Hospitals: Is the Price Right?

A Look At Hospital Pricing For The Uninsured

(CBS) 

A spokesman for St. Joseph's told 60 Minutes that Ferlini’s bill reflected the hospital’s retail price list, and that they were looking into his case.

"We're willing to pay what the insurance company is willing to pay. So why should they charge us three or four times more than it actually costs?" Peggy wonders.

That’s the question Forbes has been asking for five years. Forbes, whose mother is Chilean, heads an activist group called the Council for United Latinos. It’s a tiny operation run on a shoestring out of a small office in East Los Angeles.

Forbes is a staunch conservative who once was Pat Buchanan's press secretary. The group he runs now may be small, but it’s had a big impact: He has taken on — and embarrassed — major hospital chains all over the country for using tough tactics on the uninsured.

"When you walk in and you get an appendectomy that should be $5,000, let’s say top dollar, and you’re being charged $20,000, that’s wrong. You’ve been hosed, simply put," says Forbes.

Forbes says one out of every six Americans is vulnerable.

Forbes says those affected the most are middle-class Americans — people who are not poor enough to qualify for Medicaid or charity care. "They’re working-class folks that own a home, have a small business, may have a college savings account saved up for their children," he says.

It's people like Lisa and Scott Starbuck. The Knoxville, Tenn., couple was making about $50,000 a year, before taxes, in the computer-consulting business they run out of their home. A decade ago, they were downsized out of corporate jobs that provided health insurance. Lisa got insurance on her own, but Scott couldn't afford insurance after he was diagnosed with diabetes.

"Is it fair to say you were hoping against hope that the diabetes would get under control and there wouldn’t be any other illness?" Rather asked.

"We were just kind of gambling, I think, that that was gonna happen. But we didn’t have any choice," says Lisa Starbuck.

The couple lost their bet last year when Scott suffered chest pains and wound up in the emergency room at the University of Tennessee Medical Center — a non-profit teaching hospital.

Doctors diagnosed a mild heart attack. They inserted two stents to open up a blocked artery to his heart. It was a textbook case; there were no complications, and Scott was released after 72 hours.

A few weeks later, he got an itemized bill for more than $41,000.

"The biggest thing on there was the stents. The two stents were $19,000. And I’m not a medical professional, so I don’t know a lot, but I just didn’t see how that could be $19,000," says Lisa. "So I got on the Internet and looked up the list price, and it was $2,300."

60 Minutes checked with the manufacturer, who confirmed that they sell the stent for $2,300 apiece. Since the doctor used two stents on Scott, the total manufacturer's price was $4,600 about a quarter of the $19,000 the hospital charged him.
"I thought maybe there really is a mistake and so I called the hospital back and they said that the prices were not negotiable," recalls Lisa.

The Starbucks said the hospital did offer them a 25 percent discount, if they paid it off in two years or less. They couldn’t afford that, so they were stuck with the original $41,000 bill. Soon, a collection agency started sending them demanding letters.