Total health care spending in America was approximately $3.5-trillion in 2017 and about 32% of that amount — or $1.1-trillion — was spent on hospital services.
Hospital costs averaged $3,949 per day and each hospital stay cost an average of $15,734.
Those are alarming figures, especially for families with limited budgets or no insurance. It is not surprising that 60% of all bankruptcies are related to medical expenses.
But there are options when it comes to paying for hospital costs. It requires an educated medical consumer and the willingness to explore a variety of funding sources.
“Rising health care costs for hospital stays and surgeries have created a new financial and emotional epidemic for Americans,’’ said Gail Trauco, an Atlanta-based oncology nurse who also serves as a pharmaceutical trials expert and a licensed grief mediator.
One thing is certain: Health care is a big business.
There is no standard system that determines what a hospital charges for a particular service or procedure. Many factors figure into hospital pricing, including an individual’s health circumstances, the cost of lab tests, X-rays, surgical procedures, operating room and post-surgical costs, medications, and doctors’ and specialists’ fees.
For example, if one patient’s recovery from an operation takes place in an Intensive Care Unit (ICU) and another patient’s recovery takes place in a recovery room, costs can vary by thousands of dollars, even if the two patients’ surgeries were similar. The cost of gallbladder surgery is different for someone with diabetes than it is for someone who doesn’t have diabetes.
In addition, overall hospital costs vary considerably depending upon where a hospital is situated and who winds up paying the bill — the patient, an insurance company or a government program such as Medicare or Medicaid.
The bottom line: No two hospitals are likely to be the same. So regardless of a hospital’s published fee schedules for a service or procedure, the best information that a prospective patient can receive is a good-faith estimate. Until the bill is actually processed, there is no reliable way to assess a patient’s final hospital costs.
How much does surgery cost? Isn’t that always the first question?
The average cost of surgery can vary drastically depending upon the procedure.
In 2018, the most expensive surgeries included heart valve replacement ($170,000), heart bypass ($123,000), spinal fusion ($110,000), hip replacement ($40,364), knee replacement ($35,000), angioplasty ($28,2000), hip resurfacing ($28,000), gastric bypass ($25,000), cornea ($17,500) and gastric sleeve ($16,000).
With those figures, patients might think they know the ACTUAL cost of surgery.
Sometimes, they must think again.
There are numerous potential “add-on’’ costs to surgery that aren’t absorbed until after the fact, when financial reality becomes even more brutal.
Here are a few areas that are often included or associated with surgical costs:
- Operating room per-hour costs
- Surgeon’s fee
- Hospitalization costs (before surgery)
- Pre-surgery treatment (such as dialysis and insulin pumps)
- Anti-rejection medications
- Visits with the surgeon
- Insurance deductibles, co-pays and premiums
- Non-medical expenses (such as child care, travel and lodging)
- Lost wages.
Paying for Hospital Stays and Surgeries
In 2016, Medicare spent about $672.1-billion on benefit expenses for 58-million individuals who were age 65 or older or disabled, according to the U.S. Department of Health and Human Services. Inpatient hospital services accounted for 29% of that amount ($195.4-billion). Approximately 36-million patients per year are admitted to U.S. hospitals, according to the American Hospital Association, and Medicare pays 90% of the costs for almost 42% of them. Overall, Medicare payments account for nearly 20% of all hospital care costs.
In 2016, Medicaid paid about $339.3-billion for acute-care services, such as hospital care, physician services and prescription drugs. Its share of hospital admissions is about 20%, for whom it pays about 89% of all hospital costs. Overall, Medicaid pays for approximately 17% of all hospital care costs.
There are other ways to pay for surgery. Private health insurance pays for approximately 34% of all hospital care. Out-of-pocket costs comprise 11% of the total, while 18% are covered by other sources, including all other public health insurance programs, such as the Children’s Health Insurance Program (CHIP), and programs of the Department of Veterans Affairs (VA) and the Department of Defense (DoD); and other third-party payers, including workers’ compensation, and other state and local programs.
Patients may have to pay co-pays, deductibles or the total cost of hospital care and surgery. Anyone having trouble paying their medical debt should talk to a financial professional to discuss debt-relief options, including debt consolidation and debt settlement.
In the best-case scenario, the patient will have primary insurance to pay most of the expenses, along with a secondary form of insurance that pays the remaining expenses.
But even if you have excellent insurance coverage that pays 80% of the total bill, the remaining 20% can exceed $100,000 for major surgery. But with secondary or supplemental insurance, the remaining 20% can be paid by the insurance company and not the patient.
Sometimes, particularly in the case of self-employed people, private insurance can be obtained outside of the workplace. It could cover a bulk of the surgery cost, but most insurance plans have a “cap’’ or maximum that the company will pay. For some major surgeries, that cap is met or exceeded by standard care during the procedure.
Surgery Without Insurance
Here are some potentially scary terms:
Out of pocket.
Even if you don’t have insurance — or if you are undergoing a procedure not covered (such as weight-loss or plastic surgeries) — you do have options.
It’s always a good idea to examine all self-pay options because it’s likely that insurance will pay only a portion of the bill. Be sure to include all the expected expenses, including the surgeon’s bill, anesthesia expenses, hospital care before and after surgery, labs, medications, X-rays, testing and doctor visits.
Be proactive. Plan for contingencies (such as complications), which could raise the cost, and establish what your payments will be after the surgery (prior to having the procedure).
Never ignore calls from the hospital’s collection department. In fact, go out of your way to establish good relationships with those individuals. They can help you set up a payment plan. Sometimes, they can reduce the amount you owe and allow you to pay the rate that insurance companies have negotiated for the same procedure. So it’s senseless to alienate these people.
