Do Hospital's Charges Make Sense?, 2,999 % markup

  1. all marked up


    do cottage hospital's charges make sense?

    wednesday, january 6, 2010


    by faith ozan

    my 24-year-old son was a patient at santa barbara cottage hospital last winter and received great care. he had complications from a dental infection and after emergency-room visits recommended by his dentist, a tooth was pulled and my son was admitted to the hospital for two nights for intravenous antibiotics. thankfully, the staff and the medicine got things under control and my son was fine. it's the bill, now, that's the problem.
    i was surprised to learn from a collection agency statement that santa barbara cottage hospital marks up the cost of common antibiotics by almost 3,000 percent, and also that they defend the charges. this is an issue for us because the main reason my son was in the hospital was for antibiotics, and because the blue shield of california policy we buy requires he pay 30 percent of approved costs after deductible....

    ...i found that one unit of ampicillin/sulbactam, for example, cost the hospital $10, but they charged my son $378; eight units cost the hospital $80, but they charged $3,024 for it. or a one-gram vancomycin injection costs the hospital $9.75 per unit, and they charged my son $387. five shots cost the hospital $48.75, but they charged my son $1,935. same with moxifloxacin iv, 400 mg: it costs the hospital $43.75, but they charge the patient $557. all together, the total hospital cost for medication for my son's entire stay (according to the abx guide) was $187.54, and the total santa barbara cottage hospital charged my son was $5,625. these are all very common antibiotics, and the markup was 2,999 percent...

    http://independent.com/news/2010/jan/06/all-marked/
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    Joined: Mar '04; Posts: 17,623; Likes: 36,146

    36 Comments

  3. by   RNnbakes
    I am in no way agreeing with the hospital bill but I believe that most hospitals are businesses and are in it to make profit. That said, one vancomycin might have cost the hospital $9.75 per unit, but they have to pay a pharmacist $50 per hr to mix it, pay a pharm tech $20 to send it, pay a nurse $30 to give the injection, buy supplies used in the process, pay rent, pay for equipment etc. They are a business after all.
    It may cost Mcdonalds 1cent to buy a single beef patty but they definately are not going to sell it for the same 1cent.
  4. by   profstudent4life
    I agree. While hospital charges are atrocious, part of the reason the markups are so high is because, frankly, the hospital needs to make money to survive. Most hospitals do not depend on self-pay for their revenue; many of these charges are written off, or given discounts for inability to pay. Therefore, most of the hospitals rely on the managed care contracts to make up the bulk of their revenue. The problem is, the hospitals agree to offer discounts to those managed care companies with whom they are contracted. For instance, 20% off of total billed charges. Where does the rest of this money come from? It doesn't just "disappear." Instead, the hospital must make up the revenue in other areas, and, ironically, charges those who are most likely to be unable to pay (the uninsured) the highest prices.

    Managed care started as a good idea, as a way to control costs, but things have gotten out of control. The costs for health care in this country are exorbitant, and while many tout "insurance reform," I staunchly believe that charges need to come down. Doctors also need to stop charging $200 for a 15-minute check-up; the ENTIRE system has to change, including the concept of "health insurance." I could go on forever but....I will spare you.

    I am sorry your son received such a high charge, and I sincerely hope that he is able to work something out with the hospital. God bless.
  5. by   TheCommuter
    Sorry, but the hospital must pay the people who cannot directly bill for services. They do this by marking up the cost of goods, services, and items during one's stay.

    Nursing, housekeeping, dietary, social services, and other departments cannot bill the patient directly in order to get paid. Nursing care is rolled into the bill even more discreetly than the roll of toilet paper or the tube of toothpaste. That pair of flimsy slippers will cost the patient $50 because his/her nurses, techs, case managers, social workers, and other providers must draw an income from somewhere. It is these markups that enable staff to survive.

    Nursing care is not free; hence, that cheap antibiotic is going to get more expensive if it is given during an inpatient hospital stay.
  6. by   classicdame
    so how much did the hospital charge you for nursing care, laundry service, housekeeping, phone, tv, --------------
  7. by   Onekidneynurse
    Quote from herring_rn
    all marked up



    do cottage hospital's charges make sense?

    wednesday, january 6, 2010


    by faith ozan

    my 24-year-old son was a patient at santa barbara cottage hospital last winter and received great care. he had complications from a dental infection and after emergency-room visits recommended by his dentist, a tooth was pulled and my son was admitted to the hospital for two nights for intravenous antibiotics. thankfully, the staff and the medicine got things under control and my son was fine. it's the bill, now, that's the problem.
    i was surprised to learn from a collection agency statement that santa barbara cottage hospital marks up the cost of common antibiotics by almost 3,000 percent, and also that they defend the charges. this is an issue for us because the main reason my son was in the hospital was for antibiotics, and because the blue shield of california policy we buy requires he pay 30 percent of approved costs after deductible....

