April 27th, 2010
12:09 PM ET

Surgical equipment price a shocker

By Sabriya Rice, CNN Medical News producer
and Elizabeth Cohen, CNN Senior Medical Correspondent

When Dr. Linda Galloway learned she needed surgery to save her vision, she scheduled the procedure immediately with her ophthalmologist.

What an eye-opener it was when the hospital bill arrived. She noticed several high-priced items, including a charge of $863.20 for disposable forceps.

"Surgical instruments can be expensive but I think $863.20 is really outside of the realm of realistic prices," she complains.

Then Galloway, an obstetrician in Orlando, Florida went online and found similar forceps for $1,155 for a box of six, or $192 each.

"I was outraged. I tried to get an explanation as to why I was charged that amount of money," she said. When she called the billing department, the answer upset her even more.

"They said when you signed consent for the procedure, you allowed us to charge anything we wanted to and therefore, this is what it is," she recalls.

Galloway says she was especially upset because with her insurance plan, she has to pay 20 percent of her medical bill and if the hospital is going address her as a consumer, then she wants them to level the playing field.

"I need to be in power to do things.  If you're going to charge me this amount of money, then I need to know exactly what instruments you're going to use and what medications you're going to use. Because I can then buy them outside and bring them to the hospital."

Florida Hospital, the place where Linda had her surgery says their charges are fair and compatible with other hospitals.

"Like all other hospitals across the country, [Florida Hospital] bases charges on a charge master that serves as a guide,” a spokeswoman wrote in an e-mail.  She says that an independent contractor compares Florida Hospital’s charges with those of other hospitals and that the results show “we are in the mid-range in that pricing structure."

But is markup of more than four times the market rate really reasonable?

According to the American Hospital Association, the prices increases are necessary.

“A hospital is a very expensive enterprise to keep open 24 hours a day, 7 days a week, 365 days a year and ready for any medical need or emergency. And that does lay out a basic level of cost that has to be captured through the charge structures," says Rich Umbdenstock, president of the AHA.

Umbdenstock says that hospitals have to compensate for programs such as Medicare and Medicaid that traditionally underpay, and that each hospital has to set prices in a way that helps their bottom line.

"The hospital has to be able to bring in more money than it spends or else it won't be there for the next patient.”

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