Quote:
Originally Posted by JoeRedskin
The reason the insurance companies pay less than uninsured patients is that they negotiate bulk rates and ensure payment. The cost to you, an uninsured patient, reflects not just the cost of the service but, also, the expected returns and additional collection costs when extrapolated over a large population of patients. It's just good business.
Individuals w/out coverage get the same service, true. On average, however, the rate of collection for people w/o insurance is significantly lower. From ten insured patients, the hospital will always collect (and collect relatively promptly) $2,250. From ten uninsured paitients, the hospital may collect $5,500 but will likely collect significantly less and will collect it over a longer time (so it is worth less - 1.00 today is worth more than 1.00 tomorrow) and will incur additional costs in trying to collect it.
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Pretty good synopsis. Also, I'll add that assessing the cost of a certain procedure is incredibly difficult, even for financial wizards.
If you manufacture a widget, you know how much it cost to purchase supplies, how much you pay the people to make the widget, and how much overhead you need to cover. It's pretty easy.
But with hospitals and procedures, one knee replacement procedure for a 55 year old otherwise-healthy male may take 45 minutes in the OR and be fairly simple, requiring little in the way of resources. The same knee replacement for a 75 year old female with osteoperosis may be incredibly complicated, take 3 hours in the OR, and require more in the way of resources.
We have methods of averaging out costs for various procedures, but in the end they are just estimates. Hospitals have to cover their costs on patients who they can collect from to help subsidize the losses on patients who can't/won't pay a dime.