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FOX 7 Investigates: High cost of healthcare

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When you consider the reasons behind the rising costs of healthcare in America remember 25-year-old Travis Reidy's story.

"I'm 25 and I feel like I'm 40..I'm stressed," Reidy said.

This single dad spends 60 hours a week working at Arbor Car Wash and Lube.

"It’s rough, it's rough. It really is," Reidy said.

He has had no health insurance and now he's worried sick over the medical bills for his two kids.

A recent fall left his 2-year-old daughter with a cut on her head. So he took her to Seton Northwest's Emergency Room.

"They put this little deal on her head. Numbing stuff, four stitches. Have a nice day. There was no medication. There was nothing to it. It was $3,000 dollars," Reidy said.

If it sounds extreme, economists say it's a sign of the times, because the private market for healthcare has little or no price regulation.

"I'm getting called daily," said Marc Chapman, owner of an internationally renowned business called

For the past decade, patients have hired Chapman to negotiate healthcare bills, and he says charges often start out high because hospitals simply have no limits.

"There was someone in California who sent me a bill for an appendectomy -- $125,000 and the hospital said right away, we will discount that to $75,000. I mean that bill should be no more than $25,000," Chapman said.

Chapman says the negotiation is possible, because he has compiled years of data that shows each hospitals' actual expenses versus the charges.

"We designed a program. We take that bill run it through that program. We look at benchmarks like cost at the facility. We look at what the private insurance company would be paying to that hospital," Chapman said.

Chapman says one trend that concerns him is a new requirement for patients to disclose all of their finances before hospitals consider making adjustments.

"I have a problem with that,” Chapman said. “In that what they are saying is that if you have the means, you will pay full price. If you don't have the means, okay we will discount it somewhat."

And to those without a trained eye the charges can be hard to decode. The Affordable Care Act was supposed to require hospitals to release a price list of routine tests and treatments, also known as a charge master. But, two years later, that portion of the regulation remains in limbo. However, some states, like California, require hospitals to submit their prices.

"A hospital has to make money. They have to make money and we understand that," Chapman said.

Here in Austin, we asked several hospitals including St. David's Hospital and the entire Seton Hospital system to disclose the prices for basic treatments like, a Tylenol pill with codeine, an IV bag, a routine X-ray and a CT scan.

None of the hospitals would tell us their prices, claiming the variables are too patient specific.

"We need to know what's the fair price," Chapman said.

Chapman says through over a decade of research, he's concluded, over time, prices have risen disproportionately to their costs.

And that is true for Travis Reidy's bill too. We asked him to analyze it and here's what he found:

Using the Seton Northwest Hospital's own data as reported to the Centers for Medicare and Medicaid Services, Chapman calculated the nearly $3,000 bill for four stitches should have been more like $875.

Seton declined an on camera interview, but after we brought Reidy's story to their attention, we received the following statement:

“Seton Healthcare Family works with uninsured patients all the time to lower their bills or prepare payment plans that can work for them. We have staff who sign them up for government programs, too, if they qualify.

Sometimes, billing communication with patients is confusing. We are now talking with this individual in an effort to assist.

Hospital billing is complex and driven largely by insurance companies and government (Medicare). Do we look forward to a time when pricing can be more easily explained? Yes. Are we there yet? No."

St. David’s HealthCare also sent the following statement:

"There are a number of factors that determine the amount a patient pays for hospital services, including the patient¹s health insurance coverage, as well as a large unfunded patient population. We encourage patients to talk with their physicians and their health insurance providers to fully understand their medical coverage prior to receiving treatment. Additionally, St. David's HealthCare hospital staff members are always available to discuss any questions a patient may have about hospital charges."

"I think like what I am going to do. I can pay them $5 a month and spend 20 years paying it off," Reidy said.

Chapman says the best advice he can give to patients is to get insurance and know what your coverage will and won't do.

"You have to know your insurance. What happens if you use the ER and is there an incentive to avoid the ER and go to a clinic. If you have those --use them," Chapman said.

Another piece of advice Chapman says if you chose to raise your deductible to lower your monthly premiums, be careful. He says that the deductible is not a negotiable amount. So, if you receive a large bill, the reduction would only take place on the back end of the fees. For instance, if your bill is $10,000 and you have a $10,000 deductible, you have no negotiating power.

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