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DOVER-FOXCROFT – When Paul Bradeen opened his bill this spring for the echocardiogram he had in March, he thought Mayo Regional Hospital had made a mistake.
The jaw-dropping bill for the exam – the same procedure he had in 1999 and 2000 at the hospital – had increased in cost by 250 percent. Bradeen, 62, of Milo, who suffers from hypertension, has the procedure done to check the pump function of his heart.
For the previous exams, an outside medical practice provided Bradeen with two bills for the procedures: one bill of $430 for the interpretation of the exam, and a second bill that reflected the technical component, or the actual exam, at a cost of $303. In 1999 and 2000, Mayo hospital merely provided space for the outside agency that conducted the tests.
The breakdown of Bradeen’s most recent bill for the exam conducted earlier this year showed that the cost of the interpretation, still performed by an outside medical practice, remained the same.
The actual exam, now provided and billed by Mayo, however, had increased to $1,102.50.
“I couldn’t believe it,” he said, in a recent interview. Bradeen later learned that the price quoted reflected the hospital’s costs.
A hospital spokesman said Sunday that Mayo’s costs are on par with other small, rural hospitals in Maine. It is difficult, however, for hospitals to compete with private medical practices, which do not have the high overhead that hospitals have, according to Ralph Gabarro, Mayo’s chief executive officer.
“Health care is expensive. It’s an issue for many people, but if you are going to run a hospital, it is costly,” Gabarro said.
The higher costs also can be attributed to two other factors, Gabarro explained. Smaller hospitals clearly have volume issues that they must deal with. Unit pricing in small, rural hospitals tend to be, on average, higher than at larger hospitals.
A more significant factor is the cost shifting that Maine hospitals must do to make up for their losses in Medicare reimbursements and to recoup the cost of services provided to the underinsured and uninsured, the hospital executive said.
Before Bradeen’s inquiry into the cost of his procedure, Mayo had commissioned an independent study to determine whether the hospital costs were on par with other Maine hospitals.
“Mayo is very competitive when you look overall,” Gabarro said. Although the study did reveal the hospital was higher in laboratory and radiology costs, which includes echocardiograms, it was lower in other areas.
According to the study, a semiprivate room at Mayo last year cost $747 compared to $779 for small, rural hospitals similar to Mayo, and $724 for a statewide average.
Emergency room Level I basic care at Mayo for the same year was $51 compared to $79 for small, rural hospitals, and $62 for a statewide average.
On the flip side, the comparisons indicated that Mayo was higher for a metabolic panel, a diagnostic laboratory test. Mayo charged $66 compared to $57 for other small, rural hospitals, and $44 for a statewide average.
“We are not a high-cost hospital,” Gabarro said, noting that most charges at Mayo were in line with other medical facilities. And when they are not in line, they are adjusted and the revenue is made up in other areas of the hospital that may have been lower in cost comparisons, he said. As a result of the study, the hospital reduced the charge for echocardiograms in 2003 by 16 percent, Gabarro said.
But that comes a little too late for Bradeen, who reluctantly paid the bill.
“You place all your trust in a hospital to give you the best professional service but also fair pricing,” Bradeen said Saturday.
A savvy consumer, Bradeen said he searches for the best buys in appliances, vehicles and other purchases, but finds it hard to do the same for hospital costs.
“It’s difficult for a consumer to really know what the charges are going to be and how they vary from hospital to hospital,” he said.
Having worked in manufacturing for most of his life, Bradeen said industries must be competitive in price to remain vital; so, he asked, why aren’t hospitals?
He said the local hospital should keep costs in line, especially since Piscataquis County is the poorest county in the state. Charging 250 percent more than necessary for a procedure is not the approach hospital officials should have taken, the Milo man said.
“This is a micro example of a national disaster,” Bradeen said, of health care costs. Not only does Bradeen have to pay his policy’s deductible, but the more he spends on health care, the more his premiums increase. In 1999 and 2000, his annual health care premium was $5,007 which covers himself and his wife, Gwen. In 2001, the cost increased to $6,213, and this year the cost jumped to $7,944.
“Where will it end?” he asked.
Bradeen’s concerns about health care costs are shared nationwide.
“The rising cost of health insurance coverage is one of the biggest challenges confronting Maine,” Mark Ishkanian, spokesman for the Maine Hospital Association, said Friday.
The biggest issue, he said, is the cost shifting that occurs to make up for the lost revenue from Medicare, Medicaid and the uninsured. Because Bradeen has commercial insurance, he and others like him are expected to pay the costs that hospitals are unable to recoup from the government.
“By not paying its fair share of Medicare costs, the federal government forces a hidden tax on every other hospital user,” Ishkanian said.
He said Medicare consumes more hospital services in Maine than in nearly any other state. Only West Virginia and Arkansas had higher percentages. And the state is near dead last in the country for the amount of Medicare reimbursement it receives. Only Vermont, Hawaii, South Dakota and Iowa fared worse than Maine, according to the association.
According to an independent study commissioned last year by the association, the federal government reimbursed Maine hospitals $115 million less than what it cost hospitals to care for Medicare patients in 1999.
Gabarro sympathizes with patients who have to bear the costs of others. In addition to less revenue from Medicaid and Medicare, the hospital typically must write off about $2 million in expenses each year for the cost of services that individuals can’t or won’t pay. To offset these losses and those stemming from the uninsured, the cost differential is shifted to commercial insurers.
The nonprofit hospital projects revenues of $28 million in 2003 with operating expenses estimated at $27 million, the difference of which will be reinvested into the nonprofit hospital to fund depreciation, acquire new equipment and develop new programs, according to Gabarro.
Knowing that he paid more for the procedure than was charged at other facilities in 2002 leaves a bitter taste in Bradeen’s mouth. He questioned how many more procedures are being overcharged that consumers are not aware of.
Despite the problems with Medicare reimbursement, Bradeen said hospitals should keep costs as low as possible.
“I just don’t find it easy to be an informed health care consumer,” Bradeen said.
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