Of course, there are differences between public utilities and hospital emergency rooms. One is that utilities are regulated, and prices are set by public commissions. On the other hand, in much of the country, emergency room pricing is unsupervised. They seem to charge whatever they want.
But just as important is the way buyers “discover” the price of these two types of goods.
Consider a South African friend of mine. He bought a plot of land abutting the Cape of Good Hope Nature Reserve.
The municipal electricity supply grid ends several miles away. The utility was willing to extend electricity to his plot, but at a price that included the cost of installing miles of poles and wire. He did his research, and concluded that it made more financial sense to install solar panels and a battery system instead.
Compare that to Nina Dang. The San Franciscan cyclist fell and broke her arm in April last year.
Her pain was so acute that she was unable to communicate with bystanders, or with the ambulance crew who took her to Zuckerberg San Francisco General Hospital. There, doctors X-rayed her broken arm and examined the rest of her to make sure she had no other injuries. They put her in a splint, gave her pain medication and sent her home.
A few months later Dang got a bill for $24,074.50.
That was $20,243.71 more than her insurer considered a fair price.
She was therefore responsible for paying the excess. She tried to negotiate, but the hospital threatened to send her to a collection’s agency.
The problem is obvious. My friend knew what electricity would cost him before he made a decision. Dang didn’t know what her emergency room treatment cost until after it already happened.
My South African friend had a choice; Dang didn’t. The question of timing — of when the customer gets information about pricing — is what allows hospital emergency rooms to “administer” whatever prices they want. And that’s exactly what they do.
A fascinating yearlong study by Vox has revealed scandalous practices in our nation’s emergency rooms. They include a $5,571 bill just to sit in a waiting room, $238 for over-the-counter eyedrops and $60 for one 200 milligram ibuprofen.
The cost of identical treatment can range from a few hundred dollars to tens of thousands, depending on the hospital.
What You Can Do
Ultimately, this is a political problem. Market pricing cannot function in an emergency room setting. The solution has to come from our lawmakers. The U.S. needs to adopt the practice of most of its peers in the developed world — standardized pricing for everyday health care services. Until then, there are some things you can do to avoid this kind of scandalous rip-off.
• If there’s more than one in your area, find out which local emergency rooms take your insurance. Ask them for their price list for common services. They are obligated to make this public, thanks to a law that took effect on January 1. Identify your preferred emergency room, and tell your family, friends and neighbors. Write down a directive stipulating that you be taken there in case of emergency, and put it in your wallet or purse next to your driver’s license or ID.
• For injuries that don’t appear life-threatening, go first to an urgent care clinic. Such clinics are popping up all over the place to fill the niche between waiting for an appointment from your doctor and going to emergency room. They may be able to treat you on the spot at a much lower price. If they can’t, they’ll help you find the most economical emergency room for you.
You work hard for your money. There’s no reason you should have to hand it over to greedy, unscrupulous hospitals.
But unless you prepare yourself ahead of time, there’s a good chance you will.
This article appeared in the Bauman Letter, Mr. Bauman writes for Banyard Publishing. His research appears in financial circles. Google Ted Bauman