“I’ve been pounding the table about location-based pricing for years. Now we have hard data.”
Wolf here: Michael Gorback, M.D., who has authored a number of articles for Wolf Street on how opaque pricing in the US healthcare system inflates costs, has been a strong advocate of price transparency. He told me he is “one of the very few (only?) pain specialists who accept uninsured patients and publish their cash fee schedule.”
A “cash fee schedule” is essentially a price list. It’s the norm in just about every industry, except in healthcare, where opaque pricing dominates – to the detriment of consumers.
By Michael Gorback, M.D., at the Center for Pain Relief in Houston, TX:
Imagine you’re out shopping for a new car. You stop by Dealership A and get an offer of $35,000. You decide to do some comparison-shopping and head over to Dealership B. Their price is $39,000. You show them the offer from Dealership A. The trusty salesman says you should buy the car from him at the higher price because his store has a higher overhead. “Look at the fancy furniture in our showroom,” he says. “The chairs are really comfortable in the waiting area and we offer espresso and cappuccino. Our rent is also much higher.”
This is the logic behind higher prices for outpatient procedures done at a hospital as opposed to an ambulatory surgery center or office setting. I discussed this phenomenon on Wolf Street back in 2014.
Well, now we have some numbers. According to a report submitted to Congress by the Physicians Advocacy Institute (Medicare Payment Differentials Across Outpatient Settings of Care), hospital outpatient services cost considerably more than other settings without any evidence of added benefit. Whether it’s a colonoscopy, cardiac imaging, or just an office visit, costs are higher in a hospital outpatient setting.
“Medicare is paying hospitals more for the same services because (the federal healthcare program) thinks it costs (physicians) more to provide the same service due to higher overheads,” said Bhagwan Satiani, MD, professor of clinical surgery at Ohio State University’s College of Medicine, cited by Physicians News Network.
Yes! You should buy our $39,000 car because the furniture in our showroom is more expensive!
I’m not sure why Physicians New Network added “(physicians)” to the statement by Dr. Satiani. The physicians are not being paid the facility fee. The hospital gets the fee. Actually, if I do a procedure at the hospital, my professional fee is cut because I don’t have overhead. Think about that for a moment. Let’s say I get $250 for the procedure in the office. If I do it at the hospital I get $125, so CMS must think my overhead is $125. But CMS thinks that the hospital’s overhead is perhaps $800. Why are they subsidizing the less cost-efficient location?
Doctors working in such settings seem to have an incentive to do more medical procedures, Bhagwan Satiani said, according to PNN.
True dat! There is intense pressure on hospital-employed physicians to do more of everything – testing, procedures, treatments, and so on. Fail to order enough tests and you might find yourself having a heart-to-heart chat with one of the corporate suits.
This location-based cost differential is nothing less than cost-shifting. The hospital overcharges outpatients to pay for overhead for which it’s undercompensated. If I can do a spine injection in the office for $250, why should my patient pay $800 just to walk in the door of the hospital outpatient department? The hospital setting adds nothing to the value of the procedure: same doctor, same patient, same drugs, same supplies, same injection.
The only indication for selecting a hospital setting should be if the patient is a high risk due to health problems.
If the hospital outpatient department can’t provide the service for the same price as everyone else, then they shouldn’t offer the service.
I happen to be a shareholder in a physician-owned hospital but I still do most of my procedures in my office. I get my patients in and out faster and for a mere fraction of the cost. Many of my partners resent that but I have a fiduciary duty to my patient to put their interests ahead of mine.
I’ve been pounding the table about location-based pricing for years. Now we have hard data to support the claim that it’s costing us billions of dollars. It’s time to eliminate it. By Michael Gorback, M.D., Center for Pain Relief.
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The author’s approach leads to less invoices and paperwork too. That’s a big problem today. When my daughter had a broken arm, I think I received about 10 separate invoices from the various professionals in the hospital that were involved. Separate invoices from the hospital, doctor, XRay Tech, assistants, etc. Some sent the bills to me, others sent them to the insurance company, even though everybody had a copy of my insurance card. Absolutely ridiculous. The more people that are involved, the higher the chance of procedural and administrative errors.
Imagine if hospitals had the same transparency requirements as financial institutions!
I dream of the day when there are transparencies in healthcare, pharma and other opaque industries. Look at how other businesses have been forced to compete on price, and to spell out charges and acknowledge what was hidden. There have been too many lies of omission and commission that have gone on for too long.
Automobiles provide a handy example and have been referenced numerous times at Wolf Street. Some dealers are able to gouge buyers with fast talk, circled numbers on a yellow pad, more fast talk with some mumbo jumbo, a visit from the sales manager and other schemes and methods to get that iron to drive itself right out the door. The facades began to crack somewhat with the advent of internet-based information services, buying arrangements such as auto brokers, wholesale or fleet sales that were added ways to move inventory to individuals and other tweaks.
Imagine hospitals with pricing sheets, instead of stonewalling. On the west side of Los Angeles, there are some very high-priced hospitals and they use one another as benchmarks to justify their prices. They have less justification when charging $160 for a single over-the-counter painkiller tablet, but they try nonetheless until someone calls them on it. Few individual payers call, so they pad their income to make up for whatever pressure some insurers may bring.
Or imagine a government using its sole buyer or big buyer clout to extract some volume discount on run of the mill items that flow through MediCal or any number of other outlets. Then multiply that by the other states and the federal institutions like the Veterans Administration hospitals and medical or other treatment facilities. Why wouldn’t a patriotic American Senator or Representative want to ensure that constituents got better service for less money, and that taxpayers paid less? Of course, there are a few laws restricting such volume buying since DC Criminal X sits on a committee to decide what comes to a vote and what gets buried at the request of Big Donor Y. If only Americans knew the half of what was going on allegedly in their names!
