Longest article in TIME history explains high U.S. health costs

Hospital prices ramp up health costs

Topics: Cost Management, Margin Performance, Finance

February 25, 2013

In the longest, single-author story in TIME Magazine history, author Steven Brill last week concluded that high prices charged by hospitals and physicians are helping drive up U.S. health spending.. 

In 26,000 words, Brill explores how price inflation and variation—topics that are already very familiar to health care leaders—play a role in overall health costs. For example, Brill highlights a case where a hospital charged a patient $1.50 for a Tylenol pill, a price that could buy 100 pills on Amazon.com.

Brill dives deeper into hospital costs and practices and suggests that several issues contributing to high prices are:

  • High executive pay;
  • Overutilization or inappropriate utilization of expensive medical services;
  • Physicians practicing defensive medicine;
  • Inflated prices on medical devices, hospital technologies, and drug therapies;
  • Lack of cost sharing between Medicare and its beneficiaries; and
  • Lack of price transparency and significant price variation.

Commenting on Brill's article in the Washington Post's "Wonkblog," Sarah Kliff says the root cause for high costs is the United States' lack of rate-setting, which allows for high prices and significant price variation. Essentially, "[T]he federal government does not regulate the prices that health care providers can charge," Kliff writes—which allows them to mark up prices by more than 100% for commonplace items.

Kliff further points out that other countries—and Maryland— that have implemented rate-setting regulations have seen significantly slower growth in health costs over the last decade (Brill, TIME, 2/20; Kliff, "Wonkblog," Washington Post, 2/23).

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What Your Peers Are Saying

Rating: | Michael Mundorff | February 25, 2013

Sometimes you have to pick your battles. As a system we quit charging for OTC oral analgesics in tablet form (pediatric-dosed liquid in syringes are still charged) because we were spending more to answer irate customer complaints than the reimbursements (insurance companies don't reimburse billed charges) were bringing in. Of course they are still documented in the MAR.

Rating: | Paul Acreman | February 25, 2013

TIME magazine? I wasn't aware they were even still in business, let alone relevant.