Medical Robbery

A clear example of the brokenness of the medical system is the case of a hip replacement for an employee where I work. The total bill after the "discount" amounted to some $80,000. The same surgery by the Surgery Center of Oklahoma would have cost $19,400, all-inclusive. How can the same procedure cost four times in one place over the other? How can they get away with it? If the Surgery Center of Oklahoma is making a satisfactory profit, how much profit is the local hospital making (albeit it is officially "non-profit")? Reasons (as stated before):

1. Lack of competition. Where I work there is only one hospital. On the other hand, Oklahoma is one of the few places where no "certificate of need" needs to be approved before a medical unit can be constructed.

2. Lack of transparency. No one knew how much the local hospital would charge. The Surgery Center of Oklahoma publishes their price list on their website.

3. Compliant insurance companies. Companies make a profit as a percent of premium. Higher payouts mean higher premiums. Although they may nickel and dime a certain procedure in order to increase the profit percentage, their total profit will largely depend on the total premium collected which ultimately depends on what medical providers charge. If providers suddenly slashed their charges, insurance profitability would decrease. My eyes opened wide when I heard a former insurance company actuary explain this to me. Health insurance companies like healthy people in the same way funeral homes like people who never die.

Some hospitals often explain that their charges are high because of all the indigent care they provide. This is often a ruse, but not totally. A topic for a future installment.