Where is a waterfall chart that shows how much gets siphoned off by each level of grift, compared to a competitive rate? How long with such a chart be legal, if it is?
A National Health Service would prevent 99% of this. As the “property” of the public, it would be subject to transparency laws and pricing would be much more consistent.
“…it would be subject to transparency laws…” Maybe. BUT a national health service is NOT subject to the MOST important factor in the equation: competition. Transparency does a patient ZERO good if there is no alternative provider to go to when the national health service is itself woefully inefficient and expensive.
““…it would be subject to transparency laws…” Maybe. BUT a national health service is NOT subject to the MOST important factor in the equation: competition. Transparency does a patient ZERO good if there is no alternative provider to go to when the national health service is itself woefully inefficient and expensive”
Which is why you should have it administered by an independent contracted management, NOT State Employees.
AS the independent contracted management, will have its performance regularlye reviewed and can be easily replaced unlike STATE EMPLOYEES.
I don’t know which NH you are talking about but here in Canada you can change your doctor anytime.
As for it being expensive, it covers everyone for half the cost of the US zoo.
Yet it you look at cost as portion of GDP. How national health service is way cheaper than anything in the US
(The private sector competes on speed (for.non emergency procedures) so cheap and slow or expensive and fast patient’s or insurers choice (unless they are an uninsured, then they only get national)
The author conveniently ignores the fact that outpatient facilities owned by physicians ALSO generally are driven by physician profit motives to do more, often unnecessary services, which are provided at the outpatient facility, as they get to pocket all the profits. If anything, since the hospital gets all the profits, there is less such incentive for this to happen in hospital based procedures, by the physicians.
Obviously, this sort of profit taking never happens at the author’s own pure-of-heart eleemosynary outpatient facility.
A key difference between healthcare and car dealerships is that consumers can easily google information about car quality and car prices and decide ahead of time what car they want, and then just focus on shopping for the best price. It doesn’t matter where or who they buy it from, it’s going to be the same car.
Not so with selecting a physician or hospital or outpatient facility to do a procedure. You can DIE, that’s right D. I. E. if you make the wrong choice, e.g. Joan Rivers. Her procedure should have NEVER been done at that outpatient facility. They were not fully equipped to handle the emergency complication that arose from her operation.
This sort of information about the quality of physician providers, and the capabilities of the various hospitals and outpatient facilities is very difficult to discover unless you are actually in the healthcare business. And this is the information that is far more important than pricing for the patient who wants an outstanding and safe outcome.
Yes, this is a very nuanced subject but let’s break it down like someone already did above. A hospital charged us $78 for a 1000 mg dose of acetaminophen in 2014 after child birth. Why, because they can. If you dispute it you get stonewalled. The doctors offices I visit would never attempt to rip me of in this way.
That’s only because you don’t know all the tricks of the trade that doctor’s offices do to generate increased revenue. They often have their own ultrasound or X-ray machines which they will order, to be done in their office, whether you really need it or not. Cheaper than you can get it at the hospital you will be told! True, but the tests are also usually completely unnecessary and useless for whatever is ailing you. Or they recommend all sorts of procedures and treatments that have to be done in their office … for a small fee …. also cheaper than the hospital!
My younger daughter for a time was stuck with an HMO insurance, and had to go to an HMO dermatologist to treat her severe acne. Being in an HMO meant the dermatologist was not paid fee for service but was capitated, a fixed price per patient. So to maximize his earnings, instead of curing her in one or a few visits, he convinced her to keep coming back to his office for weekly facial scrubs at his office for $50 each time which she had to pay out of pocket. Her acne never went away.
Eventually I got her into my PPO health insurance, and she found a top notch PPO dermatologist who prescribed her the correct and very strong medication that CURED her acne within weeks. No more stupid sleazy useless $50 facial scrubs.
So, again, my #1 point is – saving money (HMOs are a way to save money – supposedly) is NOT as important as finding a really good physician who knows what they are doing and will do the job right. As a physician, I have long known that there are only a small minority of other physicians that I would trust to treat me or my family.
Honest question – did you actually pay that $78? Or was it just a line item on your bill that caught your eye? If you are uninsured, there’s a very real possibility you might have been forced to pay that charge. But if you were insured, I am 99.9% certain your insurance company did not pay that much for that pill.
I’m not blaming you for being outraged. There’s plenty to be outraged by in Healthcare. (my own outrage is that uninsured people, usually the least able to pay, are stuck with the full list price, unable to negotiate discounts like insurance companies can) But if hospitals actually got paid that much for Tylenol, they would be constructing their buildings out of solid gold…
The rise of CDHP means that, yes, people do pay outrageous expenses. Many will never hit their deductibles.
“But if hospitals actually got paid that much for Tylenol, they would be constructing their buildings out of solid gold…”
No need to invest money in the hospital buildings themselves. It’s the administrators and surgeons who build their homes out of solid gold.
I know nobody will agree with me, but I think universal healthcare is right around the corner. I remember the president saying it when he was first campaigning. As a business person he knows the true cost of the crazy system we have and he also knows nobody is getting good value from it. The only way to fix this mess is to start over. I expect to see this in his administration.
Sigh .. not to go all political on you Petunia … but as with everything else promised on the campaign trail … you’ve been sold a bill of goods .. as well as having been sold down the river for the benefit of the very few to the detriment of all others including yourself .
And suffice it to say .. even if what I’m saying were not the case .. the fact is …
The GOP will never buy into what they perceive as blatant socialism
So far I have nothing to be sorry about. The new tax plan is a small plus for us.
The GOP establishment is on way to be primaried out by the GOP voters. If they don’t represent the interest of their voters, they will be on their way out and they know it.
Then in November 2018 comes the hard part.
