Skip to content Skip to navigation

Got Your "$546 Saline IV Bag" Defense Prepared Yet? I Didn't Think So.

August 27, 2013
| Reprints
Another mainstream media article highlighting hospital charges reminds us of what’s up ahead on the pricing transparency front

When The New York Times runs an article on page 1 of its Sunday Business section, people notice. And that goes double when the headline on the article reads, “How to Charge $546 for Six Liters of Saltwater.” That’s right, that was the headline. Do you think a lot of people read that article? You bet your bottom IV bag dollar they did. Indeed, the August 25 article by Nina Bernstein garnered hundreds of comments, many of them by Times readers who offered their own hospital-pricing horror stories.

What’s more, the article’s lead was exceptionally compelling:  “It is one of the most common components of emergency medicine: an intravenous bag of sterile saltwater. Luckily for anyone who has ever needed an IV bag to replenish lost fluids or to receive medication, it is also one of the least expensive. The average manufacturer’s price, according to government data, has fluctuated in recent years from 44 cents to $1. Yet there is nothing either cheap or simple about its ultimate cost, as I learned when I tried to trace the commercial path of IV bags from the factory to the veins of more than 100 patients struck by a May 2012 outbreak of food poisoning in upstate New York,” the article continues. Indeed, notes Bernstein, “Some of the patients’ bills would later include markups of 100 to 200 times the manufacturer’s price, not counting separate charges for “IV administration.” And on other bills, a bundled charge for “IV therapy” was almost 1,000 times the official cost of the solution. “

In other words, yet another mainstream media story has appeared—this one reported quite thoroughly—shedding light on the byzantine world of hospital charges. Of course, spokespeople for hospitals and for hospital supply companies will immediately counter by explaining the complexity of the entire reimbursement system, and will try to carefully explain why hospitals are forced to inflate the charges for such items as IV bags in order to survive in a payment system that continues to have to absorb the costs of uncompensated care on a daily basis.

But the reality is that healthcare consumers are no longer sleeping; and the calls for greater transparency continue to grow, even as actions such as the first nationwide release of some hospital charge information on the part of the federal Centers for Medicare & Medicaid Services (CMS) in May unleash waves of mainstream coverage, some of it well-informed, some of it less so. The bottom line here? This hospital charge issue is not going to go away, and hospital and health system senior executives need to move as quickly as possible to create their own narratives around transparency and accountability, as we head into the new healthcare. Indeed, with more corporate purchasers of healthcare pushing their employees into high-deductible plans, and with more patients being cared for under accountable care, bundled-payment, and other arrangements, the drive towards transparency is only going to intensify.

And, yes, hospital and health system executives do have a story to tell, though to be honest, it’s a rather complicated and challenging one to tell effectively. But the data is moving in all directions these days in healthcare, and the era when hospitals could hide behind 30-page bills and walls of obfuscation are fast coming to a close. Healthcare IT leaders need to be prepared to help their organizations move forward in this new era, and they need to be prepared very quickly. Will explaining the $546 charge for a few bags of IV solution be difficult? Of course it will. But being put in a position to have to explain such things publicly is the emerging reality of now. And it’s time for everyone to get used to it.




The story really is quite simple, not very hard to tell. But many media wonks really do not want to hear it. They'd rather find a crook and lynch'm. Helps sell more mags, more web site visits, etc.

Here's the story:
Yes, healthcare charges are all over the map. Not realted directly to costs. Why? Because for some forty (40) years the government has used reimbursement and payment system manipulations to set payment rates, which are in turn partially driven by charges. Hospitals set charges to react to the government rules not to rip off a patient. Oh by the way, the average hospital total surplus margin (bottom line) is less than 3%, fairly close to you local supermarket, yet they lose money on milk but get 100% on craft beer and yet NYT doesn't complain!

Frank Poggio
The Kelzon Group
(Former Hospital CFO)