Monday, June 30, 2008

How Much Does it Cost? I Dunno.

I can't think of too many services or products that a person would purchase without knowing how much it would cost. It is amazing that no-one knows the cost of their own health care services in advance...and furthermore, even we doctors have little clue about the charges and payments that our patients pay.

This odd phenomena is largely due to the fact that 3rd parties (insurance, government) pay the bill (or a fraction of the bill) so patients don't need to know. In fact, when I tell patients that it would be a waste of money to do a certain test...often the reply is "Oh do it anyway, my insurance will cover it."

Now that patients are paying more and more of the health care cost through high deductibles or Medical Savings Accounts, there will be more interest in what is billed.

I had a patient who came to me with unusually heavy menstrual periods. The diagnostic work-up and treatment led to an out patient surgery for a fibroid removal and D&C. The operation took place in October but she is now getting bill after bill and is spending a lot of time trying to figure out what is charged and what her share of the payment is. Here is her latest accounting:

Procedure / Amount billed/ Amount patient paid

Dr. Brayer Initial Appointment/ $115/ $74
Ultrasound / $1,226 / $101
Radiologist / $281 / $0
Ultrasound / $1,022 / $335
Radiologist / $281 / $1
Ibuprofen for Surgery / $32 / $32
Darvocet for Surgery / $13 / $13
GYN Consultation / $336 / ?
Operating Room / $17,991 / $1,367
Anesthesia / $810 / $100
Tissue Exam(Pathologist?) / $400 / $13
GYN Surgery / $1,500 / $180
GYN (something else) / $15 / $3

TOTAL so far
Billed- $24,022 / Patient paid- $2,218

Although the accounting is a hassle, my patient is happy to have only paid about 10% of the charges. I think 24K for out patient surgery is pretty pricey. For someone without insurance it would be unaffordable. Wouldn't it be nice to be able to know ahead what it would cost?


Jonathan said...
This comment has been removed by the author.
Jonathan said...

As a consumer, the price of a product or service signals, in addition to the actual dollar cost, other qualities intrinsic to what we’re considering purchasing. For instance, from the price one might impute the quality, durability or resale value of a product under consideration. (There ain’t no such thing as a good 89¢ beer).

Clearly, in most areas of our lives, price regularly informs us and guides our decision making. However, such is not the case when we purchase medical goods or services. First, we don’t typically know the price ahead of time (as Dr. Brayer has pointed out). Second, even if we did know the price, we would be hard pressed to ascertain the intrinsic qualities of our purchase. If it costs more, are we buying a better surgical outcome, increased safety, or both, or neither? It’s one thing to compare the costs of cars made by two different manufactures, after all there’s always Consumer Reports, but how do we compare the costs of a procedure at Hospital A versus Hospital B? Lastly, even if we had access to comparative costs, and we were able to make apples-to-apples comparative decisions on buying healthcare services, currently our health insurance usually, and effectively, forces us into one hospital based on our physician choices, as physicians usually have practice privileges at one hospital.

In short, the usually and customary signals price affords us in our decision making are largely absent when buying medical services. While insurance companies have made us more price sensitive through deductibles, we have little information on the quality and/or outcome of our purchase decisions. In order to make more informed choices as consumers of healthcare we need more information on outcomes, safety and the like, an education on how to understand that information, the ability to choose the practitioner and/or facility at which we “purchase” our procedures, and a feedback mechanism, perhaps not unlike the feedback we leave on the Web regarding our eBay purchases, hotel stays, or other sites on which we leave our opinions in order to influence the sellers (and potential buyers) of healthcare services.

This is a tall order, but if we chip away at this, over time, we’ll be able to make Adam Smith’s invisible hand work for us.

The Happy Hospitalist said...

hey Doc. Send her my way


Healthnut said...

According to a WSJ article, about 69% of the 18000 surveyed in 2007 said that cost was the driver in delaying or forgoing treatment.

(should be all on one line)

Healthnut said...

This article just came out today, so I thought I share with you about how the insurance industry plan on reducing surgery costs in the future.

It's mind bottling that the insurance can force a patient to have the surgery done in a foreign country just to save money. Can you imagine if someone needs a surgery and the insurance telling the patient, "Yes, we will cover 80% of it, but you will have go to another country to get it done."

Anonymous said...

I spent 4 HOURS on the phone trying to find out how much it would cost to get a celiac panel (blood test) run on each of my 4 children. I have celiac, and my father in law had it. 10% of children of parents with celiac will have it, so I want my kids tested. But its not "urgent" you know? So I wanted to know if it would fit into the family budget.

It was truly insane that it took so long to find out. The lab was able to fairly quickly find out what they charged ($275, which times 4 kids, is more than I can pay out all in one month...), but they had no idea how to figure out what the negotiated payment was with my insurance company. HUH?

My insurance company only found out the amount after much kicking and screaming, and they required a crap-load of information from the pediatrician and the lab before saying basically "well if the planets are still lined up exactly as they are right now when you get the tests done, it will cost..."

Gee...thank you! And to think that I pay $300 per month for that insurance, and my employer claims to pay another $1200-1500.

The ironic kicker? The day after I finally got an answer from the insurance company, I heard a radio ad from the same insurance company about how they are making it easy for customers to find out how much they will be billed (deductibles and co-pays) for procedures.

Internal Optimist said...

I am glad the NHS is easier in this respect - this seems like an awful lot of hassle!

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