Why Does It Cost So Much!!
Almost every article on healthcare mentions cost, and every politician talks about costs. We do pay more per capita for healthcare, and the short answer is that prices are too high. We don’t see the doctor more often--the Germans get the prize for that. We have fewer hospital beds and other resources than many countries. Malpractice is a disgrace, but still less than 1% of HC spending. Our population is aging, but not faster than others. It just costs more here. Drugs are more expensive, surgery costs more, and a visit to the doctor will set you back more in the US. Why? Cost of living accounts for some of this, but mostly, there is no downward pressure on price. No purchaser is price sensative. Patients shop for cheap airplane tickets but not for cheap appendectomies. Besides, patients don’t pay for healthcare. Insurance companies decide internally how much they will pay, and generally that’s what everyone gets. They don’t get bids. I once offered an HMO a 40% discount on their ambulatory surgery and they said no. It’s actually against the law to offer discounts to Medicare patients. Porter and Telsberg argue that competition is occurring at the wrong level and is a zero-sum game. Competition in HC is seen “at the level of health plans, networks, and hospital groups”. To have any effect on cost, it should occur for individual diseases or patients or operations. If a US hospital offered a 10% discount on hip replacements, Medicare would put them in jail but no one else would take notice. Those who don’t have insurance and are price sensative can find bargains overseas. In the present US situation, the focus is on reducing costs to increase profits rather than on providing greater value to gain market share.
Comments
Health care costs are astrononomical because the health care industry stubbornly refuses to implement quality management systems (e.g. ISO 9000). At present, the cost of poor quality is 30 to 60 cents of every health care dollar. Health care providers must be pressured to fix this problem, perhaps with zero-base pricing policies by insurers along with consumers' refusal to pay for obviousl waste or poor quality.
Posted by: William A. Levinson | July 6, 2006 04:19 PM
I am now reading Porter and Telsberg book and I agree with their premise. We as physicians are paid piece-meal for what we do, not on quality. Yes we can receive bonus for reachin some HEDIS goals, but are those quality or only a way for the HMO to say they are the best.
Thier needs to be a fundimental change in the way medical care is "run". The hard part is to get all theplayers together for a frank discusion.
Comments
Myer S. Bornstein, MD MMM
Posted by: Myer Bornstein | July 8, 2006 10:24 AM
To see the rapidly-increasing number of public reports about healthcare costs and quality, visit www.consumerhealthratings.com
This public service provides links to organization-specific comparisons (hospitals, health plans, nursing homes, etc.) and demonstrates the high degree of variability within the reports and within the industry
Posted by: Gretchen Dahlen | July 18, 2006 11:41 AM
The reason that healthcare costs are so high is that the free market system doesn't function properly. Patients are unaware of the actual costs of their care and furthermore are insulated from those costs. If coinsurances were the norm where patients saw what the true costs were and paid a % then market corrections would beging to take place. Right now we have the classic free rider problem where each individual (naively) feels they have no incentive to use less healthcare. Thus the larger cost is spread across all of society.
Posted by: Brian Barringer, Director of Performance Improvement | January 17, 2007 01:01 PM