Here are more recommendations if you don’t have insurance.
Prevention — Meghan Nechrebecki, founder and chief executive officer of Health Care Transformation, said this is an often overlooked factor. “Prevention comes first,’’ Nechrebecki said. “Utilize the ambulatory care clinics. Go see your doctors and do what they recommend to keep yourself healthy. Eat well and exercise often. You will prevent many surgeries and hospitalizations.’’
Reduce Surgery Costs — Become a master negotiator. But first, pare down the cost of everything. Research where the procedure will cost the least amount of money — from anesthesia to the surgeon to the hospital to the pharmacy — much like how everything needs to be in-network for insurance. How do you do this? Call everyone who is providing the care and explain your situation. Ask for the best rate offered to insurance companies. By being pleasant (but persistent), you can whittle thousands of dollars off your bill. People in billing will often help, whether it’s pointing you toward programs for people with financial difficulties or providing inside information (such as the savings from using a surgery center instead of a hospital).
Ask the Right Questions — If you want important answers, you must ask the right questions. And some of those questions must be asked to yourself.
Example questions you should ask:
- How long will you have to repay the loan?
- How much are the payments?
- Will you be able to manage the payments? Or will you struggle to pay your bills on time?
- Will the payments put too much stress on your credit cards because you can’t pay more than the minimum?
- What’s the strategy if the cost of surgery becomes higher than the original estimation?
- Can you afford the prescription medication that is needed after surgery?
- Will paying for the surgery compromise your ability to save for future needs?
International Surgery — Seeking healthcare outside of the United States — a practice sometimes known as “medical tourism,’’ has become a recent trend. In some cases, the procedures cost 75% less. Sometimes, foreign surgeons promote and advertise themselves. But let the buyer beware. The surgeon’s credentials — and the facility where you would recover — should be verified.
Temporary Disability — This short-term benefit might not pay for the surgery itself, but it provides financial help during your time of recovery. There are limits on the monthly benefits and the length of time when you can receive them.
Government Programs — Insure Kids Now is offered to low-income working parents who don’t have health insurance (or whose insurance doesn’t cover their kids). The Children’s Health Insurance Program (CHIP) provides free or low-cost health insurance for kids. Some veterans are eligible for free healthcare without copays through the U.S. Department of Veterans Affairs (VA). Seniors (65 and over) can get surgical coverage through Medicare. Some states offer medical coverage for those with lower incomes. If you’re facing major surgery, you might qualify, even if you hadn’t qualified before.
Telemedicine — According to Mary Gorder, chief executive officer to Drs. On Calls, the new concept of “telemedicine’’ can add up to substantial savings. “If a doctor is able to consult with a patient via video conferencing without being in the same place as them, it can help alleviate the need for a patient to stay in a hospital,’’ Gorder said. “If a patient is already in the hospital, telemedicine can cut down on the cost of the stay by not requiring the doctor to be at the hospital.’’ Doctor consultations done on a per-call basis can be ideal for people who don’t have insurance because they are much less expensive than an in-person visit.
How to Pay for Surgery Costs
There are numerous creative ways to cover the costs of surgery.
Borrowing from Retirement Savings — It’s not what we’re taught, but know that your 401k or 403b retirement plans could allow you to take a loan against the funds you already have saved — without a penalty. Most plans will allow you to withdraw 50% of your vested balance (up to $50,000) for healthcare expenses.
Payment Plans — They are commonly offered when surgery is routinely paid for by the patient instead of an insurance company. Sometimes, it’s a formal agreement for monthly payments. It could be a loan that involves the hospital or surgeon in the financial arrangements. Especially in the case of an unplanned or emergency surgery, hospitals are usually happy to establish a payment plan with willing patients. Monthly payments are more attractive than NO payments. And they should keep the debt from appearing on your credit report as a negative account.
Medical Crowdfunding — This has become a routine process in recent years — such as a GoFundMe that is powered by donors — and it’s particularly effective for medical needs. You can start a campaign or one can be started for you.
Using The Nest Egg — Spending your life savings on surgery is definitely not ideal. But if the surgery improves your quality of life, it could be money well spent.
Home Equity Loans — Home equity loans are borrowed against the value of your home that is greater than the balance of your mortgage. If your home is worth $200,000, but you owe only $150,000 to the bank, you could borrow against the $50,000 in equity. It’s usually easier to obtain this type of loan — instead of an unsecured loan — because your house is your collateral. But be careful. If you can’t make the loan payments, it could lead to foreclosure and eviction from your home.
Unsecured Loans — These are loans that aren’t secured with property you own. It’s based on your credit and income — a credit card might fall into this category — and doesn’t use collateral. Surgeons might have their own loan programs, but the bottom line is the interest rate. If you can obtain a more favorable rate, go for it.
Shop Around — Hospitals and doctors charge different rates. If you’re not tied down to a network, it pays to comparison shop, just like you would do at a store.
Ask for Reduced Rates (Or Pay in Advance) — Many people might be hesitant to try this, but why not? There are discounts available, but you must ask for them. You can also pay what you can. Even a $5 monthly payment toward a hospital bill is an effort accepted in good faith.
Charity — Pediatric cancer patients can seek treatment at St. Jude’s Children’s Hospital, where all treatment is free to the patient. Meanwhile, Shriner’s Children’s Hospitals offer free services for pediatric orthopedic patients.
Speak Up — Trauco said it’s helpful to become your own patient advocate. “If you are truly in need, write about it and talk about it,’’ Trauco said. “Contact your local newspapers and TV stations to get the word out. Good Samaritans are still among us and a medical expert may offer assistance to a patient at no cost. Tell your story because someone else is also living a parallel trauma.’’