There is a general perception that hospitals charge way too much for the medical services they render to patients. Adjectives like “arbitrary,” “unfair,” and “inflated” are the most common description of hospital charges. And the average consumer just cannot get past the $30 they pay for a single aspirin pill in the Emergency Room – which is usually more than six times the cost of an entire bottle at the local pharmacy.
But is this perception fair or accurate, especially when it comes to hospitals that provide critical emergency or trauma services?
We need look no further than the headlines to understand how important it is to have top notch emergency medical services: Sutherland Springs, Texas, church shooting; Las Vegas, Nevada, concert shooting; Hurricane Harvey, Houston, Texas, mass flooding; Orlando, Florida, nightclub shooting; Fort Lauderdale, Florida, airport shooting. And the list goes on.
And as incidences such as natural disasters and mass shootings, unfortunately become more frequent and common, the critical role of trauma centers must be highlighted. They treat patients during what doctors call the critical “Golden Hour.” This is the very short window of time between the traumatic incidence and when a patient’s body will begin to shut down if their traumatic injuries are not adequately addressed. After this “Golden Hour,” medical intervention may be of little benefit.
So what exactly are these Trauma Centers?
Trauma Centers are specialty hospitals. In order for hospitals to be designated as Trauma Centers, they must be able to demonstrate they have the required resources for each of the different levels of trauma treatment. Official designation as a Trauma Center is determined by individual state law provisions.
The levels of trauma treatment include a wide variety of specialized medical care including emergency medicine, trauma surgery, neurosurgery, anesthesiology and critical care, to name a few, as well as the latest state-of-the-art diagnostic equipment. Heliports are also a common feature of Trauma Centers.
For example, different classifications Trauma Centers may include the following:
- Level 1 – has all necessary personnel and is fully equipped 24/7 to handle any type of trauma (most are at teaching hospitals)
- Level 2 – is also well equipped, but has fewer personnel and may need to transfer patients to a Level 1 center if their injuries require
- Level 3 – has fewer personnel, fewer facilities and may need to transfer patients to a Level 2 or Level 1 center depending on the severity of injuries
- Level 4 – is capable of performing advanced trauma life support and of providing a diagnostic assessment of the individual’s injuries as well as transporting them to a higher-level center
But here is the clincher which you may have overlooked. Trauma Centers are fully-staffed and fully operational 24 hours a day, seven days a week, 365 days each year. And they remain this way even during those periods when there are no emergencies or trauma conditions to treat. They do not condition their services on a patient´s income or insurance status. The cost of maintaining an “all are treated” operation at this level of readiness and expertise is significant. In fact, some areas of the country are under-served by Trauma Centers because of this expense.
According to recent studies and analyses reported by NIH, the total readiness cost for all Level I Trauma Centers in the U.S. is well in excess of $35 million a year with an estimated average cost of over $6 million per year per Trauma Center. This represents an enormous challenge to the financial viability of many of the nation’s hospitals since nearly one quarter of trauma patients are uninsured and hospitals recoup less than 20 percent of inpatient costs for their care.
While various elements of the Affordable Care Act were aimed at increasing coverage for trauma care, and had the potential of significantly increasing national reimbursement for inpatient trauma care, data is not yet available on how much of an improvement, if any, this increased payment has made. This is, in some measure, due to the fact that hospital expense growth has outpaced revenue growth. The other is the uncertainty over the future of health care reform.
Given the significant costs involved in maintaining the readiness levels of Trauma Centers combined with their unpredictable utilization, they, perhaps more than non-trauma center hospitals, are increasingly vulnerable to the escalating cost of care of uninsured or underinsured patients. Uninsured patients make up the highest percentage of those in need of trauma center resources. This may be reflective of the “safety net” role that many of our nation’s Trauma Centers play, caring for a large number of uninsured patients.
This is borne out by one three-year study that estimated the proportion of uninsured trauma patients seen at one urban Level I Trauma Center was approximately 37 percent and that treating these patients generated a $37.5 million loss over a three-year period. Most of this loss was attributable to patients without insurance, and Medicaid and Medicare beneficiaries. Nationwide, uncompensated care in general is well in excess of $36 billion. There are few, if any, hospitals that can afford to take that kind of hit forever and hope to survive.
So, the question becomes who pays the tab for Trauma Center care? And what can hospitals do to offset the significant cost involved in saving lives during the “Golden Hour?”
There is a limit to cost-shifting to the government, charities and insured patients. As a result, hospitals have to price their services and products to account for the high costs of these services. Products like the $30 aspirins must be priced to reflect the fact that they must be immediately available for use by highly specialized medical personnel 24/7. And availability is necessary whether or not these products are actually utilized. While this may seem to be a very high price, the alternative of not having these life-saving Trauma Centers is even higher!