Sunday, July 7, 2013

The Cost of Colonoscopy: A New Payment Model

There is a steady push to change the way that physicians are paid.  No compensation model is ideal.  The fee-for-service (FFS) model has become Public Enemy #1 as it is felt to be responsible for overtreatment generating excessive costs and utilization.   Salaried physicians may be freed from the FFS conflict of interest, but it has other drawbacks including a diminished incentive to provide exemplary service to patients and to referring physicians.  Since physicians did not initiate compensation and health care reform decades ago when we should have, we are now being squeezed hard by external forces that will overcorrect on the system’s deficiencies.  It’s always better to fix your own house.  There should be a lesson here for other professions who are in need of some reform and repair.  Teachers, in my view, were dragged into the education reform arena, and will suffer because of it.  Attorneys have been smug and cavalier about the legal profession’s obscene excesses and I believe that they will rue their inaction.

What do patients think about how their doctors should be paid?

I’ve done over 20,000 colonoscopies.  As I have written in this blog, I’m not even sure how much I charge for the procedure.  It’s not simply because I have little interest in the business of medicine.  It’s also because colonoscopies are like air travel.  No two passengers pay the same price.

Which system would you favor for pricing a colonoscopy?

(1)    Flat fee for the procedure for every insurance carrier.
(2)    Hourly rate.  If a colonoscopy is tough and takes twice as long, the physician should get double the dough.
(3)    Graduated rate depending upon experience.  Should a 20 year gastro veteran be paid the same as a green newbie?
(4)    Airline model.   We now know that various airline seats have been designated as premium seats because they afford an extra centimeter of leg room or the oxygen mask actually works.  Similarly, certain colonoscopy time slots could be subject to a surcharge, such as the first appointment of the day when the physician is energized and not yet running behind.  The 5 pm  slot, in contrast, would be discounted as the physician is fatigued and is trying to make a 6 pm dinner reservation. 
(5)    Name your own price model as is done with air travel, car rentals and hotel rooms.  Patients offer an on-line price in advance and the GI practice decides to accept this or wait for a higher bidder.  This adds a fun element to the colonoscopy adventure.
(6)    Patients decide after the procedure to pay the doctor what they feel the training, knowledge, experience and judgment are worth.   Some patients, I fear, may valuate the colonoscopy only by the 10 minutes duration.   This is not quite fair.  Once in Cape Cod, I saw a beautiful sand sculpture of a mermaid.  I asked the artist how long it took him to create the art.  His response was ’30 years and 7 hours’.  Get the point?
(7)    Barter system as functioned well historically.  One colonoscopy = 6 Box seats at sporting event = set of luggage = last year’s iPhone model = 1 hour plumbing service = 5 car gas fillups
(8)    No charge at all.  You can’t put a price on your health, and we shouldn’t try. 

While I’ve never regarded myself as business savvy, perhaps I’m onto something here.   What do readers think?  Is it time to take off the rubber gloves and wear suits and ties or should I keep my day job?


  1. Good post. These are all reasonable options for payment in a free market. What would happen in a free market for health care service is difficult to imagine. What if power were given to the purchaser of such services, the patient? That is the case for sophisticated technology like cellphones and personal computers which were non existent 25 years ago. The power is in the hands of the "customer". The prices of those have come down as the technology has improved.Patients are not customers in the current healthcare climate. The government and insurance companies are the customers; doctor have become more and more data entry techs serving these entities. We can take back health care and give it to the people.Some doctors have tried to do this and do not deal with the government plan or other insurance companies. Alas, so few understand what has happened. John Goodman's book called Priceless is quite good regarding empowering the patient.

  2. The above commenter must be an erudite thought leader judging by the caravan of letters following his surname. Good points. I'm not sure that patients want to have 'the power' when they are acclimated to high cost care at someone else's cost. This would require a cultural transformation among many other obstacles.

  3. Michael,

    I think you tend to paint patients with a broad brush. (I have a tendency to do the same for doctors.) I spoke with a med student the other day, and she pointed to CYA as a cost-driver; myriad tests--many unnecessary--to raise 'profits' and protect themselves (doctors) from litigation.

    Personally, I want a doctor to do several things before ordering/performing a colonoscopy of any other sort of screening test. (1) Look at my family history, and my stage of life. (2) Consider whether I have any symptoms that warrant this sort of procedure. (3) Honestly advise me whether he (if he were in my shoes, e.g. age, responsibility, goals, etc.) would "go for it" . . . or would he postpone/refuse the procedure. If I trusted my doctor (and with the current state of profit-driven medicine taking precedence over Hippocrates, I admit I trust few of them), I would be more than willing to sign a waiver, holding harmless my caring physician who can truthfully say "in your shoes, I'd push this test down the road."

    Quite frankly, I don't want to pay for any test or procedure that has a history of false positives. I don't want the mental anxiety in addition to the bother. (And if you have a chronic disease--like diabetes--the BOTHER is not minimal for the patient.) Ultimately, whether the money comes directly out of my pocket, or from the insurer to whom I pay continually rising premiums, or from the government (Medicare) for which I have paid, and continue to pay, taxes, I look with a jaundiced eye at the cost of screening.


  4. Melody,

    If you don't want any tests with false positives, I surely hope you decline every test ever offered including the history and the physical that is done based off your concern for that visit.


