Hospitals are being criticized across the United States for having huge profits. The News & Observer's Prognosis Profits series is an example. On Friday, the News & Observer's editorial page included a write up entitled Hospitals in Wonderland. This editorial stated that ..
"A lower limb joint replacement done at Raleigh's Rex Hospital costs just over $54,000. At UNC Hospitals, which owns Rex, the procedure costs $41,415. Medicare pays UNC Hospitals $20,610 for the procedure, but pays Rex an average of $12,515. At Presbyterian Orthopaedic in Charlotte, the procedure costs $69,034. At Duke University, it's $43,551. It's hard to understand how anyone could read the previous stories and this one and conclude that health care reform isn't needed. If anything, more radical common-sense change is imperative. The crazy quilt is enriching some in the medical field, especially hospitals and their administrators and drug companies and their executives, but it's scaring ordinary people who worry they'll lose their insurance, and later forfeit everything they have because of an illness."
Hospitals agree reform is needed, but it is inaccurate to place all of the blame exclusively on hospitals. In fact, it was just a few years ago that The News & Observer was writing articles examining the excessive profits of our state's largest not-for-profit health insurer.
WakeMed is paid only 31 percent of charges from all payers combined. Hospitals must also achieve a positive margin to continue to serve their patients and communities. A 4 percent operating margin, which is WakeMe's goal, is quite low when compared to almost any other business and is not excessive to maintain a healthy hospital system.
The healthcare financing system is "nonsensical" as described in the editorial, and we all - hospitals, insurance companies, providers and patients - need to work together to fix the issues.