IV Saline Solution Subject To Significant And Hidden Markups

A recent article in the New York Times discloses how an IV bag of saline solution, which costs at most $1 to manufacture, ends up costing hospital patients hundreds of dollars.  In “How to Charge $546 for Six Liters of Saltwater,”  the author details charges to a group of individuals treated for food poisoning in upstate New York.  The products started at one of a few manufacturers , Baxter and Hospira, who prepare the solutions with Morton Salt and water in a sterilized process.  The liter costs no more than a dollar to prepare and supply.

The products are distributed to hospitals through three  group-purchasing organization that handle contracts for more than one half of all institutional medical supplies sold in the US, and through a few large distributors that buy and store the medical supplies.  Although the distributors did not disclose their prices to the hospitals, because of their market position they have an incentive to establish high prices for the products.  The hospital end-users then tack on additional charges to the saline solution.  In some instances the IV therapy was charged at a rate of $787 for an adult and nearly $400 for a child.  This did not include charges for administering the IV or for the associated hospital services.  The article highlights how prices in health are concealed and how health care providers take advantage of the average consumer’s lack of pricing information.  The IV solutions contain no more than sterilized salt water, and yet hospital continue to charge hundreds upon hundreds of dollars for something that essentially costs nothing.

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