Friday, August 16, 2013

"What's An 8,471% Profit Between Friends?

I missed this New York Times article earlier this month. Apparently some elements of the health care industry are doing their best to make loan sharks appear beneficent. Take for instance objects that are cheap to manufacture:
An artificial hip, however, costs only about $350 to manufacture in the United States, according to Dr. Blair Rhode, an orthopedist and entrepreneur whose company is developing generic implants. In Asia, it costs about $150, though some quality control issues could arise there, he said.
Let's eliminate the quality control problems, add a "cartel" and a sizable mark-up to turn $350 into at least $4,500.
Hospitals and orthopedic clinics typically pay $4,500 to $7,500 for an artificial hip, according to MD Buyline and Orthopedic Network News, which track device pricing. But those numbers balloon with the cost of installation equipment and all the intermediaries’ fees, including an often hefty hospital markup.
Of course, the hip isn't worth anything unless it's implanted, so one must charge approximately $30,000 for the hip in addition to other hospital costs.
That is why the hip implant for Joe Catugno, a patient at the Hospital for Joint Diseases in New York, accounted for nearly $37,000 of his approximately $100,000 hospital bill; Cigna, his insurer, paid close to $70,000 of the charges. At Mills-Peninsula Health Services in San Mateo, Calif., Susan Foley’s artificial knee, which costs about the same as a hip joint, was billed at $26,000 in a total hospital tally of $112,317. The components of Sonja Nelson’s hip at Sacred Heart Hospital in Pensacola, Fla., accounted for $30,581 of her $50,935 hospital bill. Insurers negotiate discounts on those charges, and patients have limited responsibility for the differences.
Someone is going to have to help me with some definitions. I'm not sure if insurance companies being a check on greed constitutes irony or dystopia.


 

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