    ...i found that one unit of ampicillin/sulbactam, for example, cost the hospital $10, but they charged my son $378; eight units cost the hospital $80, but they charged $3,024 for it. or a one-gram vancomycin injection costs the hospital $9.75 per unit, and they charged my son $387. five shots cost the hospital $48.75, but they charged my son $1,935. same with moxifloxacin iv, 400 mg: it costs the hospital $43.75, but they charge the patient $557. all together, the total hospital cost for medication for my son's entire stay (according to the abx guide) was $187.54, and the total santa barbara cottage hospital charged my son was $5,625. these are all very common antibiotics, and the markup was 2,999 percent...

    http://independent.com/news/2010/jan/06/all-marked/
    how much is having your son alive and healthy worth?
  8. by   sairin8
    As a New Zealander, I had heard that US charges were high, but some of those prices are horrendous! Profstudent4life noted that doctors are charging $200 (US) for a 15 minute visit. In NZ, I pay $35 for that same visit, that's no insurance and no discount for being on a low income. And that's the expensive route. (The highest I've heard of is around $70 for a regular visit, after hours & home visits cost more). Hospital costs, if I needed it, nil.
  9. by   rjflyn
    Maybe there wouldn't be a large hospital bill if someone would have had some dental care sooner. Seems to be the issue is more if he would have he would not have needed "emergency-room visits". Having spent the better part of 22 years in the ED most people we see in the ED have not seen a dentist in years, come to use with a bad tooth- generally most their teeth are rotten but thats not for this post, infection that we treat with pain meds and oral antibiotics and strongly suggest they see a dentist for.

    Thusly, that led to "a tooth was pulled and my son was admitted to the hospital for two nights for intravenous antibiotics. " A large bill with a noted 30% copay. Not what I would call good insurance.

    Goes to show that even those who think they are healthy should find and have good health insurance irregardless if they think they are ever going to use it, because someday you just might. Even if that insurance is just a hospitalization policy with a $1000 copay- beats what this family is paying.
  10. by   litchi
    I agree with the first few replies. On the surface, those markups are unbelievable. When you take time to think about it and consider that those charges don't just reflect the cost of the antibiotics alone, they make much more sense.
  11. by   morte
    many of your thoughts were covered in the article, did you read it? did you read the part where this hospital is the only game in town? did you read the part that they were charging 7.5 times the national average? did you read the part about this fact came from CNA research? did you read the part about he was referred to the hospital BY HIS DENTIST? did you read the part about how high the profits were at this hospital compared to average? hmmmm thought not......
  12. by   rngolfer53
    Lots of health care pricing is irrational, due in part to the reimbursements from medicare and medicaid that don't cover costs.

    In order to continue operating, any organization must take in revenues at least equal to both fixed and variable costs of providing their service or product. Hospitals are no different.

    So, services provided to those who have other insurance end up with huge markups to cover the shortfall.
  13. by   reigh
    I don't think the writter of this article in the santa barbara independant totally understands the article fisrt of all. If they really meant to pluralize emergency room visits it doesn't make sence. We are talking about one infection right possible related to oral surgery and the tooth was removed and antibotics given via IV and IM. Sounds more like a stay over in a hospital for several days.

    Second what does it mean but entire hospital. That sounds cheap for a long term stay plus addmitting through and ER were they did a tooth removal and was on several antibiotics. The kid probaly was healthy accept ther must have been some risk of somthign liek sepsis to keep him on an IV right.

    What I am wondering mroe then anything is is this seems to imply they had insurance but they had to pay for drugs in a different way. I know with my insurnace drugs at the pharmacy are a different animal then the costs of procedures in how they are billed and maybe listing the charges all as drugs cost the family more then if they were paying for hospital care and the cost of drugs were better itemized. I don't know because this artical is a bit confusing and inflamatoraly written. I mean it sounds kinda like she just looked in a drug guide at costs maybe figure out by googling drug costs and finding out there was cost info in there. Not understanding her bill divided up the costs of drugs and though why is there a mark up.

    They are talking about it as if all the kid needed was to be seen in somthing more like a clinic settine were they could remove a tooth and send him home on oral abo(s).
  14. by   itsmejuli
    I worked for a large medical insurance company for many years paying inpatient hospital bills.

    I'm not supporting either the hospital charges nor the insurance company.

    My issue with this article is that nowhere does it mention what the insurance company's contracted rate for the stay is nor what the patient's out of pocket expenses actually are. The only thing it says is that "Blue Shield of California policy we buy requires he pay 30 percent of approved costs after deductible."

    Medical insurance companies have contracts with hospitals for services. These contracts can be anything from a discount of XX% to flat rate agreements depending on the patient's admitting diagnosis and/or service performed.

    Hospitals often billed exorbitant amounts for everything from drugs to supplies in addition to labs, room and board, etc etc. But when someone has insurance these charges often don't matter because the contracted rate that the insurance company will pay the hospital can be as little as 25% of the actual billed charges. Then the patient only owes what ever their out of pocket is of that 25%.

    For example, the hospital billed $25,000, the contracted rate is $5,000. The patient's insurance requires $2,000 deductible then 30% coinsurance. That would leave the patient owing $2900.

    So, regardless of the costs for antibiotics charged by the hospital I'm left wondering what the patient in this article actually owed. I also highly doubt that any of the antibiotics the patient received in the hospital were not covered by his insurance.

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