- Materials
- Effort
- Overhead
Perhaps there are others but these seem to capture the primary ones. Consider a medical procedure like pain medication offered for back pain that I went through recently.
Materials would include the medicines (numbing, steroid etc.) pumped in, the injections used, cotton, gauze and other miscellaneous items. It could also include the wear-and-tear on the chair that one sits (for 45 minutes for a 5 minute procedure) in the waiting room and the pre-op room, the operation table, any magazine one reads etc. You get the idea.
Effort would be the primary factor. It would include time alloted for the procedure, skill needed by the Doctor and the actual effort used to provide numbing and pain medication. It would also include time spent talking to the patient about history, recommendations and answer questions. Of course, since pain medication is administered to your spine, it involves major expertise so a premium can be applied for it.
Finally, overhead would include every one assisting the Doctor in the procedure including the scheduling folks, the nurses, billing folks etc.
In my case, the actual procedure took 10 minutes and consultation took 10 minutes for the Doctor. What would be a fair cost for this service? I just found out that it is more than $1200 for a single visit! I cannot comprehend how someone can bill an amount so high for a service that is fairly common.
We know for a fact that insurance companies do their own analysis and set a price cap for a procedure like this. Certainly, they don't want to be over-billed. But their basis would mostly be on the norm (what everyone charges) and not on a proper cost analysis. Who sets the price? I suspect that both the medical community and insurance companies collude in this. Keeping the price high forces folks to buy insurance. And the medical community enjoys a big payday as well. All these efforts at catching insurance fraud and setting price caps are more to catch the unbelievably greedy. Not your average greedy.
Clearly the healthcare system is broken all the way around. We have all heard about the greedy practices by insurance companies when fulfilling claims. But while that is irrefutably true, it is also clear that the insurance safety net is being abused in setting costs. I just thought I'd ramble about it a bit.
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Check out this article... it's related to your post. We need more doctors like this.
ReplyDeletehttp://www.cnn.com/2010/HEALTH/12/08/low.cost.lab.tests/index.html?hpt=C2
Let's see if this actually creates the link: link to the article
ReplyDeleteYet another example of over-pricing. A cost of $148 dropped to $18 simply by ordering via the website directly? Which implies that middle-men are making a killing! Great story about the Doc, but the bigger story is the huge disparity in costs. Will anyone investigate?
ReplyDeleteI think the real cost to the procedure is the wear and tear of the chair, as you smartly pointed out. You "claim" that this procedure only took 10 minutes, yet I'm sure that your ass was in the doc's office chair a good 25 minutes prior, wishing you had brought that magazine with you from the waiting room. Multiply that by the number of patients he/she sees per day, add in the rising cost of the obesity epidemic on the wear and tear of the chair legs, and you've got an extra $150 built into every patient visit. Good chairs are expensive.
ReplyDeleteOr on the other hand... I have a relative (he who shall not be named) who works for a *major* pharmaceutical company in "insurance sales." Pharm companies and the insurers work VERY closely to set prices. Including pharm. giving the ins. co. "rebates" for approving the use of their higher-cost drugs, or incentives to cover this drug or that drug. And apparently, the provider-administered (injection given by the doc in his/her office- exactly what you had) are VERY high dollar. Pharm companies pay docs a lot of money to stock only their particular brand of drug- not a competing one. No competition means they can set their own price. Patient has no idea of what particular brand of drug is in the injection, so there's no informed choice. Insurance company pays for the procedure, pharmaceutical company pays the doctor, patient pays nothing (or $25). Everyone wins, except that we don't.
I think if we had personal health savings accts. and had to manage our own health care costs, the system would be delivered much differently and much more effectively.
Ah! I didn't mention Big Pharma.. You are certainly correct about personal accounts. Insurance is a great safety net for a lot of things (automobile, home, life etc.) but is clearly a bad idea for healthcare.
ReplyDelete