A relatively unknown sector of US health care is hospital pharmacy dispensing of drugs. Hospitals have very high prices for everything and drugs are no exception. One reason hospital bills are high is inflated drug prices; drugs which could be purchased anywhere else for a fraction of the hospital price. A new report details this outrageous behavior by our hospitals, most of which are nominally non-profit and supposedly serving the community. Not only are the prices high, but they are variable between hospitals and even within the same hospital between payers.
It is hard to untangle this because while hospitals are subject to the price transparency rules, they do everything they can to make it impossible to figure out just how outrageous their prices are, including the prices for drugs they dispense. The point of the transparency rules was to help patients be able to shop for services, which is dubious in many cases to begin with, but impossible when hospitals and other providers hide what they are charging.
Here is how crazy this is. The price within the same hospital for a drug can vary by 2,347 times. That’s right, one payer might be charged over 2,000 times more than another one. For uninsured patients, the cash price is often the highest one. There is no excuse of high administrative expense when the patient is paying. Insurance companies sometimes pay more; this affects patients who often have copays and deductibles. And hospitals are making a fortune of this pricing behavior. (3Axis Report)
The fix is obvious, Congress should mandate that hospitals cannot charge more for a drug than they pay to acquire it plus a flat administration fee which must be directly related to the cost of administration, which is usually extremely low–doesn’t cost much to give someone a pill or an injection or even and infusion. This is an example of why health care spending is so high–hospitals rip off payers and consumers to the greatest extent they can get away with.
A low administration fee may not cover the cost of all of the pharmacist’s reviews and consultations and the basic cost of safe medication prescribing, dispensing and administration. However, I agree with reducing the charge of the drugs in the hospital. The way our hospital “marked the drug up” was based on the “mark up” for everything else. After the annual charge review for our region of the country, administration would choose the mark up that was middle of the road for our area and apply it to all charges. In the future hospitals could be required to use a different mark up for drugs that is not as high. But note- some drugs that we bought for inpatient use were astronomically priced such as novoseven for hemophilia.
Note also- most self pay patients worked with the hospital on a much reduced self pay plan.
You may also want to analyze senior management pay of non-profit vs. for profit pay. Other comparative analyses of profit vs. non-profit institutions that you may want to view are: RIFs (reduction in force), nurse to patient ratios (broken down by care type), and taxes paid (income, property; etc.). As for your piece on inpatient drug charges, a couple of points. The charges are exuberantly high-insurance payments are not. The supposed reason that patients without insurance have the highest charges is because the law requires that all charges be equal. Payments are determined by insurers. If the institution is provided out-patient chemotherapy, the institution loses monies on chemotherapy-immune therapies but these losses are made up by other services surrounding cancer treatment-radiology, radiation-oncology, PT, nutrition, laboratory; etc. Last, your statement about the cost of administering medications unfortunately possibly illustrates your lack of understanding of bedside clinical care of hospitalized patients. Clinically, there are many factors that must be answered before administering any treatment, be it medicines, or PT or radiation, interventional procedures; etc. Once you start something it is hard to go back to ground zero in a hospitalized patient. Where does national insurance competition come into play to lower costs? Why are their 50+ BCBS entities? State insurance commissions-do they hold monopolies on charges & payments? Lastly, how much monies are donated to politicians by insurance companies to maintain the status quo’s?
Kevin makes a valid comment on pricing.
I have carpal tunnel in left hand ( very likely related to athletic activity). The 8″ wrist brace price was $180 of which insurance paid $100, thus my cost was $80. ($180 was the posted price). The price from several internet distributors for the same product ranged from $35-$51.
You may also want to analyze senior management pay of non-profit vs. for profit pay. Other comparative analyses of profit vs. non-profit institutions that you may want to view are: RIFs (reduction in force), nurse to patient ratios (broken down by care type), and taxes paid (income, property; etc.). As for your piece on inpatient drug charges, a couple of points. The charges are exuberantly high-insurance payments are not. The supposed reason that patients without insurance have the highest charges is because the law requires that all charges be equal. Payments are determined by insurers. If the institution is provided out-patient chemotherapy, the institution loses monies on chemotherapy-immune therapies but these losses are made up by other services surrounding cancer treatment-radiology, radiation-oncology, PT, nutrition, laboratory; etc. Last, your statement about the cost of administering medications unfortunately possibly illustrates your lack of understanding of bedside clinical care of hospitalized patients. Clinically, there are many factors that must be answered before administering any treatment, be it medicines, or PT or radiation, interventional procedures; etc. Once you start something it is hard to go back to ground zero in a hospitalized patient. Where does national insurance competition come into play to lower costs? Why are their 50+ BCBS entities? State insurance commissions-do they hold monopolies on charges & payments? Lastly, how much monies are donated to politicians by insurance companies to maintain the status quo’s?
Hospitals also charge ridiculous rates to administer pills and injections and infusions. Different locations within the same health system may have different pricing. Inpatient and outpatient pharmacies may also have different prices for the same medication and may even have different formularies. I have arrived at the discharge pharmacy to find that I cannot purchase the same drug that I received inpatient.