LOL. Just like what he did for the abusive for profit colleges: https://www.nytimes.com/2017/06/14/business/student-loans-for-profit-schools-colleges.html
At least he’s starting to go after the H1B ers. Although it will not impact this April’s lottery.
Would not expect much of anything of substance from the Trump administration – and I’m saying this from the perspective of being as apolitical as it gets. I despise more or less all politicians/political parties equally.
But other than broadly acceptable things to the overall GOP (tax reform) or anything to do with militarism/warmongering Inc where you have the neocon/neoliberal ghouls in agreement one just does not envision this administration being able to do the heavy lifting required to accomplish anything major.
I do think something at least a bit less awful will emerge at some point as to US HC per the operation of basic market economics.
I literally know 20+ people who fly to other parts of the world just to handle basic health care needs (and doing so is always significantly cheaper even after the travel costs and often better as to the quality of service.) This, to me, suggests an obviously unsustainable environment.
Just this morning the president tweeted about dealing with healthcare in the coming year.
45 will deal with Healthcare, the same way he deals with any other cost.
CUT IT OUT.
Expect you personal healthcare expenses to rise accordingly.
Oh I agree with you! In fact so does the rest of the developed world.
It’s bizarre watching a young and healthy Paul Ryan with his pie chart, pointing out that’s it’s the elderly who really are the problem.
The young and healthy wonder why they should have medical coverage at all. (at least until kid time arrives)
By that logic the young and healthy could ask why they should contribute to social security to provide pensions. If they have a job they don’t need that either.
And of course being young and feeling immortal, if you made pay role taxes optional, a huge number of young people would opt out. Their logic might be: only those who need pensions should pay into them, negating the principle and crashing social security.
It’s the wiser heads who form government who are paid to look at the long term.
In the long term most people will need a pension income and in the long term the vast majority need health care.
Everyone who lives long enough ends up in that expensive problematic sector of the pie chart.
The pie chart says we are in different ‘boats’ and must have choices about health care. But we’re all in the same boat.
To use military terms, there is unfortunately always going to be a large fat ‘tail’ behind the ‘army’ actually providing health care.
These people are the administrators who just see paper, not patients.
One way to reduce these numbers is to have a single insurer.
The Canadian system (or Norwegian, UK, German, Japan etc.etc) is not perfect but it does provide better outcomes (see usual metrics) at HALF the cost per person, while covering EVERYONE.
So whether you like the results or just like the savings it’s worth a look.
“By that logic the young and healthy could ask why they should contribute to social security to provide pensions.” Given the (corrupt) way that Social Security is structured, young people SHOULD ask why they have to contribute. If it was properly structured (as a national savings plan – with individual accounts OWNED by taxpayers – rather than a socialist ponzi), then young people would have no qualms about contributing. Instead, it is SOLD as such, but every dollar contributed goes out to pay benefits to others right now. No wonder young people are skeptical.
The Bill To Permanently Fix Health Care For All*
30 Mar 2017
Let’s lay out the parameters for a bill, a fairly-modest update to my two previous missives on this point here and here (note the dates) and which can be easily turned into formal legislative language:
All providers must post, in their offices and on a public web site without any requirement to sign in or otherwise identify oneself to access it, a full and complete price list which shall apply to every person. This instantly allows customers to compare pricing between providers for services and products in the medical realm.
All customers must be billed for actual charges at the same price on a direct basis at the time the service or product is rendered to them. This immediately and permanently decouples “insurance” from the provision of care. The current system of an “explanation of benefits” that often features a “negotiated discount” of some 90% is nothing other than an extortion racket and is arguably felonious — threatening to bankrupt someone if they don’t buy your “insurance” through a threat to charge them ten times as much certainly appears to be a criminal enterprise and, given that more than one entity is involved, looks like it meets the definition of Racketeering. Insurance coverage may well cover some, part or none of a given bill, and nothing prevents an insurer from telling you in advance of your visit how much they will pay (if anything) for a given procedure or drug. Indeed you should demand that information from them and use it as part of choosing where to obtain treatment but the bill still has to be rendered to you, you have to be the one to file the claim and everyone must pay the same price to the same provider for the same kind and quantity of product or service.
A One-Sentence Bill To Force The Health-Care Issue
23 Jun 2017
“Notwithstanding any other provision in state or federal law, a person who presents themselves while uninsured to any provider of a medical good or service shall not be charged a price greater than that which Medicare pays for the same drug, device, service or combination thereof.”
If you want to add a penalty clause with it I propose the following:
“Any bill rendered to a person in excess of said amounts shall (1) be deemed void, with all services and goods provided as a gift without charge or taxable consequence to said consumer but not deductible by said physician or facility from any income or occupational tax and (2) is immediately due to the customer in the exact amount presented as liquidated damages for the fraud so-attempted.”
It ends the “Chargemaster” ripoff game.
It ends the $150,000 snake bite or the $80,000 scorpion sting.
It ends the $500,000 cancer treatment.
It ends all of that, immediately and instantly.
I remind you that Medicare is required to set pay rates by law at a level that in fact are profitable — that is, above cost by a modest amount — for everything it covers. Further, those pay rates are audited regularly to prove that they in fact are above cost.
Does this solve every problem? No, and in fact that would leave alone the existing monopolistic pricing systems that many medical providers, whether they be drug makers, device makers, service providers or otherwise have in place. It would do exactly nothing to get rid of the 10 paper pushers hired for every doctor or nurse, none of whom ever provide one second of care to an actual person through their entire time of employment.
But it would instantly end walking into an emergency room and getting hammered with a $50,000 bill for something that Medicare will pay $5,000 for.
This is why simply enacting Medicare for all, just like Eisenhower originally wanted, is the best way to bring us into the first world, health care wise.
