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May 31, 2012

"Many hospitals, doctors offer cash discount for medical bills"

Little known. My parents' experience matches this discussion well. 


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I'm not sure why this info should shock anyone. The cash price is a market price *after* all the other inputs are measured. It's just like how drug companies can charge Canada lower prices for some drugs after making their main profit in the US.

Back in the mid-90s I went to the hospital and pushed until I found some one who could/would negotiate a price reduction for our share of my wife's appendectomy. Even then I got a 50% reduction for cash. [The alternative then was 2 years or so of payments by a student couple. They weren't that hard to deal with.]


I would argue that this is an outlier. Hospitals know that cash patients are less likely to pay their bill than one w/ insurance. So the liklihood of getting money from cash patient is less likely so anything we can get is better than nothing (to a degree).
If everyone moved to cash the cost the cash patient begins to see would increase and the apparent discount would decrease.

Michael (Constant Conservative)

Interesting. My own experience bears this out--and I was not even a "cash patient." After my son was born, and we were getting ready to take him home for the first time, an accountant and patient representative dropped by my wife's room and informed us that we could get a 15% discount if we payed the bill before leaving. We had insurance to cover most of it, but it worked out to several hundred dollars in savings--so I took the offer. I asked a man who owns a collection agency about this and he informed me that in his market (just one relatively small metro area) somewhere between 25 and 40% of birth bills ended up in collections. After that discussion, the hospital's decision made much sense to me.


This is not unique to hospitals - cash is king, everywhere. As others noted, this plays well when there are loans and known issues with payments. Even with good payments, many companies would prefer to have cash now instead of waiting. Good discounts to be had in (remodeling) and auto industries with this approach.

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