The problem with for-profit hospitals 

Bad Medicine

A couple of weeks ago I broke a window in a poorly thought-out plan to shoo a large, flying insect out of the house. I patched up the window with cardboard and tape and started asking around for repair estimates. This is a normal enough situation, one that really shouldn't raise any eyebrows. In fact, you might even be wondering why I'm leading a column off with this little anecdote.

Well, it seems that some people believe this is exactly how we should shop for our emergency medical care, whether it's a broken arm or a heart attack. But this is how it is thanks to our ridiculous for-profit health system.

Last week, the Centers for Medicare and Medicaid Services (CMS) released a report showing that hospitals charge wildly different amounts for the same procedures. These differences occur not only at hospitals in different parts of the country, but at hospitals in different parts of the same city. The press picked up this report, and local news outlets around the country published some version of it.

However, the reports only touch on the data in the report, not the overall problem with the healthcare system. Here in Charleston, the Post and Courier report noted that Trident Medical Center charges a good bit more for their services than others do, but the article barely discusses why the charges are different, or what this means for people who seek medical care.

The essential question, one only hinted at in the P&C report and others is, "Why?" The answer is simple: we have a broken healthcare system. And contrary to what many believe, it's not broken because of government interference. Instead, healthcare, like so many other essential services, has become beholden to the profit motive. This is why there is such a disparity in what hospitals charge for the same services and exactly how they compete for "customers."

The healthcare industry is unique in how it charges and collects payment for its services. Outside of the world of healthcare, a price is set for a good or a service, and the consumer pays for something or they don't. When it comes to the healthcare system, providers often set a fee for a service and then haggle with insurers over what they are willing to pay. This leads to an uneven and cumbersome set of insurance policies and payments that force people to pick and choose the medical care they can afford instead of the care they need.

Looking at the data, you can see that higher charges bring in higher payments for the hospitals charging them. The difference in payments is far less than the difference in charges, but the result is that for-profit hospitals are making more money for each procedure performed. Keep in mind that the data for the Centers for Medicare and Medicaid Services report comes solely from Medicare receipts. Private insurers and people who paid for their own services likely paid more (the data is from 2011, prior to the Affordable Care Act's insurance mandate). Many uninsured patients most likely paid as much as for-profit hospitals could extract.

If you wonder why for-profit hospitals like Trident charge so much more for their procedures, the answer is right there in the press reports. Trident is a for-profit hospital that exists to make money, and lots of it (about $55 million in profit a year for the last four years — the highest in South Carolina). Trident advertises its services in the same way one might advertise smart phones or cars, even though it is providing healthcare services and not luxury items.

There is simply no reason for healthcare providers to compete for "customers." If I had broken my arm, instead of my window, I wouldn't have logged onto Trident's website to see what their average ER wait time was that day. I would not have called them and then Roper and MUSC to see who had the best deal that day on x-rays. The only thing I would have thought about it is, "Where is the closest doctor?"

And that's exactly how it should be. Medical charges should be flat and reasonable. We should expect the same quality of care at any medical facility, and we should not have to comparison shop for medical services in the same way we do for a car or a cell phone provider.

Healthcare is not a luxury item, nor should it be a commodity. It is an essential function of modern society, and it falls upon all of us to demand that healthcare exists as a right, not a privilege — and certainly not as another shopping opportunity.

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