Why do hospitals charge so much

Anyone getting routine tests or a diagnostic workup from a hospital is likely to be charged five to ten times what an insurance company would pay for it five to ten times what the service is really worth. So people are completely dependent on their health insurance for even small medical costs.

In what other industry would you do this? Would you use your car insurance to buy windshield wiper fluid or replace a burned-out headlight? Would you use your homeowners insurance to replace a screen?

Many small community hospitals are currently in deep financial trouble. Rather than trying to collect a fair amount for each affordable service directly from patients, hospitals go through the insurance companies for even the most mundane fees. And, since each patient only brings in a small profit, each denial puts them in a financial hole. Their answer: lean harder on the patients who owe them money.

How many ways is this system broken? As I said at the very beginning, one of the biggest problems with medical costs is that the real costs are so well hidden in all these games that almost no one even knows what they are, let alone what to do with them. This applies to doctors as much as patients. We saw how patients can easily be confused into buying drugs for far more than they cost, just because they have insurance.

Doctors are run around just as much by the absurd system of insurance reimbursement. Higher initial fees lead to higher final payouts. Of course, this might have you wondering how you can avoid being overcharged for your medical bills.

One way to avoid being overcharged for your medical bills is to do your research. One excellent resource our team in Houston, Texas recommends is www. Considering complications and other factors also allow you to make an informed choice on where to have your procedure completed. We hope this answered your question about how does hospital billing work and touched on the medical billing processes and procedures that factor into the final price.

Give us a call if you have more questions about this process. By Alanna Sharp. In Group Health Insurance. How Does Hospital Billing Work? The medical billing process and procedures can be broken down into eight simple steps : Registrations Establishment of financial responsibility for the visit Patient check-in and check-out Checking for coding and billing compliance Preparing and transmitting claims Monitoring payer adjudication Generating patient statements or bills Assigning patient payments and arranging collections Helpful Resources Speak with an Expert Dustin B.

Neider Business Consultant Contact. Group Health Insurance Plans Explore. Biden Policies. Biden's Team. Personal Finance Issues of Economic Issues of Table of Contents Expand.

Costly Healthcare Hurts Everyone. Multiple Systems Create Waste. Drug Costs Are Rising. Doctors and Nurses Earn More. Hospitals Are Profit Centers. Defensive Medicine.

Prices Vary Wildly. The Bottom Line. Key Takeaways The events of the past 18 months have increased pressure on our highly complex and expensive healthcare system, making it more urgent to lower costs. One reason for high costs is administrative waste. Providers face a huge array of usage and billing requirements from multiple payers, which makes it necessary to hire costly administrative help for billing and reimbursements.

Americans pay almost four times as much for pharmaceutical drugs as citizens of other developed countries. Hospitals, doctors, and nurses all charge more in the U. In other countries, prices for drugs and healthcare are at least partially controlled by the government. Article Sources. Investopedia requires writers to use primary sources to support their work.

These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Search Query Show Search. Special Coverage. Charlotte Talks. Show Search Search Query. Play Live Radio. Next Up:. Available On Air Stations. All Streams.

The Price We Pay. The Price We Pay will explore the reasons for that and possible solutions to our health care crisis. Also, we'll go deeper on some of the issues in this series on Charlotte Talks with Mike Collins. Facebook Twitter LinkedIn Email.