Q: Why do hospitals charge $75 for aspirin? A: Because they can.

It was once a long-standing joke that hospitals charged outrageous prices on medicines.

It’s not a joke anymore.

Once, a healthcare joke went like this:
Q: What’s the difference between a HMO, a PPO and the PLO?

A: You can negotiate with the PLO.

It’s not a joke anymore.

It should also be noted that a study conducted 26 years go by Jack D. McCue, Charles Hansen, and Peter Gal entitled “Hospital Charges for Antibiotics” found that:

“Hospital charges for intravenous antibiotics were obtained in a survey of 71 hospitals in 25 U.S. cities. Only 56.3% of the hospitals used their actual drug acquisition cost to calculate patient charges; the remainder used a base price derived from one of the wholesale price guides, which often seriously overstate the cost of antibiotics. Sixty-eight percent added a markup, averaging 134.5%, and 63.4% added a dispensing fee, averaging $5.47. A relatively high-dose, single-antibiotic regimen costs patients $50-$150 per day, independent of dose-preparation charges (average, $9.09 per dose) for a piggyback-type system or intravenous line-related charges. Antibiotics were least expensive in large hospitals and in those located in the northeastern United States. Charges for antibiotics are often inconsistently calculated, vary enormously among hospitals, and may be unfair to patients and confusing to physicians. Cost-conscious prescribing of antibiotics by physicians would be facilitated by a more consistent relationship between charges and true costs.”

That 1985 study may be found here.

The reader should also understand that in a hospital, ALL medications are administered by prescription only… even aspirin.

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Cost Spotlight: A 443% Markup on Prescription Drugs

Posted on April 30, 2012 by AHIP Coverage

Kaiser Health News/USA Today shines a spotlight on increasing hospital costs specifically the price markup of over-the-counter and prescription drugs hospitals administer to patients.  The story examines what happens to patients when hospitals classify the care patients receive as “observational.”  This classification can lead to higher out of pocket costs for patients.  And some of these costs are eye popping.  Some examples from the story include:

• “Sudden chest pains landed Diane Zachor in a Duluth, Minn., hospital overnight, but weeks later she had another shock – a $442 bill for the same everyday drugs she also takes at home, including more than a half dozen common medicines to control diabetes, heart problems and high cholesterol…For the price she was charged for her insulin during her 18 hour stay at St. Luke’s Hospital, Zachor would have enough to cover her out-of-pocket expenses for a three-month supply under her private Medicare Advantage plan if she had been home. The tab for one water pill to control high blood pressure could buy a three-week supply. And the bill for one calcium tablet could have purchased enough for three weeks from the national chain pharmacy where she gets them over-the-counter.”

• “In Missouri, several Medicare observation patients were billed $18 for one baby aspirin, said Ruth Dockins, a senior advocate at the Southeast Missouri Area Agency on Aging.”

• “Pearl Beras, 85, of Boca Raton, Fla., said in an interview that her hospital charged $71 for one blood pressure pill for which her neighborhood pharmacy charges 16 cents.”

• “In California, a hospital billed several Medicare observation patients $111 for one pill that reduces nausea; for the same price, they could have bought 95 of the pills at a local pharmacy, said Tamara McKee, program manager for the Health Insurance Counseling and Advocacy Program at the Alliance on Aging in Monterey County, Calif., who handled at least 20 complaints last year from Medicare beneficiaries about excessive hospital drug bills.”

Experts say that it is not surprising hospitals markup costs this much.  The reason — “Hospitals use their pharmacies to help generate revenue to subsidize the other operating costs of the facility, said Miriam Mobley Smith, dean of the College of Pharmacy at Chicago State University.”

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http://ahipcoverage.com/2012/04/30/cost-spotlight-a-443-markup-on-prescription-drugs/