Sticker Shock: How Nonprofit Hospitals Bankrupt the Sick

I recently broke my leg, giving me yet another chance to deal with our fractured health “care” system, including the arrogant, crass, immoral, and dishonest accounting practices of nonprofit hospitals, whose policies mandate cash over comfort by pursuing poor, uninsured, and underinsured patients for grossly inflated hospital bills until they are battered, beaten, broken, and bankrupt.

Upon entering the emergency room of Monmouth Medical Center, a nonprofit hospital located in Long Branch, NJ, in the wee hours

Monmouth County Medical Center

of May 24th, I could not see a doctor until I answered no fewer than 36 questions at the front desk—questions that were totally irrelevant to my increasingly swollen and painfully obvious leg injury: “Do you have insurance? Do you know how much your co-pay is? How will you be paying your co-pay? Do you want to put it on a credit card?” For goodness’ sake, people, I’m in pain here!

After spending two hours and two minutes in the ER, I was discharged with a prescription, leg splint, and crutches. A week later I received the bill for a whopping $2,436 (that’s $20 per minute), of which my insurance paid $354 (less than 15%).

Which begs the question: What was the cost of services rendered to my broken bone: $2,436 or $354?

Don’t hold your breath trying to get an answer. Bookkeeping at nonprofit hospitals operates under a maze of financial impenetrability, avoidance, and deceit, even though the IRS has given them special permission to operate as not-for-profit, 501(c)(3) entities. They pay no property, income, or sales taxes. Yet there’s no transparency. Question them about your bill, and they perform the yippee-eye-o-dance of illusion. Explain the charges? Goodness no. How dare you ask!

By financially bleeding the poor, “not-for-profit” hospitals have the cash to afford six- and seven-figure salaries, severance payments, tax indemnification, maid service, charter jet service, low-interest rate loans, golf club membership, housing allowances, questionable practices with inter-related entities, and cash leftover in the bank in the millions (and billions) of dollars, and that’s barely scratching the surface.

According to Monmouth Medical Center’s required annual informational return Form 990 (find it on www.guidestar.org), in 2008, the Saint Barnabas Hospital System (Monmouth Medical is one of seven operating hospitals) paid over $3.5 million to its chief executive officer. You’ve gotta empty a lot of underprivileged people’s pockets to get that kind of payload.

For these reasons, I wrote Sticker Shock (A Rip-Off Report; Why We Desperately Need Universal Single-Payer Health Care). My report which can be found on Facebook at CPAs for Universal Single-Payer Health Care and advocates for improved and expanded Medicare for all.

Sticker Shock exposes the “creative” accounting practices of nonprofit hospitals and their indifference to instituting equitable billing practices. Although nonprofits can’t discriminate based on ability to pay, they nevertheless deliberately segregate billing and collection into (1) those that have some kind of insurance and (2) everyone else.

The only way to stop this insanity is to enact a universal, single-payer healthcare system: an expanded and improved Medicare for all.

On July 3rd, two days after his 13th birthday, my cousin’s son had a stroke.  This young boy ended up in the hospital where he spent weeks undergoing treatment.  That’s an eternity in our current system of hospitals-inflating-the-price-tag-and-the-clock-is-ticking-time-bomb.  Once discharged, his son faces months of rehabilitation – 8 hours a day of intense physical, occupational, and group therapy.  Although my cousin has insurance, the hospital is not a participating entity so they are “pro-rating” his son’s care for “in-system” billing – which translated means they’ll stick it to the parents but in a kinder, gentler way by only charging 500 to 700 percent above cost and not the full twelve hundred.  These parents are looking at astronomical medical bills.

Under improved and expanded Medicare for all, my cousin’s son would receive the same level of care he is receiving now from dedicated, intelligent, caring professionals.  The cost to his family would be zero.  The cost to you and me would be zero.  That’s because improved and expanded Medicare for all would be funded by a small, progressive tax and administered by a democratically controlled entity – removing the profit motive.  Ninety percent of Americans would be paying much less for health care.  Everything would be free to the patient, with no deductibles, co-pays, donut holes, or supplemental insurance policies.

Medicare is a safe, secure, time-tested public health insurance system where patients pick their doctors, and together they make medical decisions. Today, Medicare serves almost 50 million patients.  In its 46-year history, Medicare has processed almost five billion claims at less than 5% overhead (including a fraud-detection unit). What a great record!

Americans don’t want cuts to Medicare. They want it expanded. A decade of polling has shown overwhelming support for an expanded and improved Medicare for all which would cover all necessary medical care including doctors, hospitals, prescription drugs, eyeglasses, hearing aids, psychiatric care, nursing homes, and much more.

Improved and expanded Medicare for all would be universal, womb to tomb coverage; hospitals would be paid a global budget equal to their actual operating costs. No more run-arounds from chauffeured-driven, smug guys in expensive suits.

OK, I know some of you will be saying “But Lynn, what about the lazy, nonproductive, low-lifes of society who will just drain the system we worked so hard to create?”  I hear your concern.  But we can’t specifically exclude the Real Housewives or Snooky.

You can find out more at www.healthcare-now.org and in New Jersey www.njoneplan.org.   Please join these fine organizations and help spread the word.

The Green Party supports improved and expanded Medicare for all.  Clearly, the Democrat and Republican Parties do not.

So what was the cost of services rendered for my broken bone, $2,436 or $354?  If you’re too poor to afford any type of health insurance, you’ll end up paying $2,436 even if it means the “nonprofit” hospital sends you to collection, takes you to court, garnishes your wages, or requests your arrest.

Now those are broken-down priorities.

 

Lynn Petrovich

Copyright 2011


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4 Responses to “Sticker Shock: How Nonprofit Hospitals Bankrupt the Sick”



CALynn comments:

More update on our fractured health care system. The only orthopedic doctor I could find who would see me in less than a 3 week period (to peruse the break on an Xray I delivered to him from the ER) and who was IN network and PARTICIPATING with my insurance was a doctor who always booked three patients at the same time which is why I guess you always hear commentators say we have the “best healthcare system in the world.” Not for us…but it gotta be for someone out there…
After hobbling into his office on crutches and paying the $25 copay, I’d wait at least an hour. Then be put into a room with the two other patients booked for “my” time slot (I guess you’d call that “we” time) and then wait another 40 minutes. I could hear all their problems thru the walls. One guy had a back injury and raised chickens. The other was a woman who had problems with her hand dating back 2 years. She had 3 kids – two were at school, one was in the room with her. So the doctor would go from room to room to room to room between all the patients triple booked. He never spent more than 120 seconds with me on any single visit. I saw him 6 times. “Yep it’s broken…See me in 2 weeks”.
I asked another orthopedic doctor – who I cornered while on crutches at a function – what he thought of universal single payer health care and he said he thought everyone should have health care. He said his office overhead was 80% of revenue. He said he spends 60% of that chasing money, so much so he had to hire a person just to read insurance contracts and determine what payment should be. (Aetna, my insurance provider, has SIXTY TWO separate kinds of health care plans.) So this doctor says to me “Forty eight percent of my overhead is chasing money…there’s got to be a better way.”
Indeed.


rbaldwin143 comments:

Lynn, I was searching online and found a video of your work. It seems like you are really passionate about this.
I have worked in health insurance and for healthcare administration for about 8 years. If this helps at all here are a few reasons for what you have found.

When health plans contract with hospitals many of the contracts are for a percent off of billed charges so the hospital inflates the actual cost of service because if it didn’t they would be in contract to care for people at 10-20% under cost.

Facilities are required to keep one change master for each service and that has to be the same for private pay, Medicaid, Medicare etc. So as an administrator I can’t say “Oh well I am going to charge this patient a fair amount, but I have to charge the inflated price to the insurance”.

On the other side of that payers even Medicaid and Medicaid have a set fee schedule. They don’t care about how much it costs the hospital this is just what they pay regardless and the hospital has to accept that.
In the bigger picture of things, hospitals give out a ton of free care. To cover that cost some states do have backup funds, but guess how that lost money is recouped? Inflated costs of service to everyone else.

The system is really kind of backwards and needs to be changed. E-mail me if you want to chat more about this. I really like your ideas and thoughts on the subject.
Talk to you soon,
-Robert


Thomas Littleton comments:

(hoping that Lynn is sitting down before reading this response)

I agree completely. Medicare for all would work for everyone, except the insurance companies.


NJDave comments:

Why Lynn is going to Washington, DC on October 6th





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