Searching for the price of one appendectomy

By Sarah Arnquist

This month's Philadelphia Magazine ranks the city's top physicians -- a fad nearly all major city magazines have adopted because it attracts great advertising dollars.

But tucked amid the pages of smiling surgeons and OB-GYNs is a gem of a story by the magazine's executive editor, Tom McGrath, in which he takes readers through the maze he encountered while trying to decipher the hospital and insurance bills following his daughter's appendectomy.

After his five-year-old daughter had her appendix out at Children's Hospital of Philadelphia (CHOP), McGrath set out to learn why it was so impossible for him to understand how much his daughter's surgery and hospital stay cost, how much the insurance company was paying, and how much he owed.

"I discovered two things: first, that much of the cost of our health care is determined behind smoked glass, where patients are never invited to look," McGrath wrote. "And second, that in trying to make sense of a single simple case where everything went right, you can learn a lot about what’s wrong with health care in America."

Many THCB readers may be familiar with the dense systems of setting hospital prices, negotiating discounts and the fact that no one ever pays the sticker price (except maybe the uninsured, at least until recently). But you are a fraction of the general population. As McGrath points out, even educated people like himself often fail when it comes to "health literacy." It's not because they're stupid or for lack of trying, but because the current system is too darn complex. And, moreover, there doesn't seem to be any rationale reason behind the complexity except: That's the way it's always been done.

McGrath's family had a United Healthcare high-deductible plan coupled with a health savings account. He knew he would be responsible for substantial portion of the hospital bill, but that knowledge didn't make him make him shop around, which, he points out, would have been in vain because no one could tell him the actual price of anything anyway.

Thanks, I suspect, to his press pass, McGrath sat down with the head of billing at CHOP and asked her to explain his mess of paperwork. He asked Deirdra to explain how hospitals set prices and negotiated with insurance companies. While McGrath says she was helpful, he finished with more questions than answers.

"Now, I’ll admit to being a little bit of a wiseass here," McGrath wrote, "but I couldn’t help wondering — and apparently I, uh, did this out loud — just why the hell a hospital would establish a price that no one on the planet was actually going to pay."

McGrath doesn't offer a remedy for the health care system, but his observations are relevant for any debate about health reform:

• The current system is far from transparent, and there's no way the average American can understand it.
• Having a high-deductible health plan doesn't necessarily translate into astute health consumerism, which is still largely impossible.
• Operating a bad system because that's the way it's always been done is not a rational reason to keep doing it.
• Many doctors are unaware of the actual costs of care, which he learned after lunching with his daughter's surgeon.

"Wow, an endostapler costs $550?” he said, referring to the device he’d used to close Sarah’s wounds, that had left such tiny little scars. Then the man who’d saved my kid, a guy I could never repay no matter how much I paid him, shook his head in disbelief. “That’s amazing.”

McGrath points out that, to him, his daughter's health and wellbeing is priceless. He wrote: "And that may be precisely what makes our health-care crisis insolvable: We are trying to put a price on something that is, by its nature, priceless."

Yet, health care does have a price, and must have a price because our resources are limited. It would be a lot easier to decide who pays what share of the price if the price was actually known.