I’m in the Wrong Business

The Good Old Times - photo by JoAnn Sturman

 Scott Sturman, M.D.

I thought stories like this only happen in Chicago.

Out patient surgery centers are mandated by accreditation agencies to prevent deep venous thrombosis (DVT) in surgical patients.  All patients are assessed on admission to determine their respective risks, but the criterion is so broad that nearly everyone is eligible and merits prophylaxis.  The mainstay of treatment are sequential compression devices which squeeze the patient’s lower legs during surgery and in the recovery room.

The surgery center’s cost for the compression device is $24 for two squeezers (one for each leg), but out patient surgery centers cannot recoup these outlays since insurance companies pay a one value, global fee for each surgery.  To protect themselves legally, even though the chances of a DVT are remote in many of these patients, compression devices are used on nearly every patient.  In the process the center loses $24 per patient.

Enter the compression device vendor -- An offer is made whereby the seller of the product will provide the supplies and equipment free of charge to the surgery center provided the individual patient can be billed directly by the vendor.  If the patient’s insurance company denies payment, there is still no charge to the surgery center.

Recently, a former surgical patient brought a check from a major health insurance company to the operating room director at an out patient center.

“I must have received this check by mistake,” she said.

“Here, let me take a look at it,” replied the nurse director.

The check from the insurance company for $890 made out to the compression device vendor was sent erroneously to the patient.  The original invoice from the vendor stipulated a $445 charge for each leg, thus the $890 aggregate charge.  Even with a conservative 100% mark up by the vendor to the surgery center, the vendor’s cost is $12 per pair.  The 7500% mark up for a $12 item was more than the combined fee of the surgeon and the anesthesiologist for the case.

Instances like these, where a vendor can bypass the patient and bill the insurance company directly, are the tip of iceberg, and one of the reasons healthy people pay $1500/month and more for a high deductible health plan. 

Roadside Stand China - photo by JoAnn Sturman