I had a professor in undergrad who worked on order entry research. He talked about one of the problems facing Vanderbilt as far as scanning costs.
CT scans and MRI are crazy expensive. Trauma patient comes in, doc orders a CT scan, it comes back and he says, "shit, this doesn't tell me what I need to. I knew I should have ordered an MRI instead."
They used a decision tree learning algorithm and trained it using attributes of incoming patients and which type of scan would have been the most useful. Then they did a trail where ER docs would enter in patient information and what they would have picked, but then defer to the algorithm's judgement instead.
I can't remember the number, but they significantly reduced the number of unnecessary scans.
As a side note, MRIs do not have to be expensive: grad students at research universities do them (for research, not on real patients) and the costs are nothing like at the numbers you see on medical bills.
And this is just one of the many problems with the US medical system, even if it went to a single payer system taking the individual off the hook, the cost of delivery is completely out of control due to (in my opinion) a lack of "proper" capitalism.
Perhaps any acquisitions in the field of medicine should be subject to antitrust laws?
I think there is an important point for people to remember: The cost of a procedure, like a CT scan, is not the cost of the procedure. The amount you are getting charged is the Chargemaster rate.
The Chargemaster rate is the same no matter who you are, the different is what people pay from the chargemaster bill. Let's say you are given tylenol and the charge master is $50. The reason why this is so high is because medicare will then say that they pay , say, 20% the chargemaster rate, and thus elderly patients pay $10. This is why elderly patients are seen as great patients for revenue: They all actually can pay something, even if its only a fraction of the chargemaster. A gold plated insurance patient will pay Medicare+30%, and thus the gold plate insurance pays $20. The patient with no insurance then is also billed $50 because they don't have an agreement with the hospital. Thus, what likely happens is that they pay $0 and goes bankrupt, or more likely, these patients don't have any net worth at all. This creates a weird situation where the homeless, destute, and people with no net worth essentially get infinitely free healthcare. These patients tend to be very high volume healthcare users (homeless patients that take $5000 ambulance rides as taxis because they know they will never actually pay a penny, despite having millions of dollars of charges.). This is what the Affordable Care act tried to prevent: by making people pay something, you were actually decreasing costs for all because you remove free riders who present the majority of sunk costs in the healthcare system. Very few people if ever pay for the full cost of a procedure or chargemaster. The chargemaster is a negotiation tactic. Not a final bill.
That is why a CT Scan costs thousands of dollars. Because everyone knows you'll only end up paying a fraction of that if you have insurance. And if you pay cash, its only a few hundred bucks, because thats how much people get paid anyways.
Source: I'm an ER Doc.I do research in healthcare and billing
What do, for example, tourists pay? When I buy a plane ticket to the US, there is travel insurance, but I have never needed to use it and do not know how it would work.
Cost inflation in the US is huge due to a combination of red tape, CYA, customers with good insurance subsidizing people with bad/no insurance, and many other factors. There's no simple answer, unfortunately. No one is entirely sure why medical costs are so high in the US. It doesn't appear to be any one factor that people commonly blame.
Fundamentally, they don't need to be expensive; via private medical tourism, you can get any sort of scan at a fraction of the US cost.
The problem is everyone gets paid too much. Our doctors salaries are far out of line with most countries , we have the strictest drug pricing laws in the world, and people love to sue. We also have a significant portion of the population paying no medical bills while the rest is overcharged to compensate. On top of that our health insurance is full of middle men like "PBM's" that do nothing but raise costs.
The combo means docs, drugs, treatment, and insurance are all more costly.
A fix is hard to come by but would work something like this.
1)subsidize the cost of medical school increasing supply of MDS
2)pass laws to protect physicians from frivolous lawsuits or at least limit damages.
3)disallow drug companies from advertising, ban rampant kickbacks to doc's that prescribe their drugs
4)ban anti competitive practices that prevent insurance companies from negotiating prices directly with manufacturers.
