Cost of medication as an inpatient is SHOCKING!!! - page 2

I had a patient who wanted something for her headache. I offered her the Tylenol the doctor had ordered for her to take on a prn schedule. She told me she was hospitalized many times before, and... Read More

  1. by   jnette
    Dang if I won't sneak in my own tylenol ! And bedpan, if I must ! Oral hygiene goodies, TP, you name it ! :stone
  2. by   ainz
    Healthcare is like no other industry concerning what it charges and what is actually paid in real dollars.

    Healthcare Finance 101:

    If a hospital charges $100 for an x-ray, it will actually receive differing amounts depending on WHO is paying the bill and what kind of payment schedule they have negotiated with the hospital.
    All in all, depending on payor mix (how many medicare, medicaid, commercial insurance, and private pay patients are seen), which can vary from market to market, our hospital receives about 33 cents for every dollar charged. That means $33 for the x-ray and out of that comes the tech salary, cost of equipment, film, proccessing chemicals, electricity, water, etc., etc.

    Medicare--pays one fee per DRG. If patient is admitted with pneumonia, Medicare pays one fee for all care that patient receives. If the hospital's costs to care for that patient are less than what Medicare pays for that DRG then they make money. If the other way around, they lose money. It does not matter what meds, labs, radiology procedures, IV solutions, meals, supplies used on that patient, does not matter how many of each, does not matter how many days the patient spends in the hospital, one day, one week, one month, hospital gets paid one flat fee.

    Medicaid--works like Medicare based on DRG or a per diem. Per diem means the hospital gets paid so many dollars per day regardless of what is done to the patient. Again, hospital either loses or makes money. Most Medicaid patients receive 28 to 30 days of hospital coverage per year. If a Medicaid patient has used all of their days, then the hospital has to admit the patient, care for them, not get paid, and can't charge the patient, by law.

    Commercial insurance (Blue Cross, Aetna, etc., etc)--usually negotiates a contract and pays the hospital a percentage of charges. Example, if the insurance company negotiated to pay 60% of charges, then hospital receives $60 of the $100 it charges, or $15 for a $25 tylenol.

    Private pay: usually are uninsured and can't pay their bill so is written off as charity. Some hospitals write off millions of dollars per year in charges as charity care.

    So, for a charge of $25 for a tylenol, hospital gets approx $7.50 (depending on payor mix). Out of that they pay for the drug, usually a few pennies, pay pharmacist salary ($80K plus/yr.), pharmacy tech salary, and other overhead. Patient actually pays out of their pocket only deductible and co-pay, usually about 20% of the bill. This equates to about 80 cents to $1 for the tylenol and out of that comes the nurses salary for the time it takes to get the tylenol, administer it, chart it and so on.

    As you can see, it is a complicated mess that is very difficult for everyone to keep up with and things are not what they seem. The basic problem is the concept of a third party payor.

    It's like if I said to you: you pay me $100/ month and I will pay any healthcare costs you may have for the year. So when you go to get your healthcare you don't have any idea what it is costing and don't care because someone else is taking care of paying the bill. If you were directly responsible for the bill then you would want to know what it costs, why you had to have it, what other options were available, and make choices on what you could afford and try to get the most for your money. Just like we all do when grocery shopping, buying a car, buying a house, or anything else. The health insurance concept has created an impression that we don't have to pay out of our pocket, someone else handles that for us. These days with healthcare costs so high and health insurance so high, people are more conscious about it than they were 15 or 20 years ago.

    So the bill the patient receives is actually meaningless to them and is misleading because what a hospital charges doesn't really mean anything when it comes to how much they actuall get paid.

    Even in this system, for-profits are still making millions of dollars per year.
  3. by   Katnip
    That $25 per pill covers costs like storage, lighting, and other types of overhead not covered by the room cost alone.

    And like Stella said, those with insurance cover a good portion of those without, taxes nothwithstanding.
  4. by   Mimi2RN
    The hospital received less than $4000 of my $14,000 hospital bill, and I paid about $400. I didn't complain about that!

    The patients with the highest bills are the ones with no insurance, cash pay. They have no insurance company negotiating a deal.
  5. by   colleen10
    I completely understand what everyone is saying about hospital charges and who sees what amount, but $25.00 for a Tylenol?

