As Hospital Prices Soar, a Stitch Tops $500

In the article, As Hospital Prices Soar, a Stitch Tops $500, author Elizabeth Rosenthal explains the the high costs involved with trips to the Emergency Room, and the reasoning behind why hospitals charge that much. Rosenthal sums up why hospitals are able to charge exorbitant prices for things such as gauze, IV bags, and pills quite simply: because they can. Rosenthal mentions "Economists note that hospitals can bill for emergency room care with relative impunity, since injured patients generally rush to the nearest treatment facility", an idea that we have discussed in class about how hospitals are able to use peoples fear to set prices well above market value.

Another big reasoning behind costs going up is attributed to mergers and consolidation of hospitals. Rosenthal points to Sutter in northern California, as the author writes "Sutter operates the only hospital in some California cities." providing them with the market power to raise prices without worrying about fear of decreased demand. She also notes how these major healthcare providers like Sutter or Banner are able to use their size and market power to dictate terms and pricing in contracts, as well as including gag orders that prevent patients from knowing what rate their insurers negotiated on their behalf.

One of the more interesting parts of the article was the interactive map of the cost of the medical care to treat a cut finger, highlighting the differences by regions. Next to the map was a bar graph of each of the regions and the amount that was paid to both the hospitals and doctors. Although there was a slight difference across the country in the amount paid to doctors (the biggest gap being $200 between Texas and New England), there is a huge discrepancy in the amount paid to hospitals with west coast hospitals collecting almost twice as much compared to those on the east coast. Again as we have discussed in class, is there any justification for massive difference in prices? The article points to the arbitrarily set prices on the "chargemaster".

There are many questions to think about going forward, such as what are we able to do about this? What alternatives do we, the consumer, have when it comes to receiving treatment with out being forced to pay the high prices?