There are plenty of countries with that model you can go to.
If we could have a system like Mexico where the doctor can treat you and be on your way with a so how sheet of paper, and where the doctor is not forced to treat half the population without compensation, we might actually have an actual healthcare system.
How about the developed world? Germany, Norway, Sweden, Denmark, UK (dual public / private system) Japan or next door in Canada?
This is not theoretical physics about quarks, gluons or string theory.
The evidence is in.
Better outcomes for less cost. Single payer.
Sorry Petunia, I’ve got to agree with you. As Americans, we have more chance of dying of heart attack than getting bombed by Chinese. Why spend more on defense??
I live in Europe now, with (almost) universal care. I’m sure it’s not the best, but we all have it, and use it if necessary. Better than being defended from the Chinks.
Here’s the best idea in the box. Most doctors are being hammered by regulations, overhead, taxes and stupid stuff from the government. Most just want to make some income that’s not attached to THE AMAFDABIGPHARMA MAFIA. It will take some doing and talking and negotiating but it’s worth!.
What I’ve found is a system where you have a stable of doctors who like to work for cash–or silver or gold as the case might be. Make sure you work with them directly, outside the clinic or hospital. Get an agreed upon price for the basic stuff and slip the some skins; that’s folding money, the long green.
They do their doctoring thing, you get the fix you need and both walk away from the arrangement satisfied with the results.
Back in the day that’s the way it was done.
We need to bring back simplicity to a system that’s not only FUBAR but ultra expensive and for no other reason that the insurance companies, the government and big pharma have made it that way.
I agree that the only way to fix this is to start over, but I doubt significant change is imminent. One of the biggest overhauls was ObamaCare. Written (directly or indirectly) by lobbyists, it is a complete disaster.
Look at Medicare Part D, which was introduced to provide medication coverage. Part of the bill says Medicare may not negotiate prices! Medicare doesnt negotiate prices with doctors and hospitals – it dictates them. Medicare has something like 65 million covered lives. That’s a lot of pricing leverage. Who do you think purchased that little goodie from the government?
Universal healthcare proponents will have to fight insurance, pharmaceutical, equipment, hospital, and physician lobbies,among others. I think at best we’d end up with a two tiered system of public and private services.
that medicare could not negotiate prices under part D was passed under the bush administration.
obamacare of course, did not have any measures to significantly control health care costs.
First, thank you Dr Gorback for the post and for your efforts to deal with the health care consumer, aka the patient, directly. I would add that, while price transparency is necessary to help the patient obtain less expensive care, it is far from sufficient.
One of the reason there is no transparency is that consumers haven’t demanded it. They haven’t because for the most part they don’t pay for medical services directly. Their costs are hidden in insurance premiums taken from their paychecks and their bills are paid, usually in a complicated and convoluted where by insurance companies such as Aetna. Recently, more consumers are becoming aware of the costs of medical care because of the rise of co-payments, co-insurance and the like.
Costs won’t seriously be addressed, by the private sector, unless and until the third party reimbursement system is curtained. That is, health insurance reverts to something akin to catastrophic coverage. As things are not insurers and government bureaucrats are taking their pound of flesh before anything goes to providers of care. Short of this sort of change, the only way that I see costs being controlled are by government fiat – say through a single payer system.
As an aside beware of not for profits. Ofter the leadership makes up for compensation differences with the for profit world by building elaborate facilities and giving itself lots of perks.
Also, it doesnt help that doctors have to make enough to payoff their schooling. But that cost being equal to all, albeit some dont take loans, their is still pressure to make a good living which the system helps doctors to achive through this opaque system. My mother was in charge of the ER at our local hospital in NH and I could see the ER was a sales funnel for the doctors so their is this relationship also that further binds the two parties.
In Shanghai, at Ruijin, public, hostipal, I had an MRI done on my hip and the rate sheet was 160usd, in the US add a ZERO to that figure. The hospital is run at optimal efficiency, almost, I had to sit and wait for about an hour. But if you go on the weekend no wait; not smart to take a sickday when you have the day off :)
A normal visit is 4usd but they are prescribing /pushing high priced branded meds more and more.
Its great to hear that DR Gorback taking such a positive, people first stance. However its hard to imagine how the system could be reversed under the thumb of big pharma and heavenly profits. Anyhow, published rate sheets is a great start.
In St.Petersburg RF the hip MRI is about $60 and if you come after 10 pm (they r open 24h a day) you’ll get 10% discount.
AGIIX, I already do that, as you can see on my web site. However, I can’t control what the pharmacy, lab,or hospital will charge you.
One step I recommend is to use goodrx.com for comparison shopping if you pay cash.
This won’t work if you use insurance. For example, when I had lab work done I asked about the cash price since my deductible is $6,000 and the lab charge was $500. They offered $150. Not bad! However, I found that my insurer had a negotiated price of $53 so I used my insurance. It came out of my deductible but I only paid $53.
OTOH let’s say the quoted (chargemaster – another horror to discuss another day) price for an MRI is $2,000, the cash price is $400 and the insurance negotiated price is $800. Now the question is whether your remaining deductible is more or less than $800. More than $800? Pay cash. Less than $800? Use insurance. Unless you want to try to use up your deductible.
But wait! There’s more! You still might have “co-insurance” also called a co-pay, where you still pay part of the tab. Now you need to know your out-of-pocket cap. That’s where you’ve maxed out both your co-pay and deductible.
Clear as mud.
–an interesting auto-biographical article on this topic (pasted in) as the last few years has seen a net migration of Physicians from the US to Canada. This is unusual as US doctors make considerably more salary and have for years. The skill drain has often flowed south.