    That's just a little rediculous. It's not like the Pharmacy has to mix it for you or it's a controlled substance that you can only get via prescription. And while over doses of Aspirin can be dangerous or dangerous to people with allergies or other health problems, most of the public knows how and what dose of Aspirin to take, esp. if their doctor spells it out for them on a p.r.n. basis.

    It's kind of like a mechanic charging you $650.00 for a 20 minute oil change which is roughly the same amount it costs to get a new oil pan and radiator hose that costs about $200 in parts and takes 4 hours to install.
  6. by   mattsmom81
    I agree with Cyberkat and Stella. This practice is part of our creeping socialistic system, (and of course we deny having a socialistic system) where the haves/ will do's cover the have nots/will nots. <sigh>

    I was an independent medical bill auditor for several years and the things I saw were crazy. Like pharmacy billing for 10 1 mg vials of Morphine, and 10 1K u vials of Heparin...(the unit cost nets them more $$$) to get more reimbursement. Now this is for nurse drawn drugs...and we all know nurses are NOT going to draw up 10 vials, altho pharmacy wants us to. They bill for the highest $$ profit regardless. Always amazed me they could do that...no laws against it. Still none I'm aware of.

    But..another way to look at it is it helps pay our ridiculously high handmaiden salaries.
  7. by   ainz
    The amount of money a hospital charges for things is called gross revenue. It is essentially meaningless. NOBODY pays that amount. The real amount a hospital gets is called net revenue. That is the amount left after deducting, also called contractual adjustments, the difference between what the hospital charges and what the payors will actually pay.

    Yes, charges are inflated to help offset charity care, but it still does not matter. Medicare (feds), Medicaid (state), commercial insurances will pay a certain amount and nothing more, it does not matter how much the hospital charges. They could charge $50 for a tylenol, they are still only going to get what the government and commercial insurance companies set their payment at.

    This is a key concept for direct patient care nurses to understand. When you know more about the financial system you are working in and understand it, you can be more effective in your communication with your managers and administration. You can also help your patients to understand how they are being charged for services and how their particular payor is going to pay for those services instead of having patients becoming needlessly anxious about their hospital bill. Nurses can actually contribute to the patient's anxiety by their lack of understanding of basic concepts of healthcare finance.
  8. by   Cubby
    No other industry can legally get away with price gouging. It makes you realize who is REALLY in charge. (Read Insurance companies who own the Hospitals to start with) Really ticks me off
  9. by   live4today
    Originally posted by jnette
    Dang if I won't sneak in my own tylenol ! And bedpan, if I must ! Oral hygiene goodies, TP, you name it ! :stone
    Uh jnette...don't forget the eggcrate for your bed. :chuckle It's much cheaper to buy it at Kmart or Walmart. :chuckle
  10. by   live4today
    Originally posted by ainz
    The amount of money a hospital charges for things is called gross revenue. It is essentially meaningless. NOBODY pays that amount. The real amount a hospital gets is called net revenue. That is the amount left after deducting, also called contractual adjustments, the difference between what the hospital charges and what the payors will actually pay.

    Yes, charges are inflated to help offset charity care, but it still does not matter. Medicare (feds), Medicaid (state), commercial insurances will pay a certain amount and nothing more, it does not matter how much the hospital charges. They could charge $50 for a tylenol, they are still only going to get what the government and commercial insurance companies set their payment at.

    This is a key concept for direct patient care nurses to understand. When you know more about the financial system you are working in and understand it, you can be more effective in your communication with your managers and administration. You can also help your patients to understand how they are being charged for services and how their particular payor is going to pay for those services instead of having patients becoming needlessly anxious about their hospital bill. Nurses can actually contribute to the patient's anxiety by their lack of understanding of basic concepts of healthcare finance.
    Hmmmmmmm...I wonder what my patient would say if she read this. Me dun think she'd be veddy hoppy.

    No matter how the Finance end slices it and to whom gets what, the botom line is the patients are still paying one way or the other...either in increased cost to their health coverage each renewal period, or their employers are going to suffer the cost of what they pay in offering healthcare to their employers. I understand "finances" quite well. Being born to poor hard working parents, and as an adult being considered among the majority of hardlaboring middle class workers, this explanation may be the truth ainz, but it sings to the choir when the middle person is the patient (you, I, our patients), and our employers who eventually take it out on their employees via their benefits.
  11. by   healingtouchRN
    On my bill, a dose of mepergan was $37.50, & the nurse wasted 1/2 of it because of the dose ordered. & I had to have several doses, so this is the reason why I don't just dump meds if I know they may need more soon. Tylenol is about $8. One must pay the overhead, our salaries, housekeeping , pharmacy, P&D, need I say more???

