Missing link in medical pricing: cost accounting

John Torinus:

Eric Bricker, a former primary care doctor, a former financial analyst for hospitals, and now chief medical officer for Compass, a patient advocacy firm, conceded that big hospital systems use a variety of pricing strategies, but they are not based on costs.

In most industries, there is a close connection between costs and prices. But that takes an accurate assessment of costs, which is accomplished through an old discipline called cost accounting.

We payers are told by hospital executives that medical services are “too complicated” to analyze for costing purposes.

In a word: nonsense.