Archive for February 28, 2013

The Two Big Problems

February 28, 2013

As a nation, we face one crushing problem in two major industries that are weighing us down so much we cannot keep our heads above the surface.

Health care industry

Energy extraction industry

Problem: both of these industries are charging as much as the market will bear and that is sucking dollars that could be used to fuel growth.

Health:  The eleven-part piece in Time by Steven Brill is jaw-dropping.  Markups in the order of 3000% are not uncommon.  This is just one example

This would mean that Sean Recchi’s dose of Rituxan cost the Biogen Idec–Genentech partnership as little as $300 to make, test, package and ship to MD Anderson for $3,000 to $3,500, whereupon the hospital sold it to Recchi for $13,702.

This piece begins with Mr.Recchi’s initial contact with MD Anderson in Houston.  Part-6 has this that makes sure you understand that the administrators at MD Anderson only care about profit.

As 2013 began, Recchi was being treated back in Ohio because he could not pay MD Anderson for more than his initial treatment. As for the $13,702-a-dose Rituxan, it turns out that Biogen Idec’s partner Genentech has a charity-access program that Recchi’s Ohio doctor told him about that enabled him to get those treatments free. “MD Anderson never said a word to us about the Genentech program,” says Stephanie Recchi. “They just took our money up front.”

And Mr. Brill reveals, to me at least, a dirty little secret that none of the hospital administrators with whom he spoke could defend:


Chargemaster is a database of prices for any and every conceivable item that a hospital may provide.  This database has not relation to the cost of the item provided.  Markups could be 10,000 percent. (no typo here)

By the time Steven D. died at his home in Northern California the following November, he had lived for an additional 11 months. And Alice had collected bills totaling $902,452. The family’s first bill — for $348,000 — which arrived when Steven got home from the Seton Medical Center in Daly City, Calif., was full of all the usual chargemaster profit grabs: $18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each. None of that was considered part of what was provided in return for Seton’s facility charge for the intensive-care unit for two days at $13,225 a day, 12 days in the critical unit at $7,315 a day and one day in a standard room (all of which totaled $120,116 over 15 days). There was also $20,886 for CT scans and $24,251 for lab work. Alice responded to my question about the obvious overcharges on the bill for items like the diabetes-test strips or the gauze pads much as Mrs. Lincoln, according to the famous joke, might have had she been asked what she thought of the play. “Are you kidding?” she said. “I’m dealing with a husband who had just been told he has Stage IV cancer. That’s all I can focus on … You think I looked at the items on the bills? I just looked at the total.”

Steven and Alice didn’t know that hospital billing people consider the chargemaster to be an opening bid. That’s because no medical bill ever says, “Give us your best offer.” The couple knew only that the bill said they had maxed out on the $50,000 payout limit on a UnitedHealthcare policy they had bought through a community college where Steven had briefly enrolled a year before. “We were in shock,” Alice recalls. “We looked at the total and couldn’t deal with it. So we just started putting all the bills in a box. We couldn’t bear to look at them.”


Well, you get the idea.  Hospitals and their “chargemaster” and pharmaceutical companies are sucking all the recovery out of the US economy.

More on the “energy extraction industry” next time