Lack of transparency keeps medical costs high

Profits stay high, too

On Monday, the New York Times published another brilliant piece by Elisabeth Rosenthal in her series “Paying Till it Hurts.”

Testing has become to the United States’ medical system what liquor is to the hospitality industry: a profit center with large and often arbitrary markups. From a medical perspective, blood work, tests and scans are tools to help physicians diagnose and monitor disease. But from a business perspective, they are opportunities to bring in revenue.

And American doctors, clinics and hospitals tend to order lots of tests. “It’s one of the most lucrative revenue streams they have,” said Dr. Eric J. Topol, a cardiologist at Scripps Health in San Diego who studies echocardiography. “At many hospitals, the threshold for ordering an echocardiogram is the presence of a heart.”

I was especially interested in this article because it focuses on the cost of a common test—the heart ultrasound or echocardiogram. My son had one of these done when he was a freshman in college, and my jaw hit the floor when I received the bill for nearly $2,000.

I thought that was outrageous until I read the article. According to Ms. Rosenthal, in Philadelphia the price of an echocardiogram can range from $700 to $12,000!

This kind of price variation exists everywhere in health care, and good luck finding out beforehand what that test will cost.

Related post: Researching health care costs

I looked on Healthcare Bluebook, a site that is supposed to help you figure out what’s a fair price for a medical test or treatment, and it listed the echocardiogram at $435—inclusive of the test and the doctor’s report.

Hmm, I’m guessing most hospitals or imaging centers aren’t using Healthcare Bluebook to set their prices.

Cost vs benefit

Americans are at a distinct disadvantage due to the lack of transparency and standardization of prices. Almost all other countries have regulated prices. For example, an echocardiogram anywhere in Germany costs $115; in Japan $50. And patients know the price upfront.

In hindsight, my son didn’t really need that echocardiogram. Too much caffeine and stress combined with too little sleep caused him to feel light-headed and have palpitations. That can be a scary feeling. When he called to ask my advice, I told him he was probably fine, but if he was concerned he could go to the student health center as he gets one free visit per quarter with his tuition.

The doctor was very thorough. He ordered an EKG, which was normal. But because he thought he maybe heard a very slight murmur, he suggested the echocardiogram. My son called me, a little freaked out. Heart ultrasounds are very low risk and I assumed (my mistake!) that it would cost about $250, so I told him to go ahead and schedule it if it would make him feel more comfortable.

Absolutely, I should have tried to find out the price first.

But even before that, I should have questioned the necessity of the test at all. The EKG was normal. Was getting an echo the “standard of care” or was the doc being overly cautious? What were the options? Perhaps seeing the doctor again in 3-6 months to re-listen for that maybe-maybe-not murmur.

(My son’s echocardiogram was normal, by the way.)

I could even have considered getting a second opinion.

That incident with the heart ultrasound really opened my eyes to being a better health care consumer, but it was an expensive lesson. And even knowing what I know now, and being a health care professional myself, it’s very difficult.

I’m glad for Elisabeth Rosenthal’s articles that help others see what a high-cost mess our health care system truly is and encourage us to demand better.

Related post: Be informed: Read Elisabeth Rosenthal

We need to stand up against a system that prefers to keep us in the dark so that we spend money blindly.

Sláinte,

Frugal Nurse

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