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Author: ValueSnark Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 40872  
Subject: A Small Example of Medical Costs Date: 9/3/2006 8:14 PM
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I suffered a non-life threatening and not even particularly serious injury Aug. 12 and was taken by an ambulance from the local police station (where I happened to have been near) to the ER at Beth Israel Hospital a dozen blocks away for a tetanus shot. The bill from Beth Israel was something like $637, which was surprising considering the clerk at the desk told me tetanus shots go for $675.

Last week I was shocked to receive a bill from a private ambulance firm in Buffalo, NY, I had never heard of before. I just assumed the ambulance was a New York City police function, paid for by me and other local taxpayers. The two officers who escorted me to the hospital never mentioned I'd get a bill for about $520 for the short ride. I could have easily walked or taken a cab and would have if I had been told the price of the ambulance trip.

The lawyer who lives next door told me he received an $800 bill for a four-block ride in an ambulance after a minor foot injury in New Jersey before he was a lawyer. He ignored the bill and never paid it, and suffered no legal or financial consequences despite receiving bills for a year after the event.

I asked him how this sort of stuff can happen, and he pointed out that city governments make contracts with private providers for all sorts of services on behalf of "the people," and that "the people" are presumed to consent to this nonsense.

Well, not this person.
I'm not paying, period.

He also pointed out that these "services" are sometimes put out for bid and sometimes not put out for bid, and that there are often kick backs and backhanders rendered to grease the wheels of government-business "commerce," especially in corrupt cities like New York, Newark, Chicago, etc.

Why am I shocked--shocked--I tell you!

He also said that if people stood up for their rights and fought this nonsense it wouldn't happen, or at least there would be more light on it and more competition for these services. Prices would certainly come down and a short trip that costs $10 in a taxi wouldn't cost $500+ in a "private" ambulance.

The way I figure it, taxi drivers probably make $20/hr. or $800/wk.
Let's make a heroic assumption and assume ambulance drivers deserve a 50% premium for superior driving skills, so they make $30/hr. My guess is that there's a state/muny law requiring two cops/ambulance employees to do the work, where in this case one would have been sufficient.
(It wasn't like I needed O2 or a blood transfusion or had been shot. IOW, there was no medical heavy lifting.)
Throw in another $60-$90 for overhead/profit and the cost of the ambulance and we're looking at maybe $120-$150.

Obviously some of that $520 is going to the company ($200?; $300?) and the rest is going to the police and maybe to the city treasury.

So let's go back to basic econ 101.
Demand side first. I wasn't given an option to "shop," where I would have had at least three: the ambulance, a cab, walking. Throw in a private car for four. Can you say, artificially inflated demand, with a higher price?

(You get brownie points for drawing a shifting demand curve on the black/whiteboard.)

Supply side next. I don't know the details of the contract between NYC and the Buffalo ambulance company, but I do know that there are fewer options on the supply side than there would be in a free market. Maybe the Buffalo firm was the low cost and best choice and maybe it wasn't. But at $520 for a short trip, my money would be on a monopoly/duopoly situation at work here (there is at least one other service, a Jewish ambulance service I see around).

So here in microcosm is a small part of what's wrong with healthcare in America. At almost every turn, you run into the government, and you know what that means for prices and quality of service.
Let's cut the market some slack and see if prices don't come down and if service doesn't improve.

Otherwise, prepare yourself for sticker shock if you're ever so unfortunate as to need a short ride in an ambulance.

Oh, btw, my lawyer neighbor pointed out that most people look on medical professionals as authority figures and don't question their treatment, bills, etc. However, some people do get second opinions and bully for them.

And some of us don't pay outrageous, monopoly-driven bills, which would quickly decline toward market levels if more people did the same thing.

So stand up for your rights and get some knowledge wherever you can.

VS
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