A Time manifesto on healthcare costs smashes fences that have constricted this conversation for far too long Steven Brill s taboo-busting X-ray of the US medical system, Bitter Pill, has a chance to reframe the way we think and talk and report about healthcare costs. In a penetrating, systemic, and long (36 pages) look at medical care, US style, for Time magazine, with tale after tale of the financial miseries befalling the system s victims, with number after number bolstering his analysis, Brill zooms in on the nation s unrealistic and destructive healthcare costs why they exist and persist. Brill, a journalist and an entrepreneur, offers the media a rare chance to move beyond the fence that usually corrals this discussion.

High healthcare costs are spawned by a powerful ethic in American medicine that is too often nurtured by the press, an ethic that dictates that the medicine men doctors, hospitals, and drug companies sit at the right hand of God and deserve all they can get. Brill s article crashes right through that fence, in fact, and provides the stuff for further productive reporting. When we debate health care policy, he writes, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?

Precisely. Brill gives us some answers, too, not based on quotes from the self-serving players we hear from so often in this dreary debate, but based on serious investigation. The waste at nonprofit hospitals: Waste in the US system is the recurring theme throughout Brill s piece.

The sacred cows he slaughters are the country s nonprofit hospitals, which he holds largely responsible for much of the overspending. When McKinsey, the consulting firm, examined hospital financial reports with the help of a Bank of America survey, it found, as Brill put it: The 2,900 nonprofit hospitals across the country, which are exempt from income taxes, actually end up averaging higher operating profit margins than the 1,000 for-profit hospitals after the for-profits income-tax obligations are deducted. In health care being nonprofit produces more profit.

Brill dissects some of these nonprofit places of healing from the world-famous MD Anderson Cancer Center in Houston to less well known facilities, such as Stamford Hospital in Stamford CT by showing, with real live bills from patients, the absurdity of some of their charges. For example: a $77 charge for one box of sterile gauze pads. Or consider this: $18 for a single diabetic test strip.

Amazon sells a box of 50 for $27.85, about 55 cents a strip. In hundreds of small and midsize cities across the country the American health care market has transformed tax-exempt nonprofit hospitals into the towns most profitable business and largest employers, Brill reports. (Indeed, that latter point often makes it tough for local reporters to tackle these institutions.) But Brill goes beyond the obviously absurd charges and examines where they come from the chargemaster, an uber-list of prices each hospital keeps for every possible treatment and service. It governs what patients are actually charged and what payers actually pay.

The chargemaster is phony and utterly flexible; it bends according to the negotiating leverage of hospitals and insurance companies when they joust for the final prices. Brill describes the elaborate games that hospitals and payers play in determining who gets what discounts from the chargemaster, which result in an inequitable patchwork payment system. The leverage of the biggest of the big hospitals and insurers determines which patients are charged more or less depending on their carrier s negotiating skill.

As Brill demonstrates, that leaves plenty of room for hugely inflated prices, which in turn make it possible to pay over-the-top salaries to hospital executives. Few patients know about the chargemaster and its amazing flexibility. Even hospital execs profess ignorance.

When Brill asked for a chat with the CEO of Stamford Hospital to find out more about a patient s bill, a spokesman replied that he doubted the CEO has even seen the list in years. So I m not sure why you care. Most top hospital execs refused to talk when Brill inquired about their charges.

Instead he got blah-blah comments from communications operatives. Trudy Lieberman is a fellow at the Center for Advancing Health, and a longtime contributing editor to the Columbia Journalism Review . A complete archive of her Campaign Desk articles can be found here.

Follow her on Twitter @Trudy_Lieberman. Continue reading →