Hospitalists Unaware of Treatment Costs for Inpatients

How much does an overnight stay in the ICU cost? $750? $6,000? Haven't got a clue? Many hospitalists don't know either. The cost of an ICU bed per night is $1,107, according to a recent study of two Washington hospitals. The $750-$6,000 range was what physicians at those facilities guessed.

Even though proponents of the hospitalist model have long claimed that hospitalists cut costs, hospitalists are unaware of the actual costs of care to inpatients, according to “Hospitalists’ awareness of patient charges associated with inpatient care,” published in the May/June issue of the Journal of Hospital Medicine. The study indicated that, in some cases, hospitalists were off by thousands of dollars in their estimates of how much tests and procedures cost the patients.

The guessing game

Researchers from the Internal Medicine Residency Faculty Group in Spokane, an affiliate of the University of Washington, asked hospitalists how much a hypothetical unadjusted self-paying patient would be billed for commonly used services, procedures, tests, and physician charges. Out of the 26 completed hospitalist surveys, researchers found that only a tenth of them were within a 10% accuracy rate.

“Their guesses were not very close, in general, to the so-called ‘true price’,” says Jeremy D. Graham, MA, DO, internal medicine residency Spokane faculty, clinical assistant professor of medicine at the University of Washington School of Medicine, and lead author of the study.

Hospitalists could generally distinguish which services were more expensive relative to each other but could not pinpoint a correct price. For example, they knew that a CT scan was more expensive than a chest x-ray, listing them in the correct cost order. But when asked to name a price for a CT scan, hospitalists estimated anywhere from $150 to $1,800; the price of a CT scan is actually $2,204.

The study indicates that the in-the-trenches physicians do not have a solid grasp on pricing for the services they use everyday. Why? Hospital charges are established on a confidential pricing structure based on contracts between the hospitals, insurances, and vendors and not on the actual costs of the services delivered, according to Graham.

Because healthcare prices are, in reality, adjusted, researchers gathered data from the hospital departments to create an “intellectual tool” of an unadjusted list of charges for the purposes of this study.

“In reality, there isn’t really a single, true price in our system in the US, for a given healthcare service,” says Graham. “?Almost all bills are paid with adjusted prices, adjusted in confidential contracts between a legion of payer sources and the hospitals. Those prices ultimately paid are not known prices to the average consumer, if you will. They’re distorted by some of the back-and-forth deal making for a hospital system’s ultimate goal to have an overall beneficial payer contract,” he says.

Price opacity

Hospitalists’ lack of price awareness could also transfer over to the patient, who oftentimes does not have the choice in what tests are ordered, adds Graham. Unlike in the outpatient setting where a patient can choose not to go to the pharmacy to pick up a prescription, inpatients in acute care settings are often too sick to make those price comparison decisions.

“It would be almost unheard of for you, the individual patient, to be able get a clear price on a menu before the service is delivered. Almost always, those prices would take place in deals between an insurance payer and a facility, and the individual patient or the doctor who ordered the test would be left out of knowledge of that information,” says Graham.

Patients and hospitalists are not trained in price awareness, according to Graham. After a case is completed, there’s little opportunity to revisit a patient’s case to see how much it cost the patient, he says.

The testing trend

In addition to confidential pricing structures and a lack of price awareness training, today’s physicians also tend to order more tests to be on the safe side, which poses a disturbing trend to run up costs. Graham, who teaches residents, says that inexperience can contribute newer doctors’ urge to check off more tests on the lab forms. In addition, medical legal pressures can encourage physicians to order more tests.

“A lot of what is done doesn’t necessarily help the patient a lot. We hear a lot about defensive medicine, that [physicians] feel they need a lot of tests to rule out possibilities,” says Richard Rohr, MD, MMM, FACP, FHM, hospitalist program director at Guthrie Healthcare System in Sayre, PA. “The fact is that the best defense is a good offense. A well-trained internist should be able to examine a patient, form a differential diagnosis, and confirm the diagnosis with two or three carefully selected tests.”

Controlling costs with health reform

Just as inpatient costs can hit the patient’s wallet hard; the government might also take the brunt of the financial hit.

Although Medicare’s DRG system does place some limits on what the hospital can charge, there is really no limit on what the physician charges can be for a given case, according to Rohr.

“You can call as many consults as you want—get as many physicians on the case as you want—and Medicare really has no choice but [to] pay the bill,” Rohr says.

“Everyone who touches the patient feels the compulsion to order some additional testing, look at something else. This drives up costs significantly.”

As healthcare reform is implemented, one of the major elements to be considered is controlling costs.

“You need a health system where the skill of the physician—to think about a patient’s problem and analyze it—becomes valued; that’s really the key to health reform and what we’ve been missing for the last 50 years,” says Rohr.

Karen M. Cheung is associate editor at HCPro, Inc., contributing writer for HealthLeaders Media, and blogger for www.MedicalStaffLeader.com. She can be contacted at kcheung@hcpro.com.