Understanding health care costs is difficult, largely because it is hard to know how much you are going to pay before you agree to receive care. But for basic, routine treatments performed hundreds of thousands of times a day, the costs are readily available, right? Wrong.
Consider kidney dialysis, performed on 468,000 Americans including almost 18,000 North Carolinians several times a week. A simple Google search for “how much does dialysis cost” will get you lots of ads, and a few links to national averages – mostly in the $90,000/year range. At three treatments a week, that works out to just under $600 per treatment.
But national averages are a far cry from dialysis costs in North Carolina.
If you are insured by Blue Cross NC, it is possible to access their cost-estimator tool, which is, as advertised, just an estimate. The numbers were eye popping. In my community, the costs ranged from under $1,500 to almost $4,800. As I dug in and tried to find more information, it got even worse.
At the high end was DaVita, a national chain of dialysis centers that operates 111 locations in North Carolina. When I looked more carefully at this $4,783 estimate, it turned out that is just what I, the patient, would pay – not what DaVita was charging. Between me and my insurer, DaVita was looking to charge an astounding $17,871.
While it is great for me that my insurer would pick up the bulk of the cost, ultimately, they will pass along that $13,088 in the form of higher premiums on all of us. We still lose.
According to DaVita’s most recent quarterly report, they generate just under $350 in revenue per treatment, so I figured something strange must be going on here.
Perhaps the $17,871 was not per-treatment but a per-month estimate? If so, that would put the per-treatment cost in the $1,400 range.
To find out, I called the center. They couldn’t tell me but gave me the national customer service number.
The national customer service number couldn’t tell me but told me to find out even a rough estimate of the cost, I would have to start the process of registering as a patient. They gave me another phone number.
That phone number asked me to leave a message.
All told, I was on the phone for half an hour trying to find the answer to the simple question – roughly how much does dialysis cost at your clinic.
I posed my theory that it was a monthly fee to Blue Cross NC. They helpfully wrote back that the number “should be per treatment.” This would mean that DaVita is charging over 51 times their national average for dialysis at this North Carolina clinic.
Fresenius, another national chain which operates many clinics in North Carolina was more forthcoming. Their charge of $2,429 was, indeed, per treatment – or about 10 times what Medicare pays for dialysis.
Why is dialysis so expensive in North Carolina?
One answer is our Certificate of Need or CON laws. CON is a government regulation that limits the number of medical facilities that can operate in a given area. Dialysis clinics are regulated under CON, so to open a new dialysis clinic, an area would have to demonstrate a “need” for additional facilities.
The result is that new dialysis providers cannot enter the market and offer competition which could improve services and lower prices. The existing dialysis centers are able to exercise their market power and increase the costs to patients. This is why we see DaVita and Fresenius are able to get away with such outrageous prices.