Wow that is expensive, but is it really?

this that and the mba, mbaToday I am venturing to the doctors as I near my 30th birthday to get a tune-up.  Last night we rushed out 1 year old to the doctor’s office after she broke out with a rash on her body from the MMR vaccine she just received.  Sure I used my flex card to make the payments for the co pays while at the office but that is such a small fraction of the bill. 

I looked over the desk to see that for rushing the baby to the doctors office was going to set my insurance carrier back $150.00.  I began to think that is a crime that my insurance carrier is going to be charged $150 for a nurse to see the baby for less than 10 minutes to tell us to give the baby a small dose of Benadryl. 

Think about it $150 for 10 minutes work sounds good doesn’t it?  Looking at it like that it seems great, but when you take in all of the overhead expenses that a doctor’s office must pay that $150 quickly dwindles.  That $150 also goes to cover the person that doesn’t have insurance that still need to be seen, also known as charity care.  Some people no matter how much you hound them are still not going to pay their bill whether they do not have the means or they just do not want to, so this will likely be written off to bad debt.  All the insurances that you need to operate your own office; I know these can be pretty steep.  Salaries of your office staff and all the supplies needed to run a business.  This one is of particular interest, a doctor office can charge essentially whatever they want to but that does not mean that my insurance company will pay that.  The insurance company will adjust the claim and pay say $100 to the doctors office.  So that $150 the doctor thought they were getting is now $100.  As you can see the margin quickly diminishes for the doctor’s office.

The scenario is similar to hospitals except the margins are thinner and the overhead expenses are a lot higher.  Hospitals are faced with the same problems that a little doctors office is, except they are just on a much larger scale.  Working in hospital finance I am able to see this first hand.  What do you think?  Is the healthcare system just milking us for more and more money? 

PHOTO BY: stopnlook

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Comments

  1. Wow $150 for a 10 minute visit?! Again I am glad I live in Canada. That is a ridiculous price, but when you talk of all the overhead it does start to make sense. Still I’d rather have the government just take care of it all and just pay my monthly medical services plan fee. Then when something bad happens, price doesn’t even enter into my thoughts.
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    • @ Jeremy- tell me about it. How does insurance work where you live? I have never really explored health insurance outside the US. How about a guest post :-)

      • I live in Canada too (mere minutes from Jeremy!) and I don’t know if there IS health insurance in Canada but if there were they’d be a useless waste of money. We can walk into any hospital or doctors office at anytime and see a doctor, nurse, etc.

        Of course, there’s time off work that costs, but that is usually covered by employment benefits. It’s bliss not having to budget for medical expenses. We do pay for it though – taxes and medical services plan (which is typically paid for by employers and isn’t paid for by lower income people).

      • @ Daisy – Hmm do you feel that your system works well? I will have to look into how is each province the different, or is it the same for all of Canada? This is becoming intriguing, I may have to do a little research and see how you fine folks north of the border do it!

  2. I got an allergy test and the doctor billed the insurance company $1200. The healthcare system is a scam.
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  3. I agree the cost of health care is a serious problem when they can charge $15 for just 10 minutes
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    • @ Sean – It is a double edged sword, the area I reside in is having trouble recruiting doctors. So to recruit doctors obviously doctors are going to want to be compensated. No doctors you do not get any care. I do not know the solution but if it gets any more pricey who knows if we will be able to afford health insurance any longer.

  4. If I didn’t know any better (and I usually don’t) I would’ve wondered if maybe there was a bit of greed associated with such a high price tag for these type of health services. Charging $150 to examine a baby, prescribe a small dose of Benadryl, and for less than 10 minutes seems excessive. However, after your cost breakdown, I could see the reason for such a big bill.

    Nonetheless, the healthcare industry needs some type of reform. I’m not sure that I agree with ObamaCare, but some type of healthcare reform is needed.
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    • @ Anthony – I agree reform is needed. Hospitals can’t go under but we also shouldnt be paying an arm and a leg just to have insurance incase something does happen. My premiums with my wife and kids are over 6500 a year. I go to the dr office 2 times a year myself. That is rediculous. But if you go without you run the risk of something catastrophic happening. Then if something catastrophic happens do you really care if the hospital isnt going to be paid. No you are only worried about your health.

  5. I totally get what you mean because I work in the healthcare industry .. not on the front end but I do the contracts with our providers and I work with a lot of physicians and health plans. The money we spend on patients with no insurance and who do not pay is ridiculous!
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    • @ Shopping to Saving – do you work on the insurance side or the provider side? You are right, it is rediculous the amount of money spent on thoe who do not pay. And guess who picks up the tab, those who do pay!

  6. I hate the health care system. We got billed $22,000 for a 41k helicopter ride (care flight) last month. No insurance. That is ridiculously insane.
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    • **not 41k – 41 mile ride
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    • @ Katie – I hope everything is ok. That is insane 22k. If you are going to move forward with paying it, I would call and ask for a discount. Then work out a payment plan, since most do not charge interest I would pay what you feel comfortable with each month until it is paid rather than taking out a loan to pay it off where you will have interest costs.

  7. I don’t understand how the health insurance systems works in the USA. It seems as though someone made an error in the setup. You’re doomed if you have it and doomed if you don’t.
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    • @ Dannielle – I am just waiting to win the lottery so that these costs will be trivial at some point. It is doomed, the system is flawed far beyond repair and who knows if there is a way to get everyone on board and go to some other type of healthcare program. We have become so used to it one way there will be big resistence to change. How does it work in Barbados?

