The Childbirth Industrial Complex

[MU82]

From Sarah Kliff in today's NYT The Morning e-newsletter:

Americans spend more on childbirth than nearly anything else that happens at the hospital. The average delivery is $13,000. Even after insurance pays, patients who have babies still end up on the hook for nearly $3,000.

I've spent 15 years covering the high costs of American health care, an industry in which patients routinely encounter $600 Band-Aids and $3,000 Covid tests. Recently, I've been amazed at how much hospitals, doctors and medical device companies are charging families for newborn care.

They are eking out more money from each step of having a baby. They often tap into the anxiety that so many parents feel as they form new families. "People are willing to do anything to ensure the well-being of their kids even before they meet them," said Neel Shah, chief medical officer at Maven, a women's health clinic.

Health care companies have several chances to make their pitch between a positive pregnancy test and the birth of a child.

In the first trimester, genetic companies sell tests that claim to detect serious and rare problems from a few vials of the mother's blood. But these tests, which can cost thousands of dollars, are usually wrong when they make grave predictions about an infant's health. The inaccurate results can lead parents to spend thousands on more tests and even to consider abortion.

The second trimester often brings a pitch for umbilical-cord blood banking. Brochures in obstetricians' offices describe how paying to freeze and store a newborn's stem cells may be vital if the child becomes ill later in life. But the few parents who try to use their samples often find that they are unusable, either because they have too few stem cells or because they are contaminated. Azeen Ghorayshi and I investigated these companies in a story The Times published today.

Most spending on childbirth goes toward delivery and newborn care. Cesarean section delivery remains the most common surgery in American hospitals, despite years of advocacy to lessen its use. About 30 percent of kids are born this way, more than twice the World Health Organization's recommendation.

One reason is that we have bizarre incentives. Hospitals earn 50 percent more for C-sections than for vaginal deliveries, even though recent research shows they cost less than vaginal deliveries. When cheaper medical care earns more money, that warps behavior.

Neonatal intensive care is also proving to be very profitable. Nearly 40 percent more babies went to these units, supposedly reserved for the sickest kids, from 2008 to 2018. But the infants weren't sicker. Some doctors worry that hospitals may send healthy babies to the NICU because it pays better. Investors, seeing the opportunity, have been buying up neonatology practices.

The experts I talked to have a few explanations for why these efforts work. To start, there are millions of births every year. Hospitals know that childbirth will always make up a large share of their revenue.

Another reason is that the most successful messages — the case for banking cord blood, buying advanced genetic tests or spending a few extra nights in the NICU — are selling safety for your child.

Lastly, these pitches tend to come from a trusted source: our doctors. They distribute brochures that overstate the benefits of cord blood banking or genetic testing. Cord blood banks even pay obstetricians to collect the stem cells. When your doctor endorses a new and promising technology, it is awfully hard to say no.

[TAMU, Knower of Ball]

We learned a lot between our first and second kid by reading the bill from the first delivery. The cost for the OB to stop in the room for max 45 seconds and all how we were doing was over $1000 before insurance.  The one that annoyed us the most was the lactation consultant. My first wasnt latching so we asked to see her six times during our stay (caesarean so we had to stay for days). The consultant would come in for a max of two minutes per trip and would make a slight adjustment and declare that everything was fine.  Meanwhile my daughter lost over 33% of her birth weight and had to be put on supplemental formula.  We ended up contacting a non profit that provides lactation consultants free of charge. She sat with my wife for multiple 30 minute sessions and corrected a lot of the things the hospital lactation consultant had told my wife.

The hospital charged us $275 per visit for the lactation consultant. So aproximately 15 minutes of poor guidance cost us $1650 (before insurance) while over an hour of quality guidance outside the hospital was free.

When my second was born,  we made it very clear that a lactation consultant was not to come near our room for fear of being overcharged.

[jesmu84]

I would be a little careful about pointing at individuals (OB or lactation consultant) as the evil ones here. In many situations, they're overworked and understaffed and can only spend so much time with each patient. In addition, they have no idea about their own cost and likely see a merger percentage of it.

The problem typically is rooted in the profit incentive driving healthcare these days.

[Galway Eagle]

While some of this is eye opening (especially as I'm 7 weeks away from our first's due date) some of it isn't inherently related to childbirth and is part of a much larger scale medical issue in the USA.

[Pakuni]

Best healthcare system in the world.

[MU82]

While some of this is eye opening (especially as I'm 7 weeks away from our first's due date) some of it isn't inherently related to childbirth and is part of a much larger scale medical issue in the USA.

Yes, for-profit health care is problematic.

Great news about your impending family addition. Congrats!

