Lessons Learned From The $153,000 Rattlesnake Bite

This story about a man who received a hospital bill of over $153,000 because of a rattlesnake bite has gone viral on social media. (For the Washington Post July 20,2015 story, see below.)   It is one of many examples of out of control hospital and pharmacy charges that make everyone so afraid of seeking medical care because of the overinflated costs.

The article does a good job at shedding light on the monopolistic behavior of some of the pharmaceutical companies.  They use loopholes in patent law, as well as shady payoffs to other potential competitors to corner the market for a particular type of medication so they can get away with charging whatever they want for it.

In my opinion, it only scratches the surface of the second leg of the 3 legged stool of the American healthcare crisis, the “non-profit” hospitals.  These organizations rant and rail about how much money they lose because they do so much uncompensated care for the poor.   (FYI, the third leg is the health insurance conglomerates.)

The truth is that a lot of this so called uncompensated care they are writing off is merely an accounting trick, subtracting their predetermined contracted rate from an insurance company from their massively overinflated bill (that they never expected to collect in the first place… expect from people without insurance).

A common practice of “non-profit” hospitals is to mark up medications, equipment, and prosthetics (like artificial joints, etc.) by anywhere from 200 to 1000 percent, or more.  I know a lot of small businesses that are struggling who would love to not pay taxes and still be able to charge a similar mark up.

The math in this article is there for everyone to see.  It clearly states that anti-venom costs roughly $2300 per vial, and in many cases, up to six vials are needed to treat a patient with a rattlesnake bite.  Assuming this were the case here, the hospital would have paid less than $14,000 for the necessary medication.  It charged the patient over $80,000 for it.  Unless the patient is uninsured, they do not expect to collect all of it.  Even so, if they collected half of their fee ($40,000), it would net them $26,000.  Not a bad “non-profit” for the CEOs of these hospital corporations who have to squeak by on one to five million dollars per year in salary and bonuses…  

Please do not misunderstand my point.  I am not saying that making a profit is a bad thing.  In fact, I believe the exact opposite.  Everyone should be able to compete in a free market system to make a profit.  The desire to do so is what has driven our nation to be the greatest in the world, and it has fueled countless innovations that have made the world a better place.  What I abhor is a system that 1) specifically discourages this competition in favor of monopolies, 2) has an almost complete lack of transparency, and 3) is supported by government policy and taxpayer dollars.  With this trifecta, you have what is commonly referred to as “crony capitalism.”   Such a system, like the one in place in American healthcare, is bad for everyone, except the “non-profiteers” in the boardrooms of the health insurance, hospital, and pharmaceutical corporations.

For a great breakdown of how “non-profit” hospitals get away with this charade, please check out this video of Dr. Keith Smith, co-founder of the Surgery Center of Oklahoma, dissecting a giant hospital bill:  

Exposing The Giant Hospital Bill

Michael A. Ciampi, M.D.


 

Earlier this month a guy named Todd Fassler was bitten by a rattlesnake in San Diego, KGTV San Diego reports. In itself this isn’t terribly unusual — the CDC estimates that roughly 7,000 to 8,000 people a year get bit by a venomous snake in the United States. And somewhere between five and six people die from these bites each year.

What raised eyebrows, though, was Fassler’s hospital bill — all $153,000 of it. KGTV reporter Dan Haggerty shared it on Twitter.

Remember the Rattlesnake bite story I did Monday? Guy just sent me this pic of his bill. Uhhhhhhh….. pic.twitter.com/ahK2W9KxVg

— Dan Haggerty (@10NewsHaggerty) July 16, 2015

It’s not clear whether Fassler has insurance—and whether these are dollar amounts that he will in fact have to pay out of pocket. But the confusion over health care pricing is common for Americans who receive bills and can’t be sure where the numbers come from. I reached out to Fassler for comment but he wasn’t immediately available.

Here’s what we do know: The bulk of his hospital bill—$83,000 of it— is due to pharmacy charges. Specifically, charges for the antivenin used to treat the bite. KGTV reports that Fassler depleted the antivenin supplies at two local hospitals during his five-day visit. Nobody expects antivenin to be cheap. But $83,000?

There’s currently only one commercially available antivenin for treating venomous snakebites in the United States — CroFab, manufactured by U.K.-based BTG plc. And with a stable market of 7,000 to 8,000 snakebite victims per year and no competitors, business is pretty good. BTG’s latest annual report shows CroFab sales topped out at close to 63 million British pounds, or $98 million dollars last fiscal year. The antivenin costs hospitals roughly $2,300 per vial, according to Bloomberg, with a typical dose requiring four to six vials. In some cases multiple doses are needed, according to CroFab’s promotional website.

BTG has fought aggressively to keep competitors off the market. A competing product, Anavip, just received FDA approval this year and likely won’t be on the market until late 2018. This lack of competition is one reason why snakebite treatments rack up such huge hospital bills — $55,000. $89,000. $143,000. In May of this year, a snakebit Missouri man died after refusing to seek medical care, saying he couldn’t afford the bill.

But the other reason why hospitals charge so much is the byzantine negotiating process that happens between hospitals and insurance companies to determine the final payout amount. In the case of the $143,000 snakebite in 2012, for instance, Scripps Hospital in San Diego explained that “it is important to understand that these charges are not reflective of what Scripps will be paid. At this time, the patient’s insurance company has not yet paid the bill, and Scripps is in negotiations with the company for the final amount.”

In many cases a hospital bill isn’t actually a bill, but essentially an instrument in a complex negotiation between insurers and caregivers, with bewildered patients stuck in the middle. It’s difficult to know which charges are real and which ones aren’t, and which bills to pay and which ones to ignore. It’s one reason why medical debt is a huge factor in so many bankruptcies.

Hospital bills that amount to legal fictions certainly don’t help consumers keep themselves out of debt trouble. Todd Fassler’s bill is a perfect example — he left the hospital on July 9, 2015. His bill said his $153,000 payment was due by July 27.

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