The average gross pay for family docs in BC is around $260,000 per year, but then overhead is deducted which includes clinic costs, nursing support staff, etc. But the billing and fee payment sched is set, universal and renegotiated on a regular basis. Plus, BC doctors have a pension plan!!! (Good one, too)
Specialists make considerably more in Canada than GPs do, but the fees and renumeration are all set and the same throughout each Province as negotiated by each party’s reps.
The fees do vary between provinces with Ontario and Alberta at the top. BC is around the middle of the pack.
I’m a U.S. family physician who has decided to relocate to Canada. The hassles of working in the dysfunctional health care “system” in the U.S. have simply become too intense.
I’m not alone. According to a physician recruiter in Windsor, Ont., over the past decade more than 100 U.S. doctors have relocated to her city alone. More generally, the Canadian Institute for Health Information reports that Canada has been gaining more physicians from international migration than it’s been losing.
Like many of my U.S. counterparts, I’m moving to Canada because I’m tired of doing daily battle with the same adversary that my patients face – the private health insurance industry, with its frequent errors in processing claims (the American Medical Association reports that one of every 14 claims submitted to commercial insurers are paid incorrectly); outright denials of payment (about one to five percent); and costly paperwork that consumes about 16 percent of physicians’ working time, according to a recent journal study.
I’ve also witnessed the painful and continual shifting of medical costs onto my patients’ shoulders through rising co-payments, deductibles, and other out-of-pocket expenses. According to a survey conducted by the Commonwealth Fund, 66 million — 36 percent of Americans — reported delaying or forgoing needed medical care in 2014 due to cost.
My story is relatively brief. Six years ago, shortly after completing my residency in Rochester, New York, I opened a solo family medicine practice in what had become my adopted hometown.
I had a vision of cultivating a practice where patients felt heard and cared for, and where I could provide full-spectrum family medicine care, including obstetrical care. My practice embraced the principles of patient-centered collaborative care. It employed the latest in 21st-century technology.
I loved my work and my patients. But after five years of constant fighting with multiple private insurance companies in order to get paid, I ultimately made the heart-wrenching decision to close my practice down. The emotional stress was too great.
My spirit was being crushed. It broke my heart to have to pressure my patients to pay the bills their insurance companies said they owed. Private insurance never covers the whole bill and doesn’t kick in until patients have first paid down the deductible. For some, this means paying thousands of dollars out-of-pocket before insurance ever pays a penny. But because I had my own business to keep solvent, I was forced to pursue the balance owed.
Doctors deal with this conundrum in different ways. A recent New York Times article described how an increasing number of physicians are turning away from independent practice to join large employer groups (often owned by hospital systems) in order to be shielded from this side of our system. About 60 percent of family physicians are now salaried employees rather than independent practitioners.
That was a temptation for me, too. But too often I’ve seen in these large, corporate physician practices that the personal relationship between doctor and patient gets lost. Both are reduced to mere cogs in the machine of what the late Dr. Arnold Relman, former editor of The New England Journal of Medicine, called the medical-industrial complex in the U.S.
So I looked for alternatives. I spoke with other physicians, both inside and outside my specialty. We invariably ended up talking about the tumultuous time that the U.S. health care system is in — and the challenges physicians face in trying to achieve the twin goals of improved medical outcomes and reduced cost.
The rub, of course, is that we’re working in a fragmented, broken system where powerful, moneyed corporate interests thrive on this fragmentation, finding it easy to drive up costs and outmaneuver patients and doctors alike. And having multiple payers, each with their own rules, also drives up unnecessary administrative costs — about $375 billion in waste annually, according to another recent journal study.
I knew that Canada had largely resolved the problem of delivering affordable, universal care by establishing a publicly financed single-payer system. I also knew that Canada’s system operates much more efficiently than the U.S. system, as outlined in a landmark paper in The New England Journal of Medicine. So I decided to look at Canadian health care more closely.
I liked what I saw. I realized that I did not have to sacrifice my family medicine career because of the dysfunctional system on our side of the border.
In conversations with my husband, we decided we’d be willing to relocate our family so I could pursue the career in medicine that I love. I’ll be starting and growing my own practice in Penetanguishene on the tip of Georgian Bay this autumn.
I’m excited about resuming my practice, this time in a context that is not subject to the vagaries of backroom deals between moneyed, vested interests. I’m looking forward to being part of a larger system that values caring for the health of individuals, families and communities as a common good — where health care is valued as a human right.
I hope the U.S. will get there some day. I believe it will. Perhaps our neighbor to the north will help us find our way.
I just had my yearly physical. I am pretty diligent about this as I am a cancer survivor. I saw my GP for the poke and prod, then undertook a 2 minute walk to the new hospital for a chest X-ray (20 minute wait for a walk-in), a 2 minute drive for the blood samples and other lab work …..private facility (5 minute wait)…results of all proceedures were posted online next day for me to check up on, with the doctor receiving his results same day in case there might be something to follow up on.
I am 62, in excellent health, and take no prescribed medications other than tylenol when I work too hard on building projects or in the garden.
No cost to me, and no alerts.. Same time next year. :-)
Justed wanted to say, thanks for sharing this story. Great contributions by everyone; so real, love. Good luck.
Did you know that the average annual income per person in China in 2010 was $3000? Compared to about $27,000 per person in the U.S. in 2008. So yes, that does explain why you have to add a zero to compare costs in China to that in the USA. I can assure you though, that heavily discounted prices for MRIs can be had in the US at under $400, if you look hard enough. These will always be with older cheaper scanners, run by hungry radiologists, competing for business based on price alone. So the story is more complicated than you think.
I still remember when I was an intern in Los Angeles that my annual salary was all of $15,000 per year. Do you remember the last time that YOUR income was that low? Do you remember all the things that you had to do to save money? All the things you could not buy or do because money was tight? At least we had good health insurance from our residency programs, right?
