There will be blood

June 26, 2014
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Indianapolis-area hospitals are making a killing on blood testing.

That’s clear from a new study by the National Institute for Health Care Reform. That study found, using 2011 health insurance claims from the Big 3 automakers, that common blood tests performed by hospital-owned outpatient facilities in the Indianapolis area were six to nine times more expensive than the same tests at independent lab facilities.

Let me put this in clearer terms:

-    If you had a lipid panel test (which measures cholesterol and triglycerides) at a hospital-owned outpatient facility, you paid an average of 639 percent more than if you had gone to an independent facility, such as Mid America Clinical Labs.

-    If you had a complete blood count at a hospital-owned outpatient facility, you paid an average of 810 percent more than at an independent lab.

-    If you had a comprehensive metabolic panel (which tests kidney and liver function) at a hospital-owned outpatient facility, you would have paid 882 percent more than at an independent facility.

Now, a fair bit has changed since 2011. Some hospital systems, such as IU Health, have slashed prices on their imaging procedures, for example.

So I thought I’d check to see if anything similar has happened on blood tests. I went to the cost-comparison tool on Anthem Blue Cross and Blue Shield’s website, and looked up all of Anthem’s negotiated prices with blood-testing facilities within a 25-mile radius of downtown Indianapolis.

The results? Nothing's really changed.

Comprehensive metabolic panels were running at 1,400-percent higher prices, on average, at hospitals than at independent facilities. And the other common blood tests weren’t far behind.

Here is a summary of what I found:

Comprehensive metabolic panel
Hospital labs avg (18): $144.67
Non-hospital (6): $10.33
Price difference: 1,400 percent

Lipid panel
Hospital labs avg (15): $146.13
Non-hospital (20): $13.10
Price difference: 1,120 percent

Complete blood count
Hospital labs avg (16): $67.44
Non-hospital (20): $7.05
Price difference: 960 percent

So why is this happening?

It’s due to a wrinkle in health finance. The federal Medicare program and most private health insurers pay not only for the actual blood test, but also a facility fee for the use of the hospital facility. Independent clinicians don’t receive any facility fee.

That facility fees is designed to help hospitals cover the cost of being open 24-7 and stabilizing all emergency patients whether or not they can pay.

But lots of blood tests are performed in outpatient settings, nowhere near a hospital campus. Yet Medicare and private insurers allow these hospital-owned physician practices and outpatient offices to bill as if they were part of the hospital, so long as they disclose that fact to patients.

They do, but in language that is only understandable if you already know what they’re doing. Those notices also, in my experience, never say anything about the enormous cost difference that the hospital status produces. (Read how St. Vincent “informed” one patient of the fact that a physical therapy practice near Zionsville was actually part of the St. Vincent hospital campus on West 86th Street and, therefore, charged him twice as much per visit.)

Those facility fees are a big reason for these astronomical differences in price—not only in blood test, but also in imaging scans, colonoscopies and physical therapy. They were also a key reason hospitals were willing to employ so many physicians—and pay them handsomely too.

Physicians seeing patients in hospital-owned facilities could collect significantly more money for lab tests, imaging scans, colonoscopies and physical therapy.

Among Indianapolis hospital systems, Indiana University Health has built up a physician practice with 1,500 doctors. St. Vincent Health employs about 800 and Community Health Network employs roughly 500.

Now that hospital systems employ all those doctors, their bargaining power with insurers is much greater than any of the independent shops. That’s why, I would argue, these differences have gotten bigger, not smaller, in the past few years.

Medicare has been eyeing these differences, and may try to stamp them out. It will be interesting to see if Anthem or other private insurers follow suit. Because they and their customers have been taking a bloodbath.

