The Three Million Dollar Cure

California oil refiner Jim Dawson had a job, better than average health insurance, and a life-threatening staph infection that required extensive medical care… medical care that resulted in a $3 million hospital bill, $1.2 million dollars of which Dawson was responsible for because he had exceeded his insurer’s lifetime benefit cap.

After nearly succumbing to his catastrophic ailment on more than one occasion, the good news—as The Wall Street Journal reports—is that California Pacific Medical Center this week wrote off the entirety of Dawson’s obligation (after the hospital, in an egregious example of “bad timing” called Dawson’s wife on the day her husband was discharged to announce, chidingly, that it would begin billing the Dawsons immediately for the total outstanding balance).  And that call wasn’t the only questionable move the hospital made during Dawson’s ordeal.

Among the more distasteful “insult to illness” aspects of CPMC’s conduct were several charges on Dawson’s itemized bill: $791 for circulation-boosting stockings ($12 retail) and between $2200 and $6600 per night for an oxygen mask (available through a medical supply rental at a daily rate of $8.33).

Allan Pont, CPMC’s chief medical officer said the hospital’s billing practices are “a reality of the industry.”  Translation: everybody’s doin’ it.

Dr. Pont claims that the hospital’s mark-ups are the result of attempts to cover its operating costs, adding that CPMC’s collects only a third of what it bills each year.

If we take Pont at his word, the root of hospitals’ “insane charges” (his words) is medical bad debt.  And if that’s the case, are hospitals shifting the financial consequences of their inadequate collection efforts onto patients who believe that they are adequately insured?