Determining the cost of medical procedures – a personal anecdote…

So… there I was, having a good time tailgating with some friends before a concert at the Greek Theater.  Sitting in lawnchairs, having a beer, and catching up between a few guys that don’t see each other often enough.

As we talked, I started to feel a bit dizzy….

Next thing you know, I’m laying on the ground looking straight up at someone dressed in EMT gear who’s holding some fingers in front of my face and asking “can you tell me how many fingers I’m holding up”?


Later, after this was all over, my friends told me they noticed that I’d gone quiet and was simply staring out into space.  Then I slumped over, they couldn’t rouse me, and 911 was called…

I regained consciousness, my friends helped me to my feet, but the world was spinning.  It was hard to take two steps in a straight line.

The EMT’s recommended a ride in an ambulance, but the group all knew how expensive THAT is.  I’m on a high deductible plan – the kind that normally covers nothing unless you have a major problem (like passing out in a field) and am therefore “sensitive” to the actual cost of medical procedures.

Given I COULD actually walk – with some help – and we were very close to a top-notch hospital (Cedars-Sinai in LA), a friend chose to abandon the show and help me to the hospital (and stay with me through the process – how great is that!?)

He lead me to his car, we drove to the hospital and checked in.

The check-in staff was awesome.  Despite the line in ER they moved me through quickly, and soon enough I was in the Dreaded Hospital Gown sitting on an examination table.  With my good friend John sitting in the “guest chair” in the room the entire time.

The doctor came in and we began….

By this time I’d gotten almost all the way back to normal.  Maybe a bit groggy, but completely in charge of my faculties.  No more impaired than perhaps waking up from a mid-day nap.

They ran every test known to man on my heart, and of course the various blood tests, listening to this and that, etc, etc.  They even included what Monty Python calls “the machine that goes PING!”) which told me nothing was wrong.

By the time that was over I was back to 100% – and they found nothing.

What’s next?

The doctor came back in and told me they had no idea what it was, so they recommended a night in the hospital for observation.  I asked what that meant, he said basically they’d give me a bed, hook me up to some of the monitoring machines, and come by and check my vitals periodically – just to make sure all was well.

I told him I felt great at the moment, I had no fear of having something further happen, what was this going to cost?

And here’s where it started….

The answer, of course, was “I don’t know.”

I asked “who does?”, he said he would send someone in from billing.

So…..  while waiting, John and I chatted.  He’s the VP of Risk Management for a bank – so he knows quite a bit about costing out things that are not clearly definable.   He was interested now…

For my part,  I’ve owned repair companies that did more than 50% of their work for extended warranty companies.  That billing process is greatly dependent on the various codes used to describe both the diagnosis and repair, similar to the medical business, and I’ve been the “billing expert” at times myself (in addition to hiring many of them.)  I’ve also done some study on the CPT codes used to define medical billing procedures in the past, as part of making sure I know what the cost of medical procedures are up front on my high deductible plan – when I’m at the doctor and they prescribe a procedure, I don’t just say “what do you call it”, I say “can you give me the CPT code on that?”

We were ready to question the “billing expert” when she came in.   Which turned out to be a looooonnnnggggg time later (perhaps understandable, it was getting late in the evening at that point..)

She arrived, told me her job was to handle billing out charges for the hospital.

Great!  How could there possibly be anyone who knew their charge system better than the person who actually did the billing, right?

Same question.  No future predictions required, just a quote for a basic overnight hospital stay for observation.  What’s it going to cost?  And what’s the CPT code on that?

Same answer, just more nuanced.  And she doesn’t know the CPT code.

John is rolling his eyes behind her….

She pointed out (as they all apparently do) that no one could know what might be necessary during the night.   I pointed out I’m fine with that, just quote me for what we can predict, the night in the hospital.  And what’s the CPT code for that, by the way?

She then launched into a description of how the negotiation process works for healthcare insurance, how each company has different rates, how that makes it hard to know.  No CPT code.

I pointed out that it would seem the person who does the billing would have access to the proper rates for my insurance company, she had my card, so perhaps she could just look that up?  And, if that’s too difficult, just give me a cash-rate quote – I know it’ll be high but at least it’s something.

Nope, can’t do that.


They don’t have that information available at the hospital.

So… here’s someone who is involved in charging me what will end up being $17,000 (without the overnight stay) and “they don’t have that information at the hospital?”  In 2015?  What, is it written on parchment in quill pen and stored in an office somewhere?