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  • Cost Driver
    You need to dive a little deeper, not only does the hospital charge more because of the 24/7, and bad debt generated by the ED, but because of all the additional regualtory requirements that surround a hospitals operation. Hospitals get surveyed (inspected) by CMS (JAHCO, HFAP), CLIA, State Board of Health, and are required to follow many more guidelines then independent clinics which add significantly to the cost. The other aspect left out is the quality and reliability of the test results which can vary greatly. You also have the benefit of having all your results in your medical record when you have them done at the same facility that is your medical home, thus making for better overall care coordination.
  • Why Pick on Hospitals
    You are always picking on the hospitals and physicians. Of course they charge more, they have higher costs......for administrator salaries, for physicians, for buildings stacked on top of each other on North Meridian and I-69, etc., for advertising, for suites at sport arenas, for lots and lots of things that have played a key role in the stunningly high quality scores delivered proudly by local healthcare organizations. So, come on JK, cut them some slack, they've earned it.
  • Don is right!
    But also, much of this derives from the lack of price lists that patients see or even care about. There is a reason car dealers show what accessories cost. It might be interesting to compare the cost of a simple breakfast in intensive care units. Transparency lowers cost. Using your own money lowers it much more. Everything gov't does to protect us raises cost, at times necessarily, but not always.
    • Impossible to find out costs....
      It is virtually impossible to determine the costs of procedures no matter where you are going. Years ago I needed routine bloodwork done. I talked to four people, including billing/admin, at Clarian West. No one could tell me what the total cost would be. I finally ended up speaking with an actual lab tech who was able to estimate the cost. More recently in May 2013, I had to have an outpatient surgery at Community South. I asked my doctor how much it would cost. She estimated around $5,000. I asked the surgery coordinator in the office how much it would cost. She had no clue and didn't know who could even answer that question. Total costs ended up being over $14,000. Absolutely ridiculous!
    • JK
      There is a company ( www.theranos.com ) that is currently partnering with Walgreens in the Phoenix area that offers low cost blood work. According to their site, and I don't know if this is what the actual retail charge is at Walgreens or not, but they list charges for a Lipid panel at $9.21 and a Complete Metabolic Panel at $7.27. Additionally, a protime, for which I am billed through my insurance at Mid-America for $3.44 is done for $2.70. According to an article in the Wall Street Journal ( do a search for WSJ Theranos) very little blood is needed and the results are obtained within minutes. I believe the company has plans to expand their coverage area.
      • Thank you
        Thank you JK, for continuing to expose the hospitals for what they are....money hungry, profit driven entities. The more practices they buy up, they more leverage they have with the private payors. Consumers don't want to pay the higher prices, but if the private payer refused to agree to the higher reimbursement and the hospital system goes "out of network", these same consumers would be whining about not having enough access. Yes hospitals have higher costs, but passing it on to the consumer is NOT the way to deal with it. Perhaps hospitals should just stick to what they are really needed for: inpatient care and emergency care.
      • JK
        One more comparison- I recently had a PSA test for which I was billed $19.63 at Mid-America...the charge listed for Thernos was $12.65.
      • Corporate medicine
        Big Hospital will soon be recognized along with Big Tobacco, Big Oil, Big finance….all the Bigs that rip off the American public routinely. The for-profit health care world ( including " not-for-profits" ) is doing what the rest of the Bigs do. Want to see a change? Educate yourself about Single Payer systems.
      • Make it stop!
        As soon as there's not transparency as part of healthcare, it will get worse. If you're in the biz and advertise fair pricing, you'll get the biz, cash or insurance. Repeal Obamacare and all restrictive legislation. Watch prices go down, quality go up and poor providers kicked to the curb. Have a healthy weekend!
      • $$ Really ??
        JK - in your research how many local health systems use an independent lab (MACL or other) as their lab? As for the expense of healthcare: How is healthcare the problem... they only exist because many people don't take responsibility for their own health and thus need to access a healthcare professional... Healthcare is only expensive if you need to use it... Granted some things can't be controlled, but of the things that can, what are we doing as a society?? Who is taking responsibility for themselves??? See below and ask yourself who is the problem... healthcare or the psople who do nothing to help themselves then complain that when they need help, it's expensive??? Stop putting blame on anyone but who you see in the mirror, once that person is 100% perfect then feel free to go after others! From the CDC: Health Risk Behaviors that Cause Chronic Diseases Health risk behaviors are unhealthy behaviors you can change. Four of these health risk behaviors—lack of exercise or physical activity, poor nutrition, tobacco use, and drinking too much alcohol—cause much of the illness, suffering, and early death related to chronic diseases and conditions. •In 2011, more than half (52%) of adults aged 18 years or older did not meet recommendations for aerobic exercise or physical activity. In addition, 76% did not meet recommendations for muscle-strengthening physical activity.7 •About half of US adults (47%) have at least one of the following major risk factors for heart disease or stroke: uncontrolled high blood pressure, uncontrolled high LDL cholesterol, or are current smokers.8 Ninety percent of Americans consume too much sodium, increasing their risk of high blood pressure.9 •In 2011, more than one-third (36%) of adolescents said they ate fruit less than once a day, and 38% said they ate vegetables less than once a day. In addition, 38% of adults said they ate fruit less than once a day, and 23% said they ate vegetables less than once a day.10 •More than 42 million adults—close to 1 of every 5—said they currently smoked cigarettes in 2012.11 Cigarette smoking accounts for more than 480,000 deaths each year.11 Each day, more than 3,200 youth aged 18 years or younger smoke their first cigarette, and another 2,100 youth and young adults who smoke every now and then become daily smokers.11 •Drinking too much alcohol is responsible for 88,000 deaths each year, more than half of which are due to binge drinking.12, 13 About 38 million US adults report binge drinking an average of 4 times a month, and have an average of 8 drinks per binge, yet most binge drinkers are not alcohol dependent.14 This is only a small list of preventable things we could be doing better... do your part and healthcare won't so expensive for you!
      • Which way?
        Which way does Mid America that's in Community South charge; their charge or the hospital charge?
        • JK never quits
          I agree with TJ...JK Wall has a personal vendetta against hospitals and physicians. Are there things that need to be improved...of course? But the never-ending bashing just gets old. There are many industries that are much more unscrupulous than health care. Not saying all your work is bad JK, but simmer down a little bit please!
        • JK's Analysis Is Right On!
          Interesting comments. They reveal some biases that seem to ignore the information JK presented. As a recent customer of Mid-American Lab, located inside Community North, I had blood work taken for lipids and triglycerides. For the 3 tests I was billed about $175; BC/BS negotiated the prices down to about $16. JK's article was right on the money. Of course, as a customer, I had not idea of what the test would cost before I had blood drawn. And to Patty, it is only because of the ACA that more focus and analysis is starting to reveal the reasonableness of costs of health care in the US.
        • People will learn
          This is one of the secrets of healthcare. You don't have to be in the actual hospital to receive hospital services. And the pricing by hospital's is the result of decades of price shifting. Labs costs more at hospitals and there's nothing wrong with that. But when the doctor sends my lab test to the hospital rather than the local independent lab, it is not necessary and only serves to gouge the consumer or insurance plan. Purdue University recognized this and altered their benefit plan a year or two back to encourage reference lab use. None of us paid attention to this when insurance paid it all, but now in the era of high-deductible plans, we are figuring it out. People will learn and make the choices based on quality, service, convenience and price.
        • Price comparison
          Here is the actual comparison of metabolic panel test done during hospital stay and outpatient lab within a month of each other: Lab: list price $46, after insurance discount $3.50. Hospital: list price $220, discount: none, final price $220. Congratulations to the CEO of the non-profit hospital. I hope he enjoys his new car.
        • um
          Mid-America clinical labs is partially owned by St Vincents I thought? It is hardly "independent".

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