Catastrophic health insurance means catastrophic health care for everybody except the wealthy. The deductible for Obamacare catastrophic insurance is currently $7,150. The deductibles for private catastrophic insurance is generally higher, $10,000 or more.
Now, you and I could do that deductible, no problemo, but do you really think the average American with their average annual salary of $27,000 can just pull $7,000 out of their bank savings for a catastrophic health event? No, of course not, which means that a major health crisis with catastrophic health insurance for everyone will 100% guaranteed bankrupt the average American
Is that the sort of healthcare system you find to be compatible with your moral value system? Watching your fellow average Americans forced to choose between death/painful suffering versus going into bankruptcy? Because before Medicare, that is what older Americans had to choose constantly – they were retired, had no health insurance, and could choose death/painful suffering or bankruptcy for their family and heirs. And that still is the situation for the estimated 9% of Americans who are still uninsured (15% uninsured in Texas, the highest).
Not quite true when it comes to China. Most Chinese doctors are state employees, and that means low salaries. In order to pad their income, a lot of patients would have to provide “red envelopes” in order to get proper care. Is it still cheaper in China? Sure, but it’s not an order of magnitude.
au contraire, according to this website:
Physician salaries in China range from $12,000/yr for a public hospital physician to $28,000/yr for a plastic surgeon.
So the difference is 10-20 fold less in China (avg. salary for plastic surgeon in US is $400K)
Hi, its a good point as after I left my comment I asked my self what percent of an average workers salary/month is that in Shanghai. for a person with 4yrs experience as as en mechanical Engineer it would be about 10% of their monthy wage. A factory worker would make about 1,000usd a month so 160$ out of their 1,000 is not cheap. This is Shanghai, though, which would translate to an MRI at Beth Israel, in Boston, not out the back of an Uber guys trunk on i95. It would be cheaper in 2nd tier cities in China for sure. However the cost of an imported MRI machine would keep the coats elevated even with docotrs salaries being low. So the point your making is the Chinese doctors are underpaid, correct? increase the doctors salaries, schooling, let corpprations take over the hospitals and then we can really show everyone in China how expensive it can be. So, I think you agree with my point, as you pointed out in the huge disparity between what doctors make (400k) and the average 24k a year salaried person. As Paulo pointed out, the paople in the US are up agains the Medical Institutional Complex, its not just the doctors wages, its the whole system. No one can disagree that the US has the highest medical cost in the world. if we looked at GDP per person vs medcal cost, I think, the US would win hands down. i hope im wrong.
Insurance contracting policies drive the opacity of pricing in mainstream medical care. As a private primary care group we had contracts with 600 insurance plans among about 20,000 patients. Physician contracts are generally a percent of the listed medicare fee in a given locality for a given service as described in the procedure coding system. Our best contract was 150% of the medicare fee, most were in the 110-125% of medicare fee range. Our clinical computer system did not identify the contracted rate for a service so when a patient asked what a chest xray or electrocardiogram costs, I could give a range, but the actual out of pocket cost depended not on our listed price, but on his insurer’s contract with us and what his deductible and copay arrangements were. The cost to him might be anything from $0 to $75. Neither I nor the patient had enough info at the point of service to really do much more than guess.
Just another Symptom of the corporate owned duopoly, Protected by the US constitution.
In germany in any particular area there is a fixed budget each quarter for say orthopedics. Each doctor submits how many patients they saw each month and then the total no of patients visits is divided into the total budget and that determines how much each doctor is paid for each visit.
In germany you can see a specialist same day or next day yet the total budget is keep in check. Germany’s health system is half the cost of the US but life expectancy is several years more.
Thank you for all the doctors’ contributions, both entertaining and edifying. As a former academic with two doctoral degrees (who got sick of American higher ed’s corruption and deplorable quality in which the cr*p floats to the top, I have been a medical interpreter in the last six years. I have seen good doctors and bad ones burn out, some of them creepily trying to push tests, meds, and services. Today, it’s hard for me to decide whom I feel more sorry for:the doctor or the patient… There are, however, intelligent, well-meaning, and resilient doctors who also do their homework and read up on the current developments in Medicine (I spend up to two hours a day reading that sort of thing, so I can easily tell.).
Let my contribution also serve as a tribute to them (they usually work in medical centers for the underprivileged).
“…intelligent, well-meaning, and resilient doctors who also do their homework and read up on the current developments in Medicine…” Why? There are systems currently in existence which integrate the latest information nearly instantly on just about every disease state known to man. Doctors should stick to what humans do best – probing for information and integrating subtle clues about patient health history, living conditions, hereditary quirks, etc. Let the machines do the diagnosing, with extensive input from the doctors and nurses.
Those who program the machines need a working paradigm.
There is none.
The “working paradigm” is DISCOVERED by the machine as it inductively consumes megadata on myriad diseases. Causal links between various populations, geographies and living and disease conditions that it would take a human doctor millions of years to discover (if ever) can be ferreted out quickly.
Sorry about the typos.
Forgot to mention that those outstanding doctors are familiar with the industry’s paradigms (yes, there are a number of them, while we don’t really know what a human being is), but they hardly ever follow them, because they want to help the patient…
I just spent 14 days in Aegean University Hospital in Izmir Turkey under the care of a professor of Nephrology after my kidneys suddenly decided not to work I paid a 35 dollar extra fee to get this doctor above what the state insurance would pay My only other cost was for parking my car for the two weeks
So I took a look at Dr. Gorback’s fee schedule, and while I commend him for actually publishing one, I still don’t find it in any way to be transparent. For example, why is a “Synvisc One injection w/fluoroscopy” $787 while a “Stellate ganglion block” is $140?
