Hospitals find one more way to jack up healthcare costs

A laurel to the Tampa Bay Times for its investigation of trauma center fees

Just when we thought we’d heard all the tricks the nation’s hospitals were using to jack up the cost of American healthcare—and not incidentally, pad their bottom lines—along comes a blockbuster report from the Tampa Bay Times reminiscent of the marketplace exposes the paper used to turn out with some regularity. This time, the paper spent a year digging deeply into state records to reveal that Florida’s hospitals, led by for the for-profit chain Hospital Corporation of America (HCA), have created a new profit center over the past decade: the trauma fee, which the paper calls an “exorbitant cover charge for all kinds of patients” admitted to a trauma center at a hospital’s emergency department.

The paper deserves a CJR laurel for its investigation, “Insult to Injury,” which found that some patients whose injuries required little more than first aid are being charged tens of thousands of dollars to enter hospital trauma centers. One teenager injured in a car crash was treated for a concussion at Bayonet Point, an HCA hospital in the Tampa Bay area, and left the hospital 24 hours later after racking up a $99,000 hospital bill that included a $33,000 trauma fee and charges for imaging tests. The Times hired two medical billing experts to review the case and concluded that a reasonable payment would have been about $3,609. The teenager was uninsured but received an auto insurance settlement; after his family hired a lawyer, the hospital accepted a payment of $35,276. That’s still nearly 10 times more than the experts said his care should have cost. One expert told the paper it was one of the worst cases of overcharging she had ever seen.

The two-day series by reporters Letitia Stein and Alexandra Zayas —which includes an interactive guide to what hospitals in different parts of the state charge, infographics, and a sidebar showing how the fee varies among hospitals—is an impressive achievement. It also offers takeaways for other journalists about how hospital market power is growing stronger in communities across the country.

The Times articles do a strong job explaining just why these costs are so high. Trauma centers are specialized units that have to be ready 24 hours a day, and no one disputes that that’s expensive. That’s why in 2002 a federal committee authorized trauma centers to charge what amounts to a cover fee for some incoming patients, in addition to the cost of actual services. But since then, the fees have ballooned without regulation or oversight. And patients who have suffered severe or potentially severe injuries from auto accidents or shootings are obviously in no position to comparison-shop. “You get a local monopoly on your services, which you can set very high prices for,” one health economics expert told the paper. So much for market forces lowering the price of care!

If anything, in this case market forces have raised the price of care thanks to the pricing behavior of the market leader HCA. According to the Times’ reporting, HCA’s high fees have emboldened other hospitals to hike their own, lower fees. Charlotte Sutton, the paper’s senior editor for health and politics, told me that some of the state’s nonprofit hospitals, and for-profit hospitals operated by the Tenet chain, have joined the push for higher trauma fees. Tampa General, a nonprofit hospital, has an average trauma fee upwards of $10,000, she said. The paper reported the average trauma fee in the state has risen from $2,555 in 2006 to $10,825 last year, an increase 20 times the rate of inflation. Most of those bills aren’t collected in full, but trauma centers are still revenue sources for hospitals in a way they never were before.

In the absence of regulation or a working consumer market, the only force that might push down prices is everybody’s favorite industry: health insurers. But as local reporting in some other states also recently spotlighted, an aggressive hospital often has the upper hand. In Florida, two large insurers, Florida Blue and Humana, found themselves in deals that had them paying HCA centers two to four times more for trauma patients than they paid to other hospitals. “We entered into this and we negotiated rates that we thought were fair and equitable and they are just not turning out to be that way,” said a vice president at Florida Blue, which has since renegotiated its contract with HCA.

Sutton emphasized the project was a total team effort, involving not only the two reporters and herself but also Chris Davis, the investigations editor; Connie Humburg, a computer-assisted reporting specialist; and support from the paper’s top brass. Two editorials increased the visibility of the project’s findings, and Tallahassee-based reporter Tia Mitchell covered the fallout.

Sutton also emphasized that the team got key records from an accessible statewide database through Florida’s Agency for Health Care Administration, which that made it possible to draw the conclusions the Times did. Other states might not have similar public databases. Still, other reporters within Florida might want to use the database to monitor trauma fees at their local hospitals in light of the Times’ findings.

Is there a big takeaway for all reporters, I asked Sutton. She thought for a minute, then said yes. Contrary to common claims made about hospital prices—that the number on the bill is next to meaningless when evaluating costs, because almost no one pays it—“charges do matter,” she said. The sticker price, or charge, is the number from which hospitals begin their negotiations with insurers to arrive at a final cost for services.

Reporters at the Times got ahold of some confidential documents that showed Florida Blue’s trauma payments to HCA hospitals; the final settlement reflected a percentage of the bill, so the higher the hospital’s charges, the more it got paid. “Our reporters kept digging and digging and found charges to have ripple effects,” Sutton said. “It’s important to find out what those effects are.”

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , ,