Healthcare price increases without rhyme or reason?

 LA Times:

Ridiculous, seemingly arbitrary price markups are a defining characteristic of the $4-trillion U.S. healthcare system — and a key reason Americans pay more for treatment than anyone else in the world.

But to see price hikes of as much as 675% being imposed in real time, automatically, by a hospital’s computer system still takes your breath away.

I got to view this for myself after a former operating-room nurse at Scripps Memorial Hospital in Encinitas shared with me screenshots of the facility’s electronic health record system.

The nurse asked that I not use her name because she’s now working at a different Southern California medical facility and worries that her job could be endangered.

Her screenshots, taken earlier this year, speak for themselves.

What they show are price hikes ranging from 575% to 675% being automatically generated by the hospital’s software.

The eye-popping increases are so routine, apparently, the software even displays the formula it uses to convert reasonable medical costs to billed amounts that are much, much higher.

For example, one screenshot is for sutures — that is, medical thread, a.k.a. stitches. Scripps’ system put the basic “cost per unit” at $19.30.

But the system said the “computed charge per unit” was $149.58. This is how much the patient and his or her insurer would be billed.

The system helpfully included a formula for reaching this amount: "$149.58 = $19.30 + ($19.30 x 675%).”

You read that right. Scripps’ automated system took the actual cost of sutures, imposed an apparently preset 675% markup and produced a billed amount that was orders of magnitude higher than the true price.

This is separate from any additional charges for the doctor, anesthesiologist, X-rays or hospital facilities.
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“I understand that hospitals have overhead,” the nurse told me. “But to mark up something like sutures by 675% is insane.”

Another screenshot showed the pricing for an antimicrobial solution to clean the patient’s wound. Scripps’ cost per unit was $73.50. The billed amount was $496.13 — "$496.13 = $73.50 + ($73.50 x 575%)”.

Blades for a cutting tool used by the surgeon had a cost per unit of $98.53. Scripps’ billed price was $665.08 — "$665.08 = $98.53 + ($98.53 x 575%).”

“I started asking questions,” the nurse said. “I was told that if we didn’t mark things up like this, insurance companies wouldn’t give us what we want.”
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I wrote recently about a Valley Village woman who was billed $809 by a UCLA-affiliated clinic for a plastic boot for her broken foot. She found the exact same boot on Amazon for $80.
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A dose of Floseal to limit a surgical patient’s bleeding had a basic cost of $142.81, the Scripps screenshots show. The hospital’s charge: $963.97 — "$963.97 = $142.81 + ($142.81 x 575%).”
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I suspect the insurers would like to get a look at how this software works and negotiate a more realistic price for services.  It would be interesting to see to what extent this is an attempt to recapture the cost for the treatment of the uninsured. In most cases, the patient is only interested in the co-pay portion of the bill which may also be impacted by the computer program.