is far more efficient than private plans, and they are able to bargain better rates using their purchasing power. The "WHO" of who pays and the "WHY" of why is U.S health care more expensive are most certainly intertwined.
Although Brill doesn't talk about it much in his article, Cacpitation, or paying a doctor for a set amount of money for each patient based on their needs and condition, is far less expensive and has been shown to be better for patient outcomes than the U.S Fee-for-Service system. I don't need to remind anybody that the US pays more than double the amount per capita and as a % of GDP for health care than the OECD average, yet we have worse health results than the do.
Instead, the Fee- for-Service model in which the doctor is payed a la carte, for each test and procedure offered, adds a great deal to the nations health care spending. Capitation is practiced in many countries, where they not only pay doctors for the entire care of the patient, not a la carte, but also make available to the doctors a bonus for successful outcomes and good treatment.
Why we don't study other countries systems and use what works best is just beyond me, and it frustrates me to no end.
#2 Posted by Gzoref, CJR on Wed 6 Mar 2013 at 03:06 PM
I read Brill's piece and still don't know why the 'chargemaster' pushes prices up so high. These are, after all, 'non-profit' hospitals for the most part. Blated salaries, really? That is what is implied.
Beyond that, Brill confirms an intutition on my part that, in the larger picture, the 'non-profit' sector (higher education is another example) has seen its costs rise at a much faster rate than other industries. Higher education costs and medical costs seem, in fact, to illustrate some distortions that push up costs. The student loan program serves as an analogue to Medicare in these two examples - they appear to make services less expensive to consumers, but I expect have an overall inflationary effect on prices. Casting about for people to blame instead of perverse systemic causes, usually introduced by the political/governmental sector, is standard journalistic practice. It reminds me of the wag who evaluated Liincoln Steffens' muckraking classic 'The Shame of the Cities' by noting that Steffens hadn't made the cities better, just more ashamed.
#3 Posted by Mark Richard, CJR on Mon 11 Mar 2013 at 12:32 PM