Dallas' most expensive provider is a microcosm for hospital finance

Medical City Dallas is the most expensive hospital in Texas' second-largest city, and its bills are so high that even physicians practicing in the area have been taken aback.

That was the case with Jerry Frankel, M.D., a retired local physician whose bill for a spinal fusion procedure was $166,000.

"It knocked me off my feet," Frankel told the Dallas Morning News. "I just couldn't imagine that for a three-day hospital stay the bill would be $166,000. I didn't have a figure in mind, but that comes out to be $55,000 a day, and that's just insane."

The article notes that the organization charges nearly $17,500 for a routine childbirth and a heart transplant costs nearly $1.1 million. The hospital also has the highest pre-tax profit margin in town, often approaching 30 percent a year, according to the publication.

Dallas is among the most expensive places in the country for surgical procedures, according to a recent report by the Government Accountability Office. 

However, the hospital features many of the issues that have caused the hospital sector to come under criticism for its business practices. Its chargemaster, for example, is what the Morning News called "fiction." Frankel's insurer paid only $16,000 for his surgery, and he paid just $500 out of his own pocket. Chargemasters have come under significant criticism for not reflecting real costs but inflating prices for uninsured patients.

The hospital also uses creature comforts to lure patients, including upscale artworks, carpeted atriums and textured wallpaper--issues that can have a seductive effect on some patients.

The hospital, which is currently leased by HCA, was specifically designed as a business venture rather than an extension of the community. When it was built in the 1970s, its owners specifically plotted a location that would be at the confluence of where physicians who practiced at another large provider and potential patients lived. The physicians were then recruited to practice at the hospital--and they brought their patients with them, according to the Morning News.

The Morning News noted that Medical City Dallas also plays into a commonly held notion among Americans--the more expensive their care is, the better it is. However, that concept has often been challenged. 

And for now, the hospital has clung to a fee-for-service model, rejecting the notion of bundled payments or other forms of risk-sharing. 

To learn more:
- read the Dallas Morning News article 
- here's the GAO report (.pdf)