Except they kind of are…
Prices for procedures and drugs in American healthcare are often 5x higher than the same procedures and drugs in other first-world nations. When quality of care, equipment used and drug components are identical across the board, the only difference is the methods used to determine “costs”.
Hospitals and other providers often set prices based on a complex and flawed system of cost and profit calculation called the Chargemaster. Prices in the Chargemaster actually are completely fabricated, but for many reasons. One is that hospitals know insurance companies will “discount” any charge assessed for patient care, so the larger the charge, the better the profit margin post-insurance discount. Another is that non-profit hospitals (and many for-profit ones) can use the ridiculously high chargemaster rates to calculate how much charity work they do, effectively counting money that would never have been paid to them as income lost to “charitable work”. While chargemaster prices aren’t passed directly to the consumer on a dollar per dollar basis, it’s estimated they do add $0.15-$0.20 per dollar to the bill. That means that a stent that costs the hospital $1500, but is listed in the chargemaster as a $15,000 item (like the case in the article above), brings in an additional $2,700 in revenue when passes on to the consumer at only 20% of chargemaster cost. And that assumes the hospital doesn’t try to pull a fast one like they did with the gentleman in the story above, charging $10K for a $1.5K item (66% of chargemaster cost).
Healthcare is broken, and it’s absolutely due in large part to the complete chaos of medical billing that allows providers to essentially charge whatever the hell they want (or at least think they can get away with) for just about anything.
The hospitals closing their doors every year are doing so because they either exist in areas where there are not enough patients to service to make them profitable (and again, thanks to explosive healthcare growth, “profitable” doesn’t mean making a small profit, it means you either rake in the money like Scrooge McDuck or the investors demand your closure so they can open a more lucrative facility somewhere else) or because the facility itself is so old and or mismanaged that it’s more profitable to close up shop and build a new facility (with all it’s wonderful tax incentives) somewhere else.