How do I know whether or not I really need a Stellate ganglion block? How do I know if it is really worth $140 to me? Are there different ways of performing this procedure of which I should be aware in order to make a good decision?
Our problem is deeper than just publishing prices. There is too great an asymmetry of knowledge between Mr. Gorback and myself for me to make an informed decision. Unlike purchasing a new car, I am still forced to put myself completely at the mercy of my physician unless I have a medical degree myself, or I have the funding to also have a secondary, somehow trusted physician, to act as an adviser and fiduciary on my behalf. It’s like researching an automobile but the only information you can actually get (besides a range of pricing) is the color and leg room.
Generally, I don’t go to the doctor and tell the doctor what I need. I go to the doctor when I have an ailment of sorts and need help in figuring out what to do (if anything). It’s the doctor who tells me the treatment options, risks, etc. What the doctor cannot normally tell me is the price of these options. Dr. Gorback’s list makes that possible.
I understand, but by reviewing his prices, you’ve already determined what treatment option you want, your now just shopping for prices. You are, in effect, telling the doctor what you want. I’m also betting you can’t just pick up the phone, call Dr. Gorback’s office, and make an appointment for a “Synvisc One injection w/fluoroscopy”. He will want you to make an office visit first for an examination, get some tests done, then you might get the treatment on a subsequent visit.
Again, I admire him for publishing prices, I’m just not sure how it would work in the real world. It would be interesting to find a place where this actually happens as a way of doing business and see the results.
In 2010 and 2013 I underwent some surgery. Each time I asked how much the procedure would cost? Each time I was told by the doctor he did not know. Each time there was a very high initial report on the charges. However, the subsequent billing cited much lower costs. I still have no idea of the final costs. The problem with getting price information is that it pertains only to the doctor you are working with. Are you going to make or be forced into a surgical decision, then go shopping around? This is a highly personal decision. You may not want to trust yourself to the lowest cost provider. This has been especially apparent in areas such as dental implants and laser eye surgery. The low cost mills have worse outcomes than more conservative providers.
Great thread. It shows the complexity of making an informed decision. So, even if We knew the wholeslae cost of the Synvisc One injection w/fluoroscopy，then do we negotiate what we think is more reasonable to pay? Then Dr Gorback needs to show his PnL and justify his rates. Or, like you said, go shop it arround? This isnt new brake pads for your car. Patients are at the mercy of the system to be treated fairly as its to complex, time consuming and risky to do otherwise. But at least a price list is a step in the right direction. Without out, it’s like a car salesman saying you need this car, here are the keys. Then a month later the bill comes. I read about some restaurant in Paris that has no menue/price list. Understand that if its a life or death treatment its different and shopping around is risky but its a start.
One issue is that health care, mainly due to its opaque and convoluted payment structure, has tons of cross subsidies. There are parts of health care that make tons of money, and parts that lose tons of money. General hospitals that provide all services cross subsidize between them. OTOH, specialty hospitals and outpt centers focus on the profitable parts. Did you ever wonder why there are no specialty hospitals focused on diabetes, but there are plenty focused on cardiac care? Or why there are a tiny few freestanding trauma centers but plenty of orthopedic hospitals? Did you ever try to go to an ER at an outpt center? Oh right. They don’t staff one.
Don’t get me wrong. Cross subsidizing is ridiculous. We should rationalize the payment system so that *all* necessary care is reimbursed at a reasonable level. But until that happens, much of this overpayment for hospital services is done with the understanding that it subsidizes unprofitable but necessary care. (some of it is intentional: for example rather than recognize that Medicaid payments don’t even cover the cost of care and raise payments, the govt provides grants to hospitals that take a lot of Medicaid patients)
It’s a stupid system, but it’s more complicated than simply that hospitals are overcharging.
Wolf puts up many great posts on this site and many comments are insightful and educational. I am usually content to just read them, but this subject is one that really torques me so I am moved to add my two pennies.
I believe that our healthcare system is a highly corrupt collusion among providers, insurers and government. Full disclosure: I am currently covered by Medicare and before that had big company health coverage.
As noted by the author and other postings, the “list price” system is a sham. It is a system designed to extort people into “insurance” plans or risk become a destitute ward of the state for run-of-the-mill health care. Illustrations:
Visit specialist in private practice: Invoice = $115. Actual payments = $75.45. This is a 35% discount
Visit family physician who is part of a hospital system. Each visit is considered a hospital outpatient visit. Total invoice (doctor + facility fee) = $127. Actual payments = $163.06. This is a 28% up charge over invoice. Especially grating to me is the facility fee of $35.00 that gets paid $111.26 – 317% of invoice. You will have a hard time convincing me that the hospital lobby does not own congress and Medicare.
Invoice price for a colonoscopy was $4,631.48. Actual payments were $915.65, an 80% discount.
Generic thyroid drug, 90 day supply – Insurance plan = $32.50. Walmart = $10.00 cash price. Plus, the insurance company charges a monthly premium of $28.50 for the privilege of paying their higher prices – and, I pay it as insurance for risk mitigation against catastrophic costs (and I buy the thyroid drug from Walmart).
I believe a person should be responsible for his own health. Health care is by no means a “right” Anything that is a “right” should not have to be forcibly taken from one group and given to a different group. Honest pricing of services plus catastrophic insurance policies would go a long way towards that end.
Winston, above advocates a good system of open pricing with a cash price based on Medicare fees. I would suggest a minor change to that where the cash customer must be given “most favored nation” pricing by the provider – ie, the cash customer gets the lowest price offered by the provider. Although in practice this would destroy the collusion between providers and insurers, they would still be perfectly free to continue whatever pricing practices they want to negotiate. With the entrenched swamp players in charge, such a proposal has less of a chance than Frosty the Snowman in a blast furnace.
Wolf, thanks for providing me a forum to vent on this.
