I ama surgeon in MA. I get less than $800 for a hernia repair. That includes all the face time with the patient, explaining everything, doing the procedure and taking care of him after. The hospital gets $8000 and lets me use a 'special' room for an hour and another 'special' place for a few hours for the patient to 'sleep off' the anaesthesia. The doctor who provides anaesthesia gets <200$ for every 15 minutes. The gases and his machines cost a multiple of that. Hospitals inflate their costs by running red budgets (basically up spending for everything so they can justify higher budgets). A urologist in my facility who does robot surgery gets $1500 to remove a prostate for cancer. The hospital bills $80,000 for the procedure. And cancer surgery is being permitted even though a few weeks' delay will make little difference in the outcome for most cases. The hospital, who rents me my office by the way, is not giving me any breaks on the rent even though my business is down 50% . Even comcast gave me a $100 rebate because my volume is down. Can you imagine hospitals as corporations worse than Comcast?
The concept of 'efficiency of scale' does not translate to service industries. The only efficiency that happens is efficiency of funneling more money to higher salaries of higher executives. Hospitals are driven by profit and their incentives do not align with the precepts that led to their formation.
Cost of ER, as has been said on a million posts like this throughout HN's history, are due to the fact that you're taking up one of the highest-overhead spaces in the hospital, a lot of which is malpractice-insurance-related. The criticism almost inevitably goes like this, "I went to (the absolute most expensive service center for service X) and it cost a shit-ton!" And it's almost inevitably quoting the price for an uninsured patient - because at insured, contracted rates, your OOP responsibility for ER visits is rarely >1K. Then people complain about itemization (which is why it's so rarely done)("$50 band-aids?! I could have bought my own!"), even though the itemization is nonsense. Overhead has to be allocated, and that's the itemization price - the "band-aids" item includes everything from their storage, the staff member deploying them, etc. It's not $50 band-aids. It's $50 of going to a hospital, seeing an ER doc, and having a nurse put on a band-aid for you. Don't want $50 band-aids? Go to the pharmacy and put on a band-aid for 30 cents. People pretend price transparency will make things better, but it's not obfuscation that gives rise to this - itemization is price transparency, and people who don't understand the idea of allocating overhead just get more inflamed by it.
By the way, actual cost transparency has winners and losers too. The winner is generally private insurers, who can use it to negotiate reimbursement further downward. The losers are everyone else. It's pretty much never the patient, regardless of what advocates of "patient consumerism" cry. When you're a grain of sand between two massive gears, you don't ever win the game of policy arbitrage.
If all you need is stitches, you can go to your PCP ($20-$60), surgeon's private office ($50-$100) or Urgent Care ($50-$200). Instead you go to the highest overhead center, occupy the attention of at least 2 nurses, a mid-level, and a doc, and... yes, pay for all of the above. In a space whose allocated overhead includes the weighted average of "stitches that shouldn't have come in" to "diabetic ketoacidosis with multiple organ failure."
Part of our systemic problems is, due to how we're structured, it's borderline impossible for an ER to say (a polite version of) "You're fucking kidding me. We have an urgent care center across the street - go there." [1]
We have many, many, many systemic problems. People using the ED as a primary care office and complaining about the disparity in prices is the least egregious of them.
[1] In part because hospitals used to try to bounce indigent patients. So now they can't do anything that smacks of bouncing anyone. So even if you try to divert patients from the ED to an in-house Urgent-ish Care, they still have to go through the ED pathway to determine that they're stable (meaning a doc has to evaluate them), before they can be shunted over. And now you're in a hospital, so the overhead of the Urgent-ish Care is already way higher than just having gone to UC to begin with. The hospital has no incentive to establish a spot for providing the same level of care, at high overhead, for lower reimbursement.
can I say 'bullshit' here without being rude? Hospitals ONLY provide services they can profit from. They could have a doc in an office to do the stitching you refer to. And save a crap ton on overhead. By offering a 'luxury pathway' not only do they up their profit, they make everyone else who is trying to save money for the system look bad. Hospitals CHOOSE not to offer cost effective care because there is less profit in it. And then they hide behind Stark regulations - 'we cannot help private practitioners, sorry'.