[MUfan12]

The line items are nuts. We got charged like $450 for the nurse to take our second kid to the nursery so we could get a couple hours of sleep. Most expensive babysitter ever.

It's insane how expensive the years from conception to kindergarten are. Prenatal care, birth and recovery, all the doctor visits, and oh yeah, daycare costs an arm and a leg.

I adore my kids and can't imagine life without them. But we're not exactly incentivizing people to have more of them, and I can understand why people make the decision not to.

[The Hippie Satan of Hyperbole]

The line items are nuts. We got charged like $450 for the nurse to take our second kid to the nursery so we could get a couple hours of sleep. Most expensive babysitter ever.

It's insane how expensive the years from conception to kindergarten are. Prenatal care, birth and recovery, all the doctor visits, and oh yeah, daycare costs an arm and a leg.

I adore my kids and can't imagine life without them. But we're not exactly incentivizing people to have more of them, and I can understand why people make the decision not to.

It's not just childbirth. Raising children is an increasingly expensive proposition, so there is no wonder why birthrates are declining.

[Jockey]

Capitalism!!!   Embrace it and enjoy its bountiful rewards.

Quit whining like a bunch of anti-American socialists.

[TAMU, Knower of Ball]

I would be a little careful about pointing at individuals (OB or lactation consultant) as the evil ones here. In many situations, they're overworked and understaffed and can only spend so much time with each patient. In addition, they have no idea about their own cost and likely see a merger percentage of it.

The problem typically is rooted in the profit incentive driving healthcare these days.

I didn't mean to imply that they were evil in any way. I know they don't set the prices. I do question that one lactation consultant's competence but that can be the result of being overworked. Considering we saw the same one each time over multiple days i assume she's the only one in that particular hospital.

[jesmu84]

I didn't mean to imply that they were evil in any way. I know they don't set the prices. I do question that one lactation consultant's competence but that can be the result of being overworked. Considering we saw the same one each time over multiple days i assume she's the only one in that particular hospital.

Yea. Obviously competency would be a different conversation.

I was responding to the thread topic that seemed to be focused on costs.

[Herman Cain]

Rule number 1 of Hospital Stays... Get out as soon as possible 

[Lennys Tap]

It's not just childbirth. Raising children is an increasingly expensive proposition, so there is no wonder why birthrates are declining.

Inflation's a bitch, a'ina?

[dgies9156]

It isn't just childbirth.

A few years ago, I went in for highly intricate and complex back surgery. It was successful but the all-in bill was about $800,000, list.

My insurance company at the time negotiated the cost down to $170,000, which was the agreed-on price between the insurance company and the hospital organization and various other providers. I was shocked at the magnitude of the reduction so I wrote the hospital administration and contended they were either committing accounting fraud or preying on the most vulnerable of society -- the uninsured.

They didn't like my letter and blamed bad deals with insurance companies for the magnitude of the markdown. Not a word about why healthcare costs were ridiculously out of control.

[The Hippie Satan of Hyperbole]

It isn't just childbirth.

A few years ago, I went in for highly intricate and complex back surgery. It was successful but the all-in bill was about $800,000, list.

My insurance company at the time negotiated the cost down to $170,000, which was the agreed-on price between the insurance company and the hospital organization and various other providers. I was shocked at the magnitude of the reduction so I wrote the hospital administration and contended they were either committing accounting fraud or preying on the most vulnerable of society -- the uninsured.

They didn't like my letter and blamed bad deals with insurance companies for the magnitude of the markdown. Not a word about why healthcare costs were ridiculously out of control.

Most uninsured don't pay anywhere close to the list price. A lot of studies show they actually pay less than the negotiated rate.

https://publichealth.jhu.edu/2023/study-finds-hospitals-cash-prices-for-uninsured-often-lower-than-insurer-negotiated-prices

The list price on a medical procedure is roughly like the list tuition price in private higher education.

[Sir Lawrence]

Medical billing is a fiction.  Except ambulance companies:  they get paid close to dollar one.

[The Hippie Satan of Hyperbole]

Medical billing is a fiction.  Except ambulance companies:  they get paid close to dollar one.

And refuse to negotiate preferred rates.

[MU82]

Medical billing is a fiction.

I'm not sure that the thousands - tens of thousands? hundreds of thousands? - of people who have had wages garnished and other extreme measures taken against them to pay humongous medical bills would agree.

[Hidden User]

I'm not sure that the thousands - tens of thousands? hundreds of thousands? - of people who have had wages garnished and other extreme measures taken against them to pay humongous medical bills would agree.

They want you to pay the price they quote. Not everyone is savvy enough or has the bandwidth to ask questions and navigate the billing quagmire. Them being fairly quick to negotiate with should tell you everything you know about it.