    Yup, it's amazing, I would take my own stuff & demand I be able to use it. (don't cha love taking care of nurses?)
  12. by   EmeraldNYL
    Originally posted by ainz

    This is a key concept for direct patient care nurses to understand. When you know more about the financial system you are working in and understand it, you can be more effective in your communication with your managers and administration. You can also help your patients to understand how they are being charged for services and how their particular payor is going to pay for those services instead of having patients becoming needlessly anxious about their hospital bill. Nurses can actually contribute to the patient's anxiety by their lack of understanding of basic concepts of healthcare finance.
    Thanks for the explanation ainz. I wish I understood more of the business and finance aspect of healthcare. I think we had less than a one hour lecture on it in school.... which is no where near enough because this crap is CONFUSING.
  13. by   ainz
    I had no finance courses in my undergraduate work. What a shame. But I did not go into nursing because I was interested in finance, went into it because I liked clinical work and directing my efforts toward the PERSON that was there for healthcare, my patients. As a matter of fact, I hate finance, accounting, and everything to do with it, but in my work it is a basic tool. Kind of like reading lab values. Same for the organization, the financial reports give you a diagnostic picture of business operations.

    It is quite complicated and quite absurd. The hospital pays entire departments and must buy large computer systems just to keep up with all of this mess.

    My hope is that the nurses who read my posts do not think I am defending the hospital or insurance companies, it is to simply inform nurses about the financial aspects of our healthcare system. During my years as a staff nurse I was clueless about finance and didn't care. I thought the hospital was charging entirely too much (and they are) and it was confusing to keep up with.

    My only reason for writing about all of this is that hopefully some nurses will gain some understanding that will help them when they face their managers and administrators with a proposal of some kind to improve nursing and advance the profession. The administrators are very, very, very financially oriented and bottom line focused. It is unfortunate that they have the power. If you want something changed or something done, you must be able to talk to these people in a way that they understand and a way that let's them know you know what you are talking about. Otherwise you will never earn any respect from them and you need that if you want a chance at things being different. The old saying "what you don't know won't hurt you" is not true in hospitals and dealing with administration.

    I would not advocate sharing this kind of detail concerning finance with your patients. It is helpful if you understand it. You can bet the doctors understand it very well. It is how they get paid and they make plenty of money as well.

    So the picture is like this. The hospital administration understands healthcare finance very well. The doctors understand healthcare finance very well. The other major player, the nurses, generally don't have a clue about the DETAIL of how this system works and they generally don't want to know. Therefore, nurses are kept in the dark, do not have access to financial information, just come in, clock in, take care of their patients, and go home. The administration and doctors like it this way. If nurses had full access to financial information, understood how the system works . . . . there would definitely be a revolt. Knowledge is power, this knowledge is being kept from nurses. If you don't believe me, just try asking your administration to see the hospital's financial reports year-to-date and see what kind of reaction you get. They DO NOT want you to know!!!!

    Nurses are not earning their fare share of the money being made in healthcare. It generally boils down to this, hospitals provide the building and equipment (very expensive), doctors provide the medical care and general decision making as to what clinical action is to be taken, nurses carry out those orders, measure the patient's response to it, and do many other things that attend to the patient's health. These three entities, hospitals, doctors, nurses, make up the thrust of the team. Hospitals and doctors are making tons of money, nurses are not. Hospitals and doctors know the system and how to work it, nurses do not. Hospitals and doctors get together to plan strategies to increase their earnings, nurses are left out. Hospitals and doctors have a great relationship because they help each other out financially, nurses are left out of this relationship. Hospitals and doctors get huge pieces of the financial pie, nurses do not. If you look at the healthcare dollars available out their, hospitals and doctors get it all, nurses are paid by the hour and don't seem to really care.

    It is not all about the money, but the money is there. Nurses do much of the work but are not compensated in relation to the amount of work that is done and their contribution to the outcome of the patient. Hospitals and doctors are raking in the money, nurse are not. Why are we left out of this loop? Why are we not asked our opinion? Why is financial information withheld, or only selected and safe "tidbits" are given to the nurses who are halfway interested? Why? Because if nurses knew the whole picture, there would certainly be a major REVOLT in healthcare.

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