5) provide healthcare centers of last resort(the ER) compensation for patients unable to pay.
My last point is state specific and really controversial but it's based on what I've personally seen.
States with a lot of illegal immigrants spend an enormous amount for healthcare at the ER for these people. Around 1/4 of the people that came into the ER I was familiar with were likely illegal
and over 90% either gave a fake name or never paid. The majority of those costs are passed on to those with insurance. I lived in an area with probably 3% of the population were undocumented.
Since the ER is healthcare of last resort they are forced to treat you even if you give them completely false info with no intention of paying. Illegal immigrants know this and preferentially go to the ER because they get treated without probing questions or need to pay. They also already have fake ID's in most cases so giving one to the hospital isn't a big deal. This enomous cost gets buried because it's politically unpopular to say and because the hospital just raises prices in everyone else to compensate.
I'm an ER Doc. The focus on illegal immigrants is way off base.
There's a law called EMTALA which is basically an unfunded mandate that says, in part, we can't just turn away patients because they can't pay. This was because slot of hospitals (university of Chicago in particular) were dumping or transferring patients to other hospitals who couldn't pay and making huge news stories. As you mention, this means people who can’t pay get free health care.
Who does this end up being? Almost 100% alcoholics and homeless patients, often with severe mental illnesses. When there are no resources for them, they end up taking ambulance rides to the ED, say they have Chest pain, and then we give them thousand dollar workups that you end up paying for. Illegal immigrants at large county hospitals are often grateful for any care and usually actually do end up paying at least some portion of their bill, and often are not super high utilizers.
For example, do you know who the number #1 utilizer of NY state medicare dollars is?
Trust me, if hospitals could sort out paying from non paying patients they'd do that in a heartbeat (if they have one). There's lots of programs that try to draw those sorts of patients in, like international elective procedure patients and elderly patients who are universally paid for by Medicare.
Alternatively, increased free clinics for basic healthcare (flu, checkups, non-emergency procedures) could eliminate a large percentage of wasted effort and time. Free regular checkups just a few times a year would catch so many issues before they became big expensive issues and it would eliminate the use of the ER as a general physician visit.
We're already paying out crazy amounts for doctors time and for expensive visits, might as well make the basic health checks free. No need to bring insurance in on matters like just having a doctor write "you have the flu. Rest 4 days and take this" when the entire operation is 15 minutes for a quick culture.
Doctors salaries don't tell the whole story. I've read that roughly half of doctors are self employed. They are also the owners, or major shareholders, in medical related businesses such as provider networks and malpractice insurance companies. Being a doctor means that you can make what I call "insider investments" that aren't available to the public, and the cost of training ensures that the only people who are doctors, have family money available to invest in those businesses.
The rat's nest of business entities makes it impossible to figure out where the money is going, or who is making how much. That way, everybody can point the finger at somebody else. I suspect a reason why medicine costs less in countries with nationalized systems is that it's possible to figure out where the costs are going.
I'd favor a system where medical school is free, and doctors work as employees of the government.
One brief clarification. Doc salaries are higher, but cost and length of training is higher too. Four years of college and four years of med school dig the hole very deep. Then three to eight more years often working below minimum wage as the interest on the debt compounds.
Medical school definitely needs to be less expensive to lower salaries. It's also pushing doctors towards specialities that pay more and leaving us with a thortage of GP's
pass laws to protect physicians from frivolous lawsuits or at least limit damages
Several US states have harsh caps on medical malpractice damages. They still see massively-rising medical costs. And in uncapped states the rate of growth in malpractice damage awards hovers very close to the rate of inflation of the US dollar.
Which sort of destroys the argument that "frivolous lawsuits" and massive damage awards drive medical costs in any significant way.
It's less the actual damages as much as it the defensive medicine that occurs because of the constant risk. If you show up with the flu, but it could be some weird disease that shows up in an MRI, the incentive for the doctor is to get you an MRI.