[PointWarrior]

My favorite medical billing story - my dog had an ACL surgery the same week as my MIL knee replacement surgery.   The vet gave an itemized bill ahead of time to the exact penny of every thing.   The hospital gave a statement ahead of time that the MIL knee replacement will cost between 10K and 50K.  Months later we were still trying to determine the actual procedure cost across the seemingly 5 - 10 different bills received.  It's amazing we can be precise predicting the healthcare costs of animals but not humans.

[JWags85]

They want you to pay the price they quote. Not everyone is savvy enough or has the bandwidth to ask questions and navigate the billing quagmire. Them being fairly quick to negotiate with should tell you everything you know about it.

A family friend who was a prominent back surgeon (eventually set up his own practice cause he was sick of dealing with hospital bureaucracy and was a big enough deal to call shots) used to call hospital billing "MSRP". 

"Nobody should pay MSRP for a car, and nobody should pay MSRP on your hospital bill."

He's notoriously blunt and had some other choice words for both hospital administrative billing and patients who didn't ask questions about their bills in the internet age, but no need to muddy the thread with that.

[Jay Bee]

It's amazing we can be precise predicting the healthcare costs of animals but not humans.

Wat

[Sir Lawrence]

I'm not sure that the thousands - tens of thousands? hundreds of thousands? - of people who have had wages garnished and other extreme measures taken against them to pay humongous medical bills would agree.

What other "extreme measures?"  If wages are being garnished that means a judgment has been entered.  I don't think there are debtor prisons in North Carolina, but I could be mistaken.  As others have mentioned, health care providers will negotiate with the patient if there is no insurance.  But my point is that the actual bill is a fiction.  The health care providers know that they are not going to collect what is billed.

[lawdog77]

A family friend who was a prominent back surgeon (eventually set up his own practice cause he was sick of dealing with hospital bureaucracy and was a big enough deal to call shots) used to call hospital billing "MSRP". 

"Nobody should pay MSRP for a car, and nobody should pay MSRP on your hospital bill."

He's notoriously blunt and had some other choice words for both hospital administrative billing and patients who didn't ask questions about their bills in the internet age, but no need to muddy the thread with that.

Non profit hospitals can only charge uninsured patients at most their average reimbursement rate from their in network insurance companies. Also, they are required to post their charity care policies. So many, if not most uninsured patients hospital coverage for free.

The big issue is insureds copays and deductibles, which are crazy.

[MU82]

What other "extreme measures?"  If wages are being garnished that means a judgment has been entered.  I don't think there are debtor prisons in North Carolina, but I could be mistaken.  As others have mentioned, health care providers will negotiate with the patient if there is no insurance.  But my point is that the actual bill is a fiction.  The health care providers know that they are not going to collect what is billed.

I guess "extreme" beyond garnished wages are things like medical liens on houses - it has happened, and more than I thought when I read about it for the first time. Or medical groups  graciously offer to set up payment plans that last a decade or more. Then folks had to pray that they wouldn't have another big hospital bill or other expense.

The Charlotte Observer won awards with a series they did 12 years ago about how hospital administrators, management and doctors were getting rich while low-wage regular folks were losing the few things they had. The medical group my wife worked for had 30+ administrators making at least $1M annually, even as the group went after poor people's last dollar.

I just googled the series, and this anecdote from it came up:

Rachael Shehan has no health insurance and virtually no income. But when serious respiratory problems strike, her hospital has never provided financial help, she said. Instead, the 39-year-old Lenoir resident says, Caldwell Memorial Hospital has sent bill collectors who have hounded her for payment and ruined her credit. Now, she sometimes bursts into tears when medical problems arise. 'I know the hospital isn't going to help me with my bills,'says Shehan, who relies on food stamps and the help of friends. Nonprofit hospitals such as Caldwell Memorial are exempt from property, sales and income taxes. In return, they are expected to give back to their communities, largely by providing care to those who can't afford it.

Also this:

Top executives are paid millions as their hospitals expand, buy expensive technology and build aggressively. And they benefit each year from a perk worth millions: They pay no income, property or sales taxes. These institutions were created with charitable missions. But many don't act like nonprofits anymore. In their quest for growth and financial strength, they have contributed to the rising cost of health care, leaving thousands of patients with bills they struggle to pay.

I do agree that the amount originally billed is "fiction." But the end result is still often all too real to the vulnerable folks who can least afford it. Those with means are rarely affected because most have good health insurance.

I'll also allow that maybe things have improved the last few years as the ACA has gotten better and more states (including NC) have expanded Medicaid.