HOUSE_OVERSIGHT_019424.jpg
2.26 MB
Extraction Summary
4
People
7
Organizations
7
Locations
1
Events
2
Relationships
2
Quotes
Document Information
Type:
Investigative report / news article (likely part of house oversight committee evidence)
File Size:
2.26 MB
Summary
This document appears to be a page from a report or article submitted to the House Oversight Committee, focusing on the economics of the medical supply chain and hospital billing practices. It uses a case study of a 2012 food poisoning outbreak at a Buddhist monastery in Carmel, N.Y., to illustrate how medical supply distributors (like Cardinal Health) operate and how patients face opaque billing structures, such as a grandmother and toddler billed $1,400 despite having Medicaid coverage. The text highlights the role of group-purchasing organizations and the impact of the Affordable Care Act on hospital consolidations.
People (4)
| Name | Role | Context |
|---|---|---|
| Debbie Mitchell | Spokeswoman for Cardinal Health |
Stated she could not discuss costs or prices due to investor relations disclosure rules.
|
| Dr. Elizabeth Frost | Anesthesiologist / Victim |
73-year-old from Purchase, Westchester County. Fell ill after eating at the monastery. Quoted regarding the severity ...
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| Unnamed Toddler | Patient / Victim |
Chinese-American toddler from Brooklyn treated at St. Luke's Cornwall Hospital.
|
| Unnamed Grandmother | Patient / Victim |
56-year-old grandmother of the toddler, treated at St. Luke's Cornwall Hospital.
|
Organizations (7)
| Name | Type | Context |
|---|---|---|
| Cardinal Health | Medical Distributor |
One of the three largest distributors; has a center in Montgomery, N.Y.
|
| Buddhist Monastery | Religious/Cultural Site |
Located in Carmel, N.Y.; site of the food poisoning outbreak.
|
| Woodbury Commons | Retail Center |
Designer outlet stores visited by victims before falling sick.
|
| New York State Department of Health | Government Agency |
Investigated the cause of the food poisoning.
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| St. Luke’s Cornwall Hospital | Medical Facility |
Treated the unnamed toddler and grandmother.
|
| Medicaid | Government Program |
Insurance provider for the unnamed family.
|
| House Oversight Committee | Government Body |
Implied by the footer 'HOUSE_OVERSIGHT'.
|
Timeline (1 events)
May 2012 (Mother's Day)
Food poisoning outbreak caused by Staphylococcus aureus.
Buddhist Monastery, Carmel, N.Y.
Locations (7)
| Location | Context |
|---|---|
|
Location of Cardinal Health distribution center.
|
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Location of the Buddhist monastery.
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Departure point for tour buses.
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Designer outlet stores.
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Home of Dr. Elizabeth Frost.
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Region where hospitals are merging.
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Home of the Chinese-American toddler.
|
Relationships (2)
Debbie Mitchell, a spokeswoman for Cardinal Health
visiting the monastery gardens with two friends
Key Quotes (2)
"she could not discuss costs or prices under 'disclosure rules relative to our investor relations.'"Source
— Debbie Mitchell
(Regarding the opacity of medical supply contracts.)
HOUSE_OVERSIGHT_019424.jpg
Quote #1
"Within two hours of eating that rice that I had bought, I was lying on the ground barely conscious... I can’t believe no one died."Source
— Dr. Elizabeth Frost
(Describing the severity of the food poisoning symptoms.)
HOUSE_OVERSIGHT_019424.jpg
Quote #2
Full Extracted Text
Complete text extracted from the document (4,165 characters)
cost of medical supplies from gauze to heart implants, disappears into an opaque realm of byzantine contracts, confidential rebates and fees that would be considered illegal kickbacks in many other industries.
IV bags can function like cheap milk and eggs in a high-priced grocery store, or like the one-cent cellphone locked into an expensive service contract. They serve as loss leaders in exclusive contracts with “preferred manufacturers” that bundle together expensive drugs and basics, or throw in “free” medical equipment with costly consequences.
Few hospitals negotiate these deals themselves. Instead, they rely on two formidable sets of middlemen: a few giant group-purchasing organizations that negotiate high-volume contracts, and a few giant distributors that buy and store medical supplies and deliver them to client hospitals.
Proponents of this system say it saves hospitals billions in economies of scale. Critics say the middlemen not only take their cut, but they have a strong interest in keeping most prices high and competition minimal.
The top three group-purchasing organizations now handle contracts for more than half of all institutional medical supplies sold in the United States, including the IVs used in the food-poisoning case, which were bought and taken by truck to regional warehouses by big distributors.
These contracts proved to be another black box. Debbie Mitchell, a spokeswoman for Cardinal Health, one of the three largest distributors, said she could not discuss costs or prices under “disclosure rules relative to our investor relations.”
Distributors match different confidential prices for the same product with each hospital’s contract, she said, and sell information about the buyers back to manufacturers.
A huge Cardinal distribution center is in Montgomery, N.Y. — only 30 miles, as it happens, from the landscaped grounds of the Buddhist monastery in Carmel, N.Y., where many of the food-poisoning victims fell ill on Mother’s Day 2012.
Among them were families on 10 tour buses that had left Chinatown in Manhattan that morning to watch dragon dances at the monastery. After eating lunch from food stalls there, some traveled on to the designer outlet stores at Woodbury Commons, about 30 miles away, before falling sick.
The symptoms were vicious. “Within two hours of eating that rice that I had bought, I was lying on the ground barely conscious,” said Dr. Elizabeth Frost, 73, an anesthesiologist from Purchase in Westchester County who was visiting the monastery gardens with two friends. “I can’t believe no one died.”
About 100 people were taken to hospitals in the region by ambulance; 5 were admitted and the rest released the same day. The New York State Department of Health later found the cause was a common bacterium, Staphylococcus aureus, from improperly cooked or stored food sold in the stalls.
MYSTERIOUS CHARGES
The sick entered a health care ecosystem under strain, swept by consolidation and past efforts at cost containment.
For more than a decade, hospitals in the Hudson Valley, like those across the country, have scrambled for mergers and alliances to offset economic pressures from all sides. The five hospitals where most of the victims were treated are all part of merged entities jockeying for bargaining power and market share — or worrying that other players will leave them struggling to survive.
The Affordable Care Act encourages these developments as it drives toward a reimbursement system that strives to keep people out of hospitals through more coordinated, cost-efficient care paid on the basis of results, not services. But the billing mysteries in the food poisoning case show how easily cost-cutting can turn into cost-shifting.
A Chinese-American toddler from Brooklyn and her 56-year-old grandmother, treated and released within hours from the emergency room at St. Luke’s Cornwall Hospital, ran up charges of more than $4,000 and were billed for $1,400 — the hospital’s rate for the uninsured, even though the family is covered by a health maintenance organization under Medicaid, the federal-state program for poor people.
HOUSE_OVERSIGHT_019424
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