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Cost of Healthcare Becoming Too Real For the Middle Class

Cost of Healthcare Becoming Too Real For the Middle Class

We all know that the days of affordable healthcare are long gone. In 2014 US healthcare spending has reached $3 trillion and for me this used to be an abstract figure to be pondered upon while I was reading morning papers. My recent encounter with laboratory bills for the tests that my doctor and my son's doctor ordered showed me how real these cost really were.

With the steady rise of the high-deductible medical insurance plans, working people are seeing the actual costs of the medical procedures and tests more often.  Andrea Ryan, Director-Public and Government Relations at the Western Connecticut Healthcare Network (WCHN), which runs three hospitals in Connecticut, New Milford, Norwalk and Danbury), during our phone conversation mentioned an increase of 15% of the high-deductible plans in the past several years. Until recently the public was not too concerned about the increasing costs of the healthcare as the hospitals and laboratories were charging the insurance companies directly according to the contracted prices they had in place. Covered patients did not worry about the charges as they were not responsible paying them or at least not directly.

Rising medical costs have been attributed to various factors, unnecessary testing and unnecessary visits to the doctors and medical facilities, ER visits that could have been avoided, etc. Ms. Ryan and Mr. Rosenberg, CFO of WCHN told me that it is no secret that healthcare institutions often push the costs of unpaid costs from Medicare and Medicaid users onto the private sector users, making the cycle continue without a real solution in sight.

So how did I end up thinking about the costs of the healthcare? It wasn't the news articles, although there are plenty of them recently (Aetna exiting Obamacare market, Mylan's EpiPen pricing, etc). During the flu season this year my son and I had visited our respective primary care physicians with the respiratory tract infection symptoms, upon which our doctors ordered various tests to be performed to determine what was going on. We were tested for flu and strep infections and also our doctors ordered a test called the respiratory viral panel ( test for various other viral pathogens).  My son was diagnosed with the flu (he did not receive any treatments since the diagnosis happened more than 48 hours after the onset of the symptoms). My tests came back negative for all of the pathogens and I weathered the infection using the age-old remedies recommended by our grandmothers, chicken soup, tea, honey and lots of rest (and of course Advil and Tylanol, because we are living in the modern times and why suffer in pain if we can help it).

Several weeks after, our illnesses were just faint memories of discomforts that we had to suffer, reminding us to be grateful for our overall good health. Then, I received two bills from the WCHN laboratory services in the amount of $900 each. I initially thought that this was some sort of a mistake and that we were charged for a service that was not rendered or that a system mistakenly calculated the cost. I am not a person to trust the system (political or any other type) so I was on a mission to find out what the cost was for. It turned out that the some of the cost included in the bill was for several simple tests (flu and strep), which amounted to about $100. The rest was for something called the “RT, multi-AMP test,” basically a respiratory viral panel. I was assured that the cost was not a mistake and that I was to pay the bills (gulp, $1800).

There was no stopping here now. I had to understand why a test (that seemed routine to me) was costing me this much (and it would have cost my insurance the same, if I had a different type of coverage). I used to work for a company that was in the In-Vitro Diagnostics Instrumentation field (an. instruments that use bodily fluids, such as urine, blood or saliva to perform testing for variety of illnesses or pathogens), so I knew a little about how the hospitals procured these tests and which companies were typical providers of the instruments and instrument consumables.

 I read my way through multiple editions of Journal of Clinical Microbiology that explained to me that the two most common tests used for the viral pathogen evaluation were BioFire FilmArray test and the Luminex XTag test. Both these test were extensively reviewed in several Journal publications and they both expanded their detection capabilities of the viral pathogens to 20 different viral strains after 2001. Internet is a wonderful thing when doing the research (as long as you stick with to the peer reviewed articles). It was fairly easy to deduce based on the articles that each of the tests cost about $200 (including the reagent pricing and laboratory technician time plus the fringe benefits). So, I wanted to know what test was WCHN using in their laboratories and why was it costing me (the user) four times the cost of what WCHN was probably paying? Further, was this test absolutely necessary for two fairly healthy individuals such as my son and myself? My doctor and my son’s doctor both indicated that we were not the only ones reporting this outrageous cost and they had since stopped ordering this viral panel test for the low risk patients with respiratory tract infection symptoms.