I used to believe in caps, but I think we could do better than that. Create a no-fault insurance market that pays people without the hassle of civil trials. That has the potential to allow medical professionals to be more open and honest about mistakes they make (similar to the aviation industry). That, in turn, would allow for data-driven decisions about how to make the biggest improvements for the lowest dollar amount.
Oh, and while we're at it, how about a self-driving unicorn that runs on rainbows...
100% agreed with this. This is an insightful comment. people have no idea how much practice patterns would change if less defensive medicine could be practiced. So much of the inconvenience of medicine exists because the standard of care is extremely conservative to ensure minimal risk of litigation. The few states that have malpractice caps really doesnt change anything--those states just provide a good practice environment in rare situations, but doesn't change the way that standard medicine is practiced because that is developed out of state as a national consensus.
If MRIs were priced at what most people would call reasonable, then that defensive practice wouldn't be as big of a problem. We've seen prices of $100 to 300 mentioned for some other countries.
Its not about frivolous lawsuits as much as defensive medicine which is the standard of care. For example if you come in to the Emergency department with a traumatic brain bleed (even a tiny spec on your scan), then you end up getting another scan at 6 hours, likely platelets since you took a baby aspirin that day, a very expensive neurosurgery evaluation, keppra for 2 weeks, and continuous monitoring, even though by all metrics you have a very benign pathology. Why? Because this is the standard of practice. Not because it makes any sense.
also, keep in mind that the factor that matters the most for practice patterns (especially defensive ones which drive up cost) is not where a doctor practices, its where a doctor trains. Since most doctors train in high risk litigation environments, and most standard of care procedures are developed with defensive practices in mind, the standard of care is high cost high utilization medicine.
I don't need to make an argument. Call your doctor and ask him how much he pays for his malpractice insurance.
I used to know some people in healthcare tangentially and the answer is $50,000 to $250,000 A YEAR depending on specialty etc.
Sometimes the practice will pay these costs for you, so the doctor might not be paying it directly but the money is coming from somewhere.
My friends told me malpractice insurance was generally about a third of your salary. And this includes people like pharmacists and physicians assistants too. So if much higher than world average doctor salaries in the US are any part of the reason for high medical costs, lawsuits are a third of that
I used to know some people in healthcare tangentially and the answer is $50,000 to $250,000 A YEAR depending on specialty etc.
And... inflates at a rate which appears to be completely unrelated to malpractice damage awards. So calling for caps and limits on malpractice suits would not solve it.
Consumers need protection from doctor's mistakes, plain and simple. I don't need to make an argument either. Call someone who has lost their child to a doctor's mistake.
They are hugely complex pieces of kit, manufactured in relatively low volumes and requiring lots of specialized materials and development. Not an easy thing to cost-reduce. (That said, each scan has very low marginal cost).
I agree that they're highly complicated, but they're made in surprisingly large volumes. There are 5,564 hospitals in the US, and each one will likely have several. A manufacturer will probably ship 500 units/year. This is decent enough volume where you can drive good cost reductions.
Source? Because I'm pretty sure that's completely untrue. Nervous tissue like the brain is the most resistant to radiation of any cell types in the body. Radiation affects faster growing cells the most, and nerve cells grow the slowest of any in the body. The brain is also the best shielded part of the body against x-rays, and the x-rays in a CT machine are necessarily highly collated, so unless your brain is getting scanned your brain is receiving almost zero dose.
If CT scans damaged the body, it would be visible in the lymphatic and immune system first, and way before any other systems.
CT scans and MRI are crazy expensive. Trauma patient comes in, doc orders a CT scan, it comes back and he says, "shit, this doesn't tell me what I need to. I knew I should have ordered an MRI instead."
They used a decision tree learning algorithm and trained it using attributes of incoming patients and which type of scan would have been the most useful. Then they did a trail where ER docs would enter in patient information and what they would have picked, but then defer to the algorithm's judgement instead.
I can't remember the number, but they significantly reduced the number of unnecessary scans.