  5. It is upsetting to read that you do not know how much you charge for a colonoscopy. If a patient would like a price point for your service, you can't give a price? Or at least an estimate? Probably because you can bill for all of the little things that can happen during a colonscopy that are probably out of your control. Do you charge per polyp biopsy and removal?

    If I take my car in for a service, I get an estimate before the work is done. It is only in rare circumstances that I'm charged differently (although it can happen). In fact, there are few service-based professions where the provider can't give an estimate prior to the work. Medicine seems to be the only one.

    My son had a craniosynstosis surgery and I remember asking the Neurosurgeon how much it would cost and he couldn't give me an estimate. I wanted to know how much we needed to pay after the insurance adjusted the cost of the bill.

    What's funny is that all doctors ask their patients if they have insurance because it gives them an idea of how much they will be reimbursed. This is a one way street. I can't tell you what I charge, but I will only do this procedure if you have private insurance or pay out of pocket.

    I challenge you to provide every patient you see in the future for a colonoscopy an estimate of the cost, at the very least a range with perhaps a confidence interval: "Mr John Smith, I can't give an accurate quote for the cost of your colonoscopy, but for people of your age and co-morbidities about 75% of them I've charged between $3,500 and $5,500. Yours could be more or less depending on how the procedure goes, I will not know until the procedure is over. And I do not know how your insurance will bill you."

    Would you have the courage to change your practice in this regard?

    I'm a resident ER physician in NYC and I have no idea what I charge. It's pathetic. I have no idea how much my hospital charges for a CBC, Urinalysis, or a CT Scan. In fact I have no idea how much is charged for intubation. But what I do know is a complication laceration repair is billed at $100's of dollars while intubating is billed at < $100 (at least that is what several attendings tell me).

    Why are we so scared at letting consumers know the price of services? I wonder if you would charge less knowing if the GI doc down the street from you charges 1/2 of what you do for an elective procedure. Just let people decide who to get their colonoscopy from. Seems to work with many other service-related industries that people know extremely little about (real-estate, automobiles, wealth management, hair-stylists).

  6. Great post ... but did you miss the "introductory offer pricing/lifetime package" concept ... you know, get your first colonoscopy at 40, and sign up for one every ten years thereafter ... the first one has the teaser rate.

    OK, seriously now ... have you read the NY Times article "What does birth cost?"
    Elmer Hospital, in Elmer, N.J, said it would charge $4,300 for a normal delivery without an epidural and with no complications. Newborn care would be $1,400 more.
    Medicare would pay Elmer Hospital $3,550 for a normal delivery without an epidural and $1,028.30 for newborn care.
    The patient found the bill for her previous pregnancy. She had a normal delivery with no epidural in December 2010 and refused all extras, even Tylenol. She was insured, and her baby was born at the University of Pennsylvania.
    Her insurer’s negotiated price? $16,672.

    Recently my bride had a medical device installed ... the invoice cost was $2100 plus doctor's fees, and other services. I asked for the model number of the device and found that it could be obtained for $209 (plus shipping). So the device maker probably paid the new Medical Device Tax (cost less than $5) and was still able to sell it and make a profit ... but I was charged 10x on my bill.
    Could I have gone elsewhere ... not really, there is only one group of doctors that install this within a 100 mile radius ... and they are all in partnership together.

  7. My guess is you would be able to give me a VERY accurate quote for your colonoscopy if I were to pay you in cash and not involve insurance companies. I bet you would be able to quote me the cost for a anesthesiologist, cost for each polyp removed, cost of the pathologist, and cost for your facility. I know you would know the EXACT cost of the procedure because if I paid you in cash, the you would probably make multiples e amount reimbursed to you.

    I bet I would know this to be true because I would only accept your services if I was given an estimate prior to the procedure. Much like getting your transmission repaired. My car repairman says he never knows the true cost upfront because he can't anticipate every problem he might encounter. But he gives me an estimate because the law says so (in CA). Auto repair shops is a pretty efficient marketplace.

  8. @Melody,appreciate your comments. Interesting proposal to offer your physician a 'hold harmless' document to protect him against need for unnecessary defensive medicine. You are in the 1% here as most patients would not opt in to this program. One might extrapolate the 'hold harmless' provision beyond medicine, but this would collide against the growing epidemic of litigomania.

    @Steve, thanks. You wish to peruse the recent Time magazine piece by Steve Brill entitled, Bitter Pill. This would be required reading for you as an ER medicine resident as well. You will understand better, as I did, the corruption in the hospital billing system.

    @George, I reject what I perceive in your tone that I am somewhat mercenary in my dealings with patients. You may wish to review some other blog postings here before making such a judgment. If a patient has no insurance, we do whatever we can to make it financially as comfortable as possible for the individual. Yes, we do expect a level of responsibility on the patients' part, but we are mindful that uninsured folks may need special consideration, and we give to them, knowing their circumstances may be ours in the future.

  9. FYI : Interesting article in the Washington Post highlighting that based on "allowed" billing times, some physicians must be working 26 hour days.

  10. @Minnesota, I read the Post article. The Gastro societies issued an inadequate response, in my view. The article, assuming the facts are correct, suggests that the profit motive may have run amok. As you may know from this blog, I favor the truth over my own or the profession's interest.