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US Hospitals: Pay More, Get Less


Meet Bayonne Medical Center in New Jersey, the most expensive hospital in the country. In an analysis of Medicare data from 2001, the NYT found that Bayonne charged more per treatment than any other US hospital for almost a quarter of common procedures. The data is eye-popping:

Bayonne Medical typically charged $99,689 for treating each case of chronic lung disease, 5.5 times as much as other hospitals and 17.5 times as much as Medicare paid in reimbursement. The hospital also charged on average of $120,040 to treat transient ischemia, a type of small stroke that has no lasting effect. That was 5.6 times the national average and 23.6 times what Medicare paid.

The most surprising thing about these rates becomes clear when you see them in light of two other facts about Bayonne. First, the hospital doesn’t serve some ritzy, star-studded town where you would expect high prices, but a “faded blue-collar town 11 miles from Midtown Manhattan.” Second, these high prices don’t translate into higher quality care. A 2011 report about the quality of care across New Jersey ranked Bayonne only in the 50th percentile of hospitals.

Bayonne is one more piece of evidence pointing to a health care system that is fundamentally broken. In few other sectors of the economy can a service provider get away with repeatedly charging significantly higher prices for a service that is no better, and in some cases worse, than those offered by competitors. The system is also profoundly regressive, foisting the highest bills on the communities that can least afford them.

The key lesson here is that health care is not, and has not been for a very a long time, a true market. That observation has to be at the heart of any health care reform going forward.

[Glove image courtesy of Shutterstock]

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  • Lorenz Gude

    After screeching shrilly at Via Meadia for the last couple of years on this topic I am gratified to see the recent series of articles directing fire directly at the waterline of the USS Healthcare. But US health outcomes are still among the best in the world – only slightly inferior to places like Australia. The problem is that it costs twice as much or more as a percentage of GDP. However, unlike another sacred cow in the American system – higher education – medicine has maintained quality while education from K through bachelor’s degrees has not. And run the cost of education up faster than the rate of inflation. I was genuinely shocked when I did a bit of graduate work in California 20 years ago that the admissions office told me that my 1964 degree came from a time ‘when they still were good’!! Gadzooks!

  • Edward Callahan

    Take a good look at your last health insurance statement, the one explaining how much they were charged, how much they paid and how much you must pay. Then you will understand what any health care provider CHARGES means nothing. What they get REIMBURSED from the insurance company counts for everything. And that figure is controlled by the “insurer”.

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