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Overcharged in the Emergency Room

July 22, 2018 in Economics

By David A. Hyman, Charles Silver

David A. Hyman and Charles Silver

When 8-month-old Jeong-whan Park fell off a bed and bumped his
head, his parents took him to the emergency department at
Zuckerberg San Francisco General Hospital. It took doctors little
time to determine Jeong-whan was fine, and they discharged him 3
hours later. Two years later, Jeong-whan’s parents got a bill in
the mail for $18,836 — of which $15,666 was for something
called “trauma activation.”

If your air conditioning went out in the middle of a heat wave
— a life-threatening situation for many elderly people
— the technician doesn’t demand $15,666 just to show up. They
will probably charge a standard fee for a service call, but the fee
is both transparent and reasonable. The same applies to plumbers,
electricians, and every other trade we know of — no matter
how dire the emergency to which they are summoned.

HVAC techs, plumbers, and electricians don’t charge outrageous
service fees because they can’t. They operate in markets where they
face competition to please consumers who are spending their own
money. If they charged $15,666 just to come to your house, they
would be out of business before the next heat wave hit. Hospitals
operate in markets where government blocks competition, which would
otherwise result in lower prices. Government also encourages
open-ended insurance, which allows hospitals to price-gouge because
most patients are too heavily insured even to notice, much less
punish the price-gougers.

The combination makes it possible for hospitals to hit patients
with huge trauma activation fees, no matter how inconsequential
their injuries. For example, St. Mary’s Medical Center charged a
woman $13,626.35 for an hour’s worth of treatment for her burned
fingers, of which $12,500 was the trauma activation fee. Another
hospital billed a bicyclist with road rash $12,500. A third
hospital charged $33,000 to treat superficial cuts.

If we want to make it
harder for the U.S. health care system to gouge patients, we should
focus on eliminating provider monopolies and increasing
competition.

But, the prize for the most outrageous trauma activation fee
probably goes to Lawnwood Regional Medical Center in Florida. Eric
Leonhard was wheeled into the ED at Lawnwood with a broken pelvis
— and wheeled out again in less than an hour because they
didn’t have the right specialist to treat him. But that didn’t keep
Lawnwood from billing him for $32,767, which comes to about $800
per minute.

There is nothing inherently wrong with charging a standard fee
to ED patients on top of whatever services they consume. Operating
a trauma center is expensive, and hospitals must cover their costs.
A trauma activation fee is like a “cover charge” …read more

Source: OP-EDS

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