  8. Medical expenses have been going thru the roof for a while. As I get older I wonder how we’ll be able to go to the doctor if we get really sick. We have insurance, but what they cover keeps changing.
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    • @ Lisa – exactly then you wonder if they paid the right amount for the service. With deductible and co insurance increasing it is hard to meet the yearly minimums before the coverage really starts picking up the bulk of the tab if you are an otherwise healthy family.

  9. The bureaucracy and ambulance chasing lawyers are the real cost driver in everything – medical facilities now have special staff to deal with all the records required between the insurance companies and the government and all the layers in between and doctors order all sorts of tests and consulting specialists to mitigate any risk. That 10 minute visit probably generated 3 0 – 40 minutes of paperwork processing.

    • @ KGK – It is very true knowing first hand the amount of staff needed to fill out all the paperwork needed to file just a claim with an insurance carrier. What do you think a good solution to this would be? We are in a rut and need to find some way to get out!

      • Two “simple” steps – fist get congress to put a stop to the nonsense malpractice suits and second figure out the real cost for a service without all the adders and amortization to cover the “free” services. It makes no sense that a cash paying customer would have to pay a higher price than an insurance company – so in essence it seems the uninsured are billed at much higher rates that are then absorbed by people who pay insurance premiums – the irony is that the “cash” price is higher than the amount that would be paid by an insurance company for the same service – -and the insurance payment includes the “surcharge” for the uninsured. Another problem is taxes — of that nurse was making $30/hr 10 minutes would be $5, but her “burdened rate” with benefits and taxes etc is probably more like $60/hr + and the beat goes on…

      • @ KGK – it seems plausible but we all know how quick Congress acts. Until then we will just wait till the healthcare system collapses or goes bankrupt.

  10. Christopher, that $150 includes embedded taxes and insurance that doctor has to carry to protect him or her from a malpractice lawsuit. As Anthony said, Obama care is not the answer. We need tort reform and we should allow insurance companies to compete in all states to bring the cost down. Government care will bring the quality of care down.
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    • @ Shilpan – there is a lot buried in that $150. It seems as though the way Medicare and Medicaid are leaning though they are only paying hospitals now for performance. There are certain measures that a hospital must meet inorder to qualify for add on payments. Unfortunately the hospitals are only looking to quality outcomes now when it is tied to their revenue. I hope something happens soon, really soon. I feel bad for my children because who knows what it will be like when they are older.

  11. It’s a funny way of doing things you have in the U.S. Even though there are failings on occasions I’m glad that here in the UK we have the National Health Service.
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    • @ Geoff – How would you say that your National Health Service works? Would you say it is effective? How does it get funded, are there taxes or do you have to pay into a pool each month or paycheck? I love the internet so many different perspectives from all over the world. Small town central ny guy is learning about healthcare coverage across the globe. Very interesting!!!

      • Everyone who earns over a certain amount pays what is known as National Insurance. This is used mainly to fund the NHS. This N.I. is a proportion of a person’s salary, the % depending on whether a person is employed, or works for himself. This entitles everyone to free hospital treatment, and discounted dental care, though some dentists will only accept ‘private’ patients. In an emergency the NHS works very well, with fast treatment. If a medical procedure is non-emergency there is often a waiting list of months, though the government is always striving to bring that waiting period down. Some people do choose to pay for private hospital treatment, or more usually take out insurance to cover medical care which gives them greater choice.
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      • @ Geoff – Interesting it seems like a system that is working pretty well, and some who want more of a choice or quicker treatment seek out alternate forms of insurance. Thanks Geoff.

  12. There’s no such thing as free lunch, hospitals are no on longer not-for-profits. They got to make money too. As for insurance companies, no fee for service is 100% percent, I avoid the emergency room like the plague. But i understand your need to want to go to the emergency room for your 1 year old.
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    • @ Lorilla – this was actually at the dr office that we went to. I would hate to see what the ER visit would cost. That would have been a much longer rant!!!! What do you think the solution to healthcare is, or where do you see it going?

  13. I want to see far more competition in health-care. I never understood why insurance is used to pay for most everything, as surely the purpose of insurance is for unexpected, unforeseen events. Too many people see the doctors for small things up here in Canada, and what happens is that many doctors become arrogant, conceited, and don’t give two sh!ts. They refuse to take the time to investigate uncommon, hard-to-diagnose problems.

    I don’t believe that politics is an answer, only competition is. Some people prefer Canada’s style, and in some ways it may be better. However, it’s certainly not a one-size-fits-all solution, and nothing can be.
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    • @ InvestItWisely – I agree with you the term insurance is typically for unexpected. I think if doctors charged more in line with what a copay was we wouldnt use our insurance. I know when we take our girls for their shots when they are a baby those bills easily run up to the hundreds. It is the same here in america people are always going to the dr for every little ache and pain. That runs up healthcare costs as well and ends up costing us all more. Something has got to happen we cannot keep going the way we are. Healthcare is one of the largest portions of the state and federal budgets outside of education.

  14. Agree with Kevin, we need to have competition among the doctors to get patients. Competition always cuts cost.

    Basically doctors’s job insurance is too costly, making the customer pay higher than normal fees.
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    • @ SB – The entire system is flawed. The doctors have high insurance rates because patients and their lawyers are so quick to sue. The doctor shortages that many communities experience makes doctors work longer hours and more hours so sometimes there are accidents. I know if I worked 12-16 hour days, there would be instances where I made an error. I understand their profession is different, but we are only human and mistakes happen. I hope something happens soon before my premiums cut any deeper into my take home pay.

  15. Careflite sent me two bills. The first one was for $990.00 …I have been told it is for rolling me from the wrecked vehicle to the helicopter. The second is for the helicopter ride plus meds for $21,000.

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