When I spoke to dr. Paul Fiedler, the Director of Laboratory Services at WCHN, he confirmed that the test platform used for their laboratories is the BioFire test platform, which did not surprised me. Platform was very stable and allows for encompassing other types of tests necessary to diagnose variety of conditions (some more serious than simple colds). So, what is the WCHN doing to educate the local doctors about what is included in the tests such as the viral panel test (the code in the doctor’s office does not go into details about what viruses a person is being tested for)? Dr.Fiedler writes, in his e-mail to me: "We communicate frequently with our clinical colleagues about new tests and test performance through a variety of mechanisms. These include newsletters, Grand Rounds, updates at departmental business meetings, presentations of abstracts at research events, and direct one-on-one consultation with both regional medical directors and local providers" This was not a very specific answer.

More questions I was asking, more questions were surfacing. Why was WCHN charging me four times the cost of this test? Was this because WCHN was trying to cover for the uncollected costs from the patients under Medicare and Medicaid plans, costs that were not completely recoverable from the government? Was the cost so high because of the uncollectible debt from other private sector patients? In May of 2015 WCHN announced layoffs due to the loss of $1 million in state hospital provider tax per week (totaling $50 million of funding loss per year), so are they recuperating their costs through up charging for services such as laboratory tests?

I had an opportunity to speak to Steven Rosenberg, CFO of WCHN and after our conversation I realized that I never knew how dire of a situation our hospitals were facing.

Mr. Rosenberg informed me that each year WCHN has $159 million accrued unpaid debt for costs that Medicare and Medicaid does not cover, along with the $15 million of uncollected debt from people who defaulted on their payments and about $19 million of unpaid costs for the medical care that the hospitals provide for patients they deem cannot afford the care. On top of the newly implemented state tax that the organization pays, this puts them in an extremely difficult situation.

Management of WCHN and their board have realized that they cannot count on the government to pay their share of cost, that is, there will be no additional revenue from the Medicare and Medicaid payments. They are turning to commercial sector and patients like me and our insurance providers to bridge the gap. They are also doing what they can when it comes to reducing the costs without implementing drastic changes that would affect patient care. Mr. Rosenberg says that the hospitals typically like to operate with 3.5-4% profit margins to allow them to reinvest in their equipment and people, but presently WCHN is only breaking even.

What can we do to improve the outlook of our healthcare providers in Danbury, New Milford and Norwalk? Mr.Rosenberg said that they are attempting to reduce their staff with attrition, which ideally would only affect their middle management staff. Each year they are trying to consolidate the supply chain and re-negotiate the contracts they have in place with the existing suppliers. They also try to reduce the length of stay for the patients when appropriate.

Another problem that Mr. Rosenberg sees is sudden increase in private suppliers of various healthcare services (he calls it "the retail healthcare"), such as MRI, Laboratory work and emergency care. Hospitals cannot compete with their cost structure because these institutions are not obligated to care for Medicare or Medicaid users. They do not care for patients without insurance, the request credit cards up front to ensure that they can collect on any charges that cannot be collected through insurance providers.

He says that the state legislators are aware of the issue, but the problem seems to be too big for anyone to wrap their hands around it and suggest any viable solutions that would be beneficial for the hospitals, patients and the state of Connecticut.

 So what is left for us patients to do? I had little guidance from my insurance company and the professionals at WCHN.  I was told that we (patients) must take steps to understand the tests that our doctors are ordering for us.  But we are not medical professionals, how are we to understand which tests are necessary and which could be avoided? My insurance customer service person said that I had free will and could make decisions. Not sure how my free will is related to understanding my medical conditions and required tests, but I did not press further, they were just doing their job, attempting to answer my questions. WCHN is providing resources for the doctors to understand their processes, testing and microbiology per Dr.Fiedler's comments. It was not clear though how this was being accomplished.  

What can we do to prevent institutions and companies overcharging for their services? Mr. Rosenberg did not offer clear answers, as this seems to be a problem that cannot be resolved by the hospital management teams only. Our legislative representatives need to get involved, both on the state level and on the federal level. Patients, insurance companies, lawmakers, medical professionals, drug companies and test providers and makers must take the situation seriously and come together to propose some viable solutions.  There seem to be too many pieces of the puzzle. Pharmaceutical companies' costs, costs of doctor's services, insurance costs, inability of the government to pay the full cost of the care of Medicare and Medicaid users.

Until we get answers, we must write to our legislators and ask them to get involved and to take actions and work with the healthcare professionals to stop this out of control cost increases. We have to talk to our healthcare providers and understand what we are paying for. Transparency is the best option for the patients at this point.

My hope is that the readers who use WCHN's services in Danbury, New Milford and Norwalk area would be careful about what services they use going forward by talking to their doctors and insurance providers about the concerns they may have. My hope is that this awareness will help families curb their healthcare costs without adverse effects on their well-being.

I also hope that our state legislators reconsider their decision to cut the hospital taxes and consider the true impact of their decisions on the well being of tax paying residents of Connecticut, especially in the private sector. 

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