Monthly Archives: March 2013

Why Can’t Hospitals Stop Over-Billing Us? (Part 1/2)

Update: On January 5, 2015, Stephen Brill published America’s Bitter Pill: Money, Politics, Back-Room Deals, and the Fight to Fix Our Broken Healthcare System, expanding on his popular Time article.

It is an interesting book, not because I agree with Mr. Brill’s data but because it happens to be a useful exercise in how data sometimes can be applied/misapplied to streamline a compelling narrative.

Below is a shameless self-reblog from my response to the original Brill article focusing on how data from a sub-sub-sub-specialized hospital should not be used to comment on an entire set of hospitals, some of which struggle to serve as the safety net for a vulnerable population.



In an article titled “Bitter Pill: Why Medical Bills are Killing Us,” Stephen Brill outlines a well-researched investigation on hospital over-billing.  In the article, Brill begins by highlighting the unreasonable mark-up MD Anderson places on every medication, service, and imaging that it provides.  He argues that this “hard-nosed approach pays off,” earning MD Anderson $531 million operating profit in 2010, and that this comprises a 26% operating margin.  $1.8 million of that went to the pockets of Ronald DePinho, the president of the cancer center.

Although Brill never outright states the connection, his implication is clear: general hospitals are the oft ignored mammoth in the health care debate, operating under the veil of legitimate non-profit business.  A general hospital funds its astounding operating income by making the uninsured and under-insured suffering patients an offer they cannot refuse – a markedly inflated bill.  It then funnels this unfairly earned profit into the pockets to the Godfather of the organization.

The logic is sensational, if only it were correct.

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On Choices, Decisions, and Happiness

The fable of Buridan’s donkey tells of a donkey who is profoundly hungry.  When put in the exact midpoint between a two identical piles of hay, the donkey was unable to choose which one it wanted and eventually dies of hunger.  Ironically, if the donkey had only one and not two piles of hay to choose from, its life would have been easier (and longer).  Obviously, people are smarter than Buridan’s donkey – are we?   Continue reading

Why Can’t Hospitals Stop Over-Billing Us? (Part 2/2)

In a prior post, I read Steven Brill’s story on health care hospital bills and offered a brief analysis of the “average hospital” in contrast with MD Anderson (spoilers: sub-specialty cancer treatment is profitable, the average hospital is not).  The data show that average hospitals are low-margin organizations.

Below, I argue that although the data disagrees with the vilification of general hospitals in “Bitter Pill,” the article is spot-on that medical bills are incredibly over-priced.

Then, I offer a hypothesis on why.
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