By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    learn to recognize and treat yeast infections
    Most Commonly Asked Questions About Yeast Infections
    November 17, 2021
    Advanced lung cancer diagnosis systems used by doctors
    Advanced Lung Cancer Diagnosis Systems Used by Doctors
    March 6, 2022
    The Top Benefits of a Wearable Blood Pressure Monitor Watch
    The Top Benefits of a Wearable Blood Pressure Monitor Watch
    June 13, 2022
    Latest News
    5 Steps to a Promising Career as a Healthcare Administrator
    July 31, 2025
    Why Custom Telemedicine Apps Outperform Off‑the‑Shelf Solutions
    July 20, 2025
    How Probate Planning Shapes the Future of Your Estate and Family Care
    July 17, 2025
    Beyond Nutrition: Everyday Foods That Support Whole-Body Health
    June 15, 2025
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    Soaring Medical Costs Pinned on Medical Devices
    June 7, 2011
    Debt Ceiling Negotiations on Health Care are Mere Cost Shifting
    July 15, 2011
    Is Kathleen Sebelius Listening to the NCPA?
    August 29, 2011
    Latest News
    How IT and Marketing Teams Can Collaborate to Protect Patient Trust
    July 17, 2025
    How Health Choices and Legal Actions Intersect After an Injury
    July 17, 2025
    How communities and healthcare providers can address slip and fall injuries with legal awareness
    July 17, 2025
    Let Your Lawyer Handle the Work Before You Pay Medical Costs
    July 6, 2025
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Time’s Brill Persuasive but “Bitter Pill” Misdiagnoses Health Care Ills
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Finance > Time’s Brill Persuasive but “Bitter Pill” Misdiagnoses Health Care Ills
BusinessFinanceHospital AdministrationNews

Time’s Brill Persuasive but “Bitter Pill” Misdiagnoses Health Care Ills

Joanne Conroy
Joanne Conroy
Share
6 Min Read
healthcare costs
SHARE

healthcare costs

The Feb. 20 Time magazine article by Steve Brill highlights the very real challenges people have navigating our health system. Specifically, it highlights individuals who have no health insurance or inadequate insurance coverage. One of the primary questions the author poses is, “Why are our prices so high?”

healthcare costs

The Feb. 20 Time magazine article by Steve Brill highlights the very real challenges people have navigating our health system. Specifically, it highlights individuals who have no health insurance or inadequate insurance coverage. One of the primary questions the author poses is, “Why are our prices so high?”

More Read

Value of Rural Hospitals
LifeBridge Health Lends a Helping Hand to Hurricane Sandy Survivors
Top Baby Clubs for Health Conscious Parents in the UK
Pfizer to Expand Clinical Trial Data Access, Takes Step Toward Transparency
When It Comes to Denial Management, Qualitative Data Is Your Best Ally

Uwe Reinhardt wrote a great 2006 article in Health Affairs about how hospitals set prices and how they are paid. For many years, we lived in an alternate universe where chargemasters were developed to itemize those hospital services and goods and to assign prices. Insurers soon started negotiating steep discounts on hospital charges, and chargemasters rarely reflected what hospitals were actually paid for services. In the 1980’s, we developed Diagnosis-Related Groups (DRGs), which bundled the costs of services for inpatient care for Medicare. DRGs were originally calibrated on the relative costliness of cases and were updated regularly for changes in technology, practice, and market forces. However, the alternative universe of the chargemaster marched on, updated for inflation and changes in practice.

The challenge highlighted in the article is this: As insurance policies become increasingly consumer-directed, our system becomes treacherous, posing great financial risk to patients. Patients with a high deductible, or those who face co-insurance payments for inpatient care or out-of network care, enter the alternate universe of the chargemaster. Suddenly those prices, essentially irrelevant to those with traditional insurance, really matter.

Brill demonizes the chargemaster, hospital CEOs, and health care industry growth in general. He has compelling anecdotes. Many of those stories helped sell the Affordable Care Act to the American public. We wanted to ensure that people did not get “bad insurance” that would only increase their risk for medical bankruptcy. But as compelling as Brill’s stories are, and as persuasive, they ignore much of our publicly available information.

The Chargemaster

Let’s agree that any system would be preferable to the opaque chaos of charges we currently have. Insurance companies are as reluctant to reveal their proprietary negotiated prices with providers as hospitals are to revamp their 20,000 to 40,000-item chargemasters.

Who created that monster? In 2005, MEdPAC commissioned Allen Dobson and the Lewin Group to conduct a “Study of Hospital Charge Setting Practices.” They concluded that those practices are a “balance of competing objectives of balancing budgets, remaining competitive, complying with health care and regulatory standards, and continuing to offer needed services to the community.”

In hospitals, most of the attention on chargemasters tends to focus on newly added procedures, devices and drugs, rather than recalculating charges for existing services. Disparities between charges and costs have grown over time because many existing charges were set before hospitals had the tools to more thoroughly break down and examine costs. Mark-ups tend to vary by service line, with high-cost items receiving a lower mark-up than low-cost items. The fact that charges are often not closely tied to costs implies the current Medicare payment systems may not be closely tied to resource utilization.

CEO Salaries, Margins, and the Growth of Health Care

Brill selectively chose compensation figures that included severance and retirement. CEO compensation is publicly available, market-driven, and reflective of the complexity and the size of these organizations, many of which employ tens of thousands of people.

Hospital margins are tracked on many public websites. Large teaching hospitals’ operating margins generally are 1.5 percent less than those for non-teaching hospitals. Nationally, hospital margins have returned to their 2008 levels of 7 percent. Moody’s Investors Service reported in January that its outlook for U.S. not-for-profit hospitals will remain negative in 2013. This reflects the impact of the recession on patient volumes, heightened pressure from employers and all levels of government to lower the cost of health care services, and significant changes ahead for how hospitals are paid.

Controlling costs and demand for health care services is a responsibility of both providers and patients. We need a commitment to develop new ways of evaluating cost and setting prices. Not only will this need to include economic, regulatory, and market-driven considerations but should be anchored in principles that incentivize healthy communities, reward prevention, and increase patient engagement.

We will have to make some hard choices: we have built a care system that we can’t afford to grow anymore. The choice will not be who will pay, but what treatments are unnecessary and what we can do individually and collectively to prevent illness. We need to make sure that people understand their coverage choices so they are not financially vulnerable.  Rebasing chargemasters and moving resources out of the health system will not get us there. We need to create transparency and engage both patients and practitioners in the process.

photo: healthcarecosts/shutterstock

Original post

TAGGED:healthcare costs
Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

5 Steps to a Promising Career as a Healthcare Administrator
5 Steps to a Promising Career as a Healthcare Administrator
Health
July 31, 2025
holistic dental
Holistic Dentist Services Are Natural and Safe
Dental health Specialties
July 28, 2025
botox certification
Help Improve People’s Skin Health Via Botox Certification
Skin Specialties
July 22, 2025
Telemedicine Apps
Why Custom Telemedicine Apps Outperform Off‑the‑Shelf Solutions
Health
July 20, 2025

You Might also Like

healthcare costs
Medical Education

Teaching Medical Students About Costs

March 4, 2013

The Real Cost of Specialty Pharmacy

March 27, 2015
kratom can offer a number of health benefits
News

What Are Different Forms Of Green Kratom Available Online?

November 9, 2022
online marketing
BusinesseHealthFinance

Internet Marketing Strategies Build Care Options for Pomona Valley Health Centers

March 7, 2014
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?