Time Magazine’s “Bitter Pill” – Part III

Be grateful that you’re not totally dependent upon Bayonne Medical Center in New Jersey for your hospital care. The New York Times May 18th edition was inconsiderate enough to front page a story on the fact that this institution charged the highest prices in the country for nearly one quarter of the most common hospital treatments. Why was this inconsiderate? Because in the May edition of Viewpointe that arrived in most mailboxes on that same date, this column maintained that it was virtually impossible for the public to gain access to hospital billing charges. The Times article proved otherwise.

You should be aware that this column first appears in my blog as early as two weeks before it was published in Viewpointe. The reason I mention this is that as of May 1st, when the May Viewpointe article was first posted on the Internet in my blog, the entire column was accurate and relevant. However, two and a half weeks later, on May 18 th when Viewpointe, was delivered, a critical portion of it had become misleading and irrelevant.

An Inconvenient Happening

What happened? May 8th intervened, making that date a singular and memorable event in the annals of medical health care history. You might recall that last month’s column remarked, in fact focused on the vast disparities charged by hospitals for the exact same procedures, medical supplies, and tests. That was, and is still perfectly correct. But in addition, it related the huge difficulties faced for an individual to acquire cost information for these same hospital services.

That latter part of my article became anachronistic when the government issued a press release that stated: “Today [May 8th], as part of the Obama administration’s work to make our health care system more affordable and accountable, Health and Human Services (HHS) Secretary Kathleen Sebelius announced a three-part initiative that for the first time gives consumers information on what hospitals charge. [My bold]. The press release continued: “New data released today show significant variation across the country and within communities in what hospitals charge for common inpatient services.”

The release reconfirmed: “Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city,” Secretary Sebelius said. “This data and new data centers will help fill that gap.”

Not Yet Practical

How practical is this new revelation? Actually, the website is very poorly formatted and the database is extremely difficult to navigate. For example, I found Boca Regional Hospital briefly in there someplace, but I lost it and could not find it again. However, I assume these problems will ultimately be corrected. I did manage to find two other local medical centers to use as an example. West Boca and Delray hospitals are perhaps six or seven miles apart, yet an analysis of their Chargemaster billing practices is, to say the least, shocking but not surprising.

Listed below are five medical conditions, the billing price charged, first by West Boca, then the same for Delray, and finally the average actual payment to the hospital by Medicare. (That figure is very close for both hospitals).

	West Boca Hospital	Delray Hospital	Medicare Average Payment
Chest Pain	$18,246	$38,296	$3,630
Hip and Pelvis Fracture	$14,695	$30,435	$4,100
Back Problems	$23,472	$38,296	$4,490
Atherosclerosis	$18,496	$28,983	$3,850
Acute Heart Attack	$61,295	$79,030	$11,100

Two hospitals, so close in distance yet so far apart in prices. West Boca’s prices are “only” over three to five times the Medicare values while Delray charges seven to over ten times what Medicare thinks the procedures are worth. Viewing it differently, Delray charges about one and a half to two times West Boca’s prices. How can that be?

That can be summed up in one word––Tenet. Tenet Healthcare is a publicly traded company that owns both hospitals, plus some 50 others, as well as 90 outpatient centers. The records show that Tenet is not what might be called a squeaky clean operation when it comes to its relationship with Medicare.

As early as 1994 it settled a Medicare fraud case for $360 million. In 2003 a class action suit was settled for $216 million. At least three other medical fraud cases were won by the government: in 2003 ($900 million), 2006 ($125 million), and again in 2012 ($43 million). Over the last ten years alone Tenet has paid Medicare fraud penalties of over $1 billion.

Of course one of the largest hospital fraud penalties ever levied was $1.7 billion against Columbia/HCA. The CEO under whose watch this all happened was fired by the board, yet he still walked away unindicted with more than $350 million. He then spent some of that to convince (dropping the last five letters here would be the more accurate word) undiscerning Floridians to elect him as governor of Florida––the eminent Rick Scott.)

Considering Tenet’s dubious integrity record, one might rightfully suspect its Chargemaster billing practices (especially Delray’s) when compared with actual Medicare payments. Equally suspect is the relationship between its two local hospitals. Based on the above pricing discrepancies, true or not, Tenet seems to view its Delray hospital twice as meritorious as West Boca. (The good news is that this is the type of information the new HHS database reveals, and patients will now have a base from which they can negotiate.) Okay! Now back to the Bitter Pill article.

Congress is the Real Culprit

In his farewell speech to the nation, President Eisenhower warned against allowing the “military industrial complex” to gain too much power. Of course that has never stopped them from trying (and succeeding). As an example, in the last five years, the defense and aerospace industries have spent $1.53 billion on lobbying (I call it bribing) our Congressmen and Senators in Washington. That is only a little more than the $1.3 billion spent by the oil and gas interests over the same period. If you are naïve enough to believe that lobbying is a waste of money, think again. The veritable army of lobbyists in our capital (12,348 as of 2012) would not exist if there were no payoff. In fact a number of analyses have shown that the return on investment (ROI) generated by lobbying money is significantly higher than the ROI of the individual companies who provide the money.

I think most Americans would agree, (as I believe would most honest politicians––or is that an oxymoron?) that lobbyist “contributions,” that John McCain once called extortion, completely distorts our democratic process. Therefore it might not be surprising to learn that since 1998, what has grown into the “health care industrial complex,” has spent on lobbying almost twice that of the two industrial complexes mentioned above combined, and three times that of the military complex alone. What do you suppose the general/president would be thinking now?

Pharmaceutical Follies Still Prevail

In essence, Steven Brill, the author of Bitter Pill, blames Congress for being complicit in the unacceptably high costs of health care. He views this in part as the result of a system corrupted by the lobbying machine, one that has become almost totally unregulated thanks to the Supreme Court’s Citizen’s United decision.

Brill points out that as a result of the health industry’s (specifically the pharmaceutical company’s) “contributions” to our esteemed legislators, drug company profit margins were dramatically enriched. Lobbying efforts left the Medicare D Prescription Drug program significantly weakened when our politicians, unquestionably influenced by industry money, mandated that the federal government could not negotiate drug prices with the pharmaceutical industry the way the Veterans Administration had done for years.

According to Wikipedia: “Estimating how much money could be saved if Medicare had been allowed to negotiate drug prices, economist Dean Baker gives a ‘most conservative high-cost scenario’ of $332 billion between 2006 and 2013 (approximately $50 billion a year), and a ‘middle cost scenario’ of $563 billion in savings ‘for the same budget window.’ ”

Typical of the totally corrupted system is that much credit for this lobbying triumph can be attributed to former Congressman Billy Tauzin, (R-LA.), who steered the bill through the House. He retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. (Much of this was elaborated upon in a three part series in Viewpointe starting in June 2006, titled Pharmaceutical Follies.)

Next month will concentrate on other activities that raise health care costs, plus Brill’s suggested solutions that could radically improve the broken system.