Would you pay $3.50 for a Tylenol tablet? You may have already. Hospitals, like other businesses, charge what the market will bear. Since hospital patients use whatever services the doctor orders and insurance companies pay the bills, outrageous charges become quite bearable. When one southeastern hospital jacked up its Tylenol charge to $3.50 a pill, you might suppose that other local hospitals used their lower prices as a competitive edge. They didn't. Instead, they raised their own prices to $3.50 a pill.
Medicare enforces a system of standard payments to hospitals, but most private insurers still pay whatever the hospital charges. So employers get squeezed by higher premiums. To fight back, some companies require workers to foot part of the insurance bill, while others buy plans with higher deductibles.
Charges vary dramatically from hospital to hospital and city to city, making it difficult to evaluate bills. A urine test that costs an average of $9 in New England, for example, runs $26 on the West Coast and may cost as much as $35. A high price may reflect ambitious construction programs or sloppy management, both of which raise overhead costs. But hospitals rarely explain their charges. "In all the times that we've questioned the hospital and said, we'll pay, but how did you arrive at this, we haven't gotten any answers," says Alvin Saidiner, president of PCC/Drug Data Systems Inc., a Burbank, Calif., firm that tracks hospital costs and analyzes bills for insurers and employers.
How much do fees vary? Here are examples with averages and ranges from the Southeast, a typical region. All figures are from PCC's database of more than 5,000 hospitals.
National Southeast Southeast
Item range range average
Urine test $4.00-35.00 $4.00-29.00 $14.00
Blood test 4.00-60.00 4.00-41.00 21.00
Electrocardiogram 10.00-95.00 10.00-60.00 39.00
Tylenol tablet 0.01-9.00 0.01-1.50 1.25
Admission kit 2.50-30.50 3.50-21.00 10.00
Valium tablet 0.25-3.50 0.37-2.50 N/A
Razor 0.15-6.20 0.50-5.00 N/A
Box of Kleenex 0.25-5.25 0.35-5.25 N/A
Semiprivate room 135.00-470.00 158.00-308.00 N/A
CORRECTION-DATE: January, 1986
The photographer's credit for Scorecard (Insider, December 1985 page 22) should have been Kay Chernush/The Image Bank