Both procedures involved sticking in a needle and injecting stuff.
The answer to your question is that Synvisc One is a patented drug and 6ml of it costs anywhere from $1300 retail from a US supplier to $335-425 from a Canadian or other foreign supplier. So presumably the source of the Synvisc One from this healthcare provider is not a US retail supplier. Use of the fluoroscope is another cost – an X-ray tech is usually involved to assist with the fluoro unit.
Stellate ganglion blocks are generally done with a generic el cheapo local anesthetic. It can be done with fluoroscopy or ultrasound guidance, or “blind” using anatomic landmarks. Since the listing does not describe use of an imaging modality, it is possible the procedure will be done “blind” – which I would not advise if you bother to read up on all the drastic potential complications if you miss and hit the wrong target.
So, again my #1 point, more important than just the cost, I think what is even more opaque here is not the reason for the charges or the prices, but the QUALITY of the physicians and the center doing the procedure. Both procedures are relatively simple to do, but have potential complications. This was what Joan Rivers and her family discovered – even seemingly simple procedures can become rapidly fatal in the hands of incompetent physicians and outpatient centers.
You see how the cost of everything in the US is bloated up compared to the rest of the world. Drug prices especially. Our bought and paid for Congressmen, Democrats and Republicans, have no wish to save us from the ravages of Big Pharma. Medicare could save huge amounts of money if it were allowed to negotiate drug prices, as the Canadian health system does.
re: ERs – in 1986, Reagan signed into law EMTALA , which banned ERs from doing what was commonly known as “wallet biopsies” and “turfing” the patients who showed up in the ER with insufficient funds or health insurance to public city/county hospitals. This was, of course, a massively unfunded Federal mandate, because now indigent patients who showed up in the ER HAD TO BE TREATED.
When Romney famously said in the 2012 Presidential debates “We have a National Healthcare system! It’s called the ER!” – he was referring to EMTALA.
It should be remembered that EMTALA was a bipartisan law – that Great Conservative Ronnie Reagan signed it into law! The excesses which managed to outrage both political parties into creating this law included, at my medical school, an incident that made the front page of the city newspaper where an indigent black man who had been stabbed in the back was turfed to the City Hospital – with the knife still stuck in his back.
EMTALA of course, instantly turned ERs into loss centers for the hospital, as ERs did sort of become the National Healthcare Plan for indigent patients, just like Romney said. So the only way ERs could recoup that cost was to massively crank up the charges for the paying customers with insurance. A major cost shift.
So, another personal story – my oldest daughter, while in college, was suffering from the flu and got dehydrated and passed out one day. Her friends took her to one of the ERs in the medical center across the street. From the ER, she called me, concerned, because the ER wanted to do a head CT and CT angiogram of the chest on her. I was outraged, and spoke to the ER physician and told him that was a lot of radiation for a young woman and absolutely not indicated for somebody with an obvious reason for passing out. He said it was just their protocol. So I told my daughter to refuse all the CT scans. Before they would let her go, the ER forced her to sign an AMA (Against Medical Advice) document.
In san diego i am supposed to get a cspinal mri all i wanted to know was the general cost for my 20% of medicare procedure before i went. You will get zero info from from imaging co and a double zero from insurance co.If the price comes in at a high number they will then chase me for there money. I thought i might get a car instead i know what the price is.
Health care in USA is a equivalent to day light robbery!!
In planning for a hip replacement I went to my health insurance website and clicked on “estimate costs.” After entering my doctor and hospital it spit out an estimate of about $35k which was in line with lots of results from Google. After the procedure the bills rolled in including one item categorized as “Supplies” for about $60K bringing my total cost to around $89K. Wow – glad I’ve got “Insurance.” But wait – what is this? Dozens of line items for room, board, meds, tests, anesthesia, etc. but nothing identifying the metal and ceramic prosthesis itself the surgeon implanted in my body for the rest of my life. Turns out, hospitals, which stock these items, have been marking up these babies heugely – manufacturer’s price to the hospital for the prosthesis is about $3,500.
Today the hospital corporation called to reduce my outstanding balance (for my deductible) by 40% if paid in full by EOY.
Smells like a brothel at low-tide.
I agree, great you have insurace. But you and everyone else pays for it. So are happy you pay for this in your premium? What if you paid 1/2 the premium and it cost 1/2 the price, would you be more happy? Your paying for this and so is your neighbor. lets say if you pay 500us a month in premium thats 6k a year thats 16.6 yrs of payments less your deductions up in smoke. Everyone should get a hip replacement and break the system :) then start over.
I wrote “insurance” sarcastically. Yeah – the hospital is laying off their overages on the insurance company – who’s laying it off on the public which is why we can’t have nice things like at least a public option if not universal medicare. And 60 grand for a three thousand dollar part with a manufacturing cost of around $300 is milspec-level fleecing.
Aside from my hip, though, I’m a healthy late 50’s person just over $100k so I pay the highest premiums. I could have self-insured for the past 6 years and come out even. So I paid private insurance for risk assumption, peace-of-mind, but they aren’t assuming any risk so wtf am I paying for.
Oh and get this – I almost ended up at the wrong hospital – the one right next door – which isn’t on my plan. Two hospitals, literally next door to each other, different companies, both were on my plan last year but this year one was dropped. I could have ended up paying it all out of pocket even with insurance! WTF are they for?!! I need insurance for my insurance?!
Another wrinkle – pre-ACA the entire $89k would count against my lifetime cap instead of $35k which is what I expected it to cost.
Oh – and the carrier dropped our entire county for ’18 so I’m shopping again, higher prices and now even fewer hospitals and doctors.
Really ready to go naked.
Hell, is that all, in some Australian Hospitals they serve alcohol with dinner.
As a curative measure no doubt.