What kind of byzantine system does this hospital have?!

At this point I give up, and say forget it – I’m not going for it.  If they can’t give me a price, I’m not staying.  What do I need to do to check out?

She leaves to get that ball rolling.

Some time later, another woman walks in and gives me a clipboard, asks me to sign.

I read it, and what I’m being asked to sign is a document that says I accept responsibility for the charges –whatever they are!!!   And the charges are on the “master price list”.

Great!  They have a master price list!  Let’s see it!

Well…. No, they can’t do that.  It’s not available at the hospital…

I ask her to tell me what the charges will be so I can sign the document.  She tells me she can’t do that.  I ask her whether it would make any sense to sign a document accepting charges without knowing what the charges are?

She waffles a bit but ultimately comes out with “no, you’re right…”

So…. I ask, where do we go from here – do you hold me here?

She says no, that’s not going to happen, I can note “refused to sign” and that’ll be it.

Whew!  Escape is in sight!

Out of the hospital I go…  But it’s not over yet.

Next up, I receive the insurance summary in the mail – total bill $17,000 (“negotiated price” for Anthem/Blue Cross $6700….)

This, of course, “pegged” my deductible.  Whether the cost was $17,000 or $6700 (or anything over $2500) made no difference, but I thought it might be interesting to continue down the path….

First, I contacted Cedars and told them I was not going to pay the bill to them until I received a detailed bill showing every individual charge.

Eventually I did receive that, and it was every bit as interesting to read as Steven Brill lays out in his Time Magazine article “A Bitter Pill”, exposing the massive overcharging in medical bills.,2,26,MedicalCostsDemandAndGreed.pdf

One single issue I felt was emblematic of the whole thing…

During the visit they hooked me up to an IV with a saline solution drip.  Apparently that’s standard practice, which is fine…

The charge for that one liter of slightly salty water?  ONE THOUSAND SIX HUNDRED EIGHTEEN DOLLARS AND 3 CENTS.  That’s $1618.03.

Now…  Maybe it’s expensive because of the quality control needed before they shoot something in my veins.   I’m fine with that, it seems like a good idea.

So I did some research and found several hospital supply stores that had this solution available.  They all seemed to sell the same thing (in cases of 12) for about $95.  Meaning the actual cost of that bag of salt water is about $8.00.  I suspect a hospital as high volume as Cedars gets them in bulk and pays far less, but I don’t know that.

Now….You COULD say that the price is so high because they had a nurse tap into my veins to hook it up, then someone had to monitor it, etc, etc.

Perhaps their nurses are REALLY well paid, because I know for a fact that the entire involvement of personnel in that IV was about 10 minutes at most.  Assuming it’s OK for the hospital to charge $16 for something with a cost of $8 (a margin any retailer would drool over), that means “nurse time” cost $1602.  That’s $9,612/hour.  Nice money if you can get it.

Maybe the extra is NOT to pay for the nurse.

Great.  So there’s a “Facilities Charge” on the bill of FIVE THOUSAND SIX HUNDRED FIVE AND SEVENTEEN CENTS on the bill as well ($5605.17…)

What’s that for if not to cover such incidentals?

And, by the way, I later found out that all the information I was asking their billing person for is found on the internet.   The hospital is required to publish their “chargemaster” on the internet, here is Cedars-Sinai…

As a result of this, I wrote a letter to the President of Cedars-Sinai, Thomas Priselac.  That exchange is documented here in case you want to read it.

To his credit, he did respond to my first letter.  Nice of him, but it was obviously a canned response written mostly by a PR flack.  My follow-ups received no response.

Now… I’ve managed customer service my entire life, and I’ve often responded “on behalf of the President”, to people who have issues as small as feeling they were overcharged for something by just a few dollars. I’ve always responded to every single letter I’ve received, large or small.

One might THINK that a “customer” who resulted in revenue of $6700 might be owed a level of customer service that exceeds that of a customer who thinks they were billed $2 extra for a repair, but I guess in Medical World it’s OK to ignore your customers.

I also CC’d my letters to all my local and national political representatives, of course.  Zero response from any of them as well.

That’s the end of this one, let’s hope someone DOES SOMETHING about this at some point so people who are not as fortunate as I are no longer taken advantage of by a system designed to drive any normal person into bankruptcy.