Medical Pricing Scumbaggery
David Lazarus writes at the LAT about huge, automated markups for healthcare from a leak of hospital records -- Scripps Memorial Hospital in Encinitas:

Ridiculous, seemingly arbitrary price markups are a defining characteristic of the $4-trillion U.S. healthcare system -- and a key reason Americans pay more for treatment than anyone else in the world.

But to see price hikes of as much as 675% being imposed in real time, automatically, by a hospital's computer system still takes your breath away.

I got to view this for myself after a former operating-room nurse at Scripps Memorial Hospital in Encinitas shared with me screenshots of the facility's electronic health record system.

The nurse asked that I not use her name because she's now working at a different Southern California medical facility and worries that her job could be endangered.

Her screenshots, taken earlier this year, speak for themselves.

What they show are price hikes ranging from 575% to 675% being automatically generated by the hospital's software.

The eye-popping increases are so routine, apparently, the software even displays the formula it uses to convert reasonable medical costs to billed amounts that are much, much higher.

For example, one screenshot is for sutures -- that is, medical thread, a.k.a. stitches. Scripps' system put the basic "cost per unit" at $19.30.

But the system said the "computed charge per unit" was $149.58. This is how much the patient and his or her insurer would be billed.

The system helpfully included a formula for reaching this amount: "$149.58 = $19.30 + ($19.30 x 675%)."

You read that right. Scripps' automated system took the actual cost of sutures, imposed an apparently preset 675% markup and produced a billed amount that was orders of magnitude higher than the true price.

This is separate from any additional charges for the doctor, anesthesiologist, X-rays or hospital facilities.

Call it institutionalized price gouging. And it's apparently widespread because the same or similar software is used by other hospitals nationwide, including UCLA, and around the world.

The software:

Scripps' software is from a Wisconsin company called Epic, which says its programs have compiled medical records for more than 250 million patients worldwide.

Epic's healthcare systems include MyChart, the patient portal used by many hospitals, as well as a wide variety of applications intended for clinical settings.

Epic's clients include UCLA, UC San Diego, UC San Francisco, Stanford University, Johns Hopkins University and Yale University.

"Automate revenue and coding from clinical activity to reduce administrative overhead, avoid missing charges, reduce A/R days and increase total revenue," the company's website says. (A/R is short for accounts receivable -- the time that a payment is outstanding.)

...Scripps' use of Epic's software sheds new light on my last column about the hospital, which involved Scripps billing a patient nearly $80,000 for a procedure that Medicare said should cost less than $6,000 -- a more than 1,200% markup.

The bill included a roughly $77,000 charge for "medical services," which Scripps said covered "technical service charges" such as "the facility, the surgical room, the equipment, the support staff." That is, the routine costs of running a hospital.

A single facility can't be held accountable for the dysfunctional, profit-focused U.S. healthcare system. The issues raised here apply to every medical facility in the country.

But one common aspect of all U.S. hospitals is a desire to keep their pricing under wraps, to prevent patients from knowing how badly they and their insurers are being fleeced.

Maybe now that a smidge of sunlight has been let in, we can have a more honest conversation about fixing things.