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Comment by OGinparadise | Hacker News Reader

like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

A 20+ times difference? how can they justify it

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Because the government can force a cost upon a hospital that is not sustainable? Which in turn requires the hospital to recoup the costs elsewhere. One of the claims opponents have to ACA is that it will force private insurance out because the government will mandate its costs forcing private payers; companies and individual alike; to pick up the tab through higher billing from service providers.

Still one has to flinch when you see the pay some NON doctors get. Then again, its the same in education too. Some of the highest paid people in public and college education are not educators.

The article addresses that.

The real question is why new hospitals don't open up and charge less than these hyper-inflated retail rates and compete on price?

I'm only on page 3, maybe that's addressed too - but I doubt it.

I am going to go out on a limb and suggest barriers to entry.

You don't just get a group of skilled doctors together and say, "let's make our own hospital!"

Rent-seekers + regulation agencies = regulatory capture = barriers to entry = no competition.

You essentially cannot, in the United States, get a group of doctors together to form a hospital as of the passage of Obama's healthcare reform act. (Technically, you can, but that facility cannot become Medicare certified, which is usually a death knell.) [1]

[1] = http://www.ama-assn.org/amednews/2010/06/28/gvsa0628.htm

But you also see absurd discounts with private insurance companies - - eg you get testing done by Quest and get an $1000 bill, and then the insurance discount is $900 before the insurer even pays anything. That's not the government forcing unsustainable pricing, that's simply nonsense.

In no other industry is there such a difference between the sticker price and "discount", where those who can least afford to pay have to pay the most.

> Because the government can force a cost upon a hospital that is not sustainable? Which in turn requires the hospital to recoup the costs elsewhere.

Is this accurate? It was my understanding that payment practices with insurance providers is what causes the high sticker price of any given medicine or service in hospitals, even though insurance companies and programs like Medicare do not pay those prices, only those who pay out of pocket do.

Medicare and Private insurers are two separate things.

Insurance companies negotiate rates with hospitals/doctors/etc. Medicare _dictates_ rates which providers can either accept or reject.

The reason the Medicare cost of an Xray is ~$20 is because it was decreed to be that expensive. It has no bearing on the cost to provide the service since the hospital had no input in the reimbursement decision.

You can search and easily find reports about how doctors restrict the number of medicare patients they see because the reimbursement rates for care are too low.

Except that the hospitals themselves say that the Medicare cost is typically around 10% less than the cost of the service/product.

The solution to a 10% shortfall is not to gouge those not responsible for that for at least a 150% minimum profit (up to 800%).

You should contrast the cost of a CT/MRI here vs in other countries like India or Japan.

The funny thing is, I ask healthcare professionals the same question and it is always just chalked up to the broken economics.

Somewhat unsurprisingly, doctors who own an investment interest (or outright ownership of equipment / facility) are 3.7 times more likely to order CT/MRI scans.

That is purely human "greed".

I somehow doubt that self-selection of patients needing such imaging is occurring.

Well, or the doctor is interested and knowledgeable in MRI scans, which leads to both investment and more likely to use it as a tool.

Which either says that other doctors are under-using MRI scans (doubtful, the US orders more CT/MRI scans per capita than any other country on earth by nearly seventy per cent, which to say that doctors elsewhere should be doing up to six times more), or that they're exploring their own "interest" at the cost of the consumer.

A 20+ times difference? how can they justify it

It's not right, but I know how they justify it.

Health insurers negotiate a "discount" rate, that doctors tolerate for two reasons. The first is that the insurer will actually pay. The second is that, since insurers direct patients, they have leverage. One might call it extortion, in that the physician either needs to accept the insurer's rates, or end up "out of network" and get no patients from that insurer.

Uninsured patients have no leverage, and the vast majority of them never pay their medical bills, so the people who do pay get marked up severely.

my math was off --a little :)--but still

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