Scandalous hospital pricing procedures have been on the map since last year’s Time magazine piece by Stephen Brill, but the NYT yesterday offered a striking account of a particularly egregious example of hospital price-gouging. Health Management Associates, a Florida hospital chain, is being sued for inflating its profits. The article describes a publicly displayed score card that rewarded doctors for admitting more patients who came the ER. More:
The lawsuits describe a wide-ranging strategy that is said to have relied on a mix of sophisticated software systems, financial incentives and threats in an attempt to inflate the company’s payments from Medicare and Medicaid by admitting patients like an infant whose temperature was a normal 98.7 degrees for a “fever.” […]Federal regulators have multiple investigations into questionable hospital admissions, procedures and billings at many hospital systems, including the country’s largest, HCA. Community Health Systems, the Franklin, Tenn., company from which H.M.A. hired its former chief executive in 2008, faces similar accusations that it inappropriately increased admissions. Community is in discussions with federal regulators over a settlement regarding some of the accusations.
This story should be seen against the background of increasing hospital power in our system, which the ACA may be facilitating. We’re used to treating the insurers and big pharma as the main health care villains, but it’s clear that hospitals are a central driving force of the system’s dysfunction. Price inflation is often unintentional, or simply caused by rational responses to perverse incentives, but in this case a hospital chain deliberately set out to encourage overtreatment and other abuses. We need to shift our health care system’s center of gravity away from hospitals as quickly as prudence allows.