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Why We Can't Control Medical Costs.

Most of us are skeptical that insurance companies are devoted to our health.  Answer the following question.  Do you think your insurance company is more interested in your health or in controlling costs?  Pretty tough question, huh?

There is a tension between medical quality and medical costs.  If we had a system that offered perfect quality, it would be unaffordable.  If we imposed rigid cost controls, then medical quality would be compromised.  Where do we draw the line?

 It is clear to most of us that the medical industrial complex is riddled with waste.  Keep in mind that one man’s medical waste is another man’s income.  For example, physicians define waste as excessive charges by hospitals.  Government officials define waste as excessively high drug prices.  Patients define waste as high co-pays and deductibles.  Drug companies define waste as outrageous legal expenses to get drugs to market and to defend against frivolous lawsuits.  Primary care doctors define waste as unreasonably high reimbursement that medical specialists receive.  Keep in mind that most folks don’t feel they are overpaid, but are quick to point to others whom they accuse of being overcompensated.  For example, when a politician floats a proposal to tax the rich, we hope that the definition of rich is anyone richer than we are.

Steak is cheap when someone else is paying for it.

Get the idea?  In summary, medical waste is easily defined.  It is money that someone else earns. 

This is why excising medical waste from the health care system is so difficult.  Who would you trust to decide which waste should be wasted?  The government?  Physicians?  Pharmaceutical companies?  I don’t have an easy answer here.   Part of the solution, in my view, is when patients have a little more skin in the game.  Here’s how this works.

A physician advises an MRI of the back on two different patients.  Patient A has full coverage for the study and would face no out-of-pocket costs.  Patient B has a $5,000 deductible and would have to write the radiologist a big check.

Patient A: “Thank you, doctor. My back has been hurting for over a week.  I’d like to get it done as soon as possible.”

Patient B: “$940!  Can I try those exercises you recommended instead?”

It’s always easier to spend someone else’s money.  Do you find that you order differently in a restaurant when it’s on someone else’s dime?


  1. There isn't a Radiologist in the country that get's paid $940 for an MRI....unless they own the facility (which does happen, but isn't the typical model).

    Far more typical: The HOSPITAL or ORTHOPEDIST (who, by the way, self refers) charges the insurance or the patient for the MRI. MRI's are expensive, and have a lot of overhead....they are not cheap.

    The Radiologist, on the other hand, will bill/be paid somewhere in the neighborhood of $40 to $100 for the interpretation.

    My opinion: All physicians work hard, and should be paid for their time. Primary care physicians are woefully under compensated for their expertise.

  2. I went to medical school in London in the 1970s under the British National Health service. I then emigrated and spent the next five years as a general Surgery Resident in Seattle, and now practice surgery in the Bay Area. After I arrived here I saw that the basics of the science of medicine and the management of disease were not much different between the countries, but even today, 33 years after I arrived, I am still shocked at the wastefulness of physicians with the Health Care dollar. In St. Thomas' Hospital Medical School in London no test could be ordered and no therapy recommended unless the medical student (or House Officer) could give a clear explanation and justification of the value for the expenditure involved. There was a deep principle at work which stated that no test may be ordered unless the result will directly affect the course of therapy and no treatment may be instigated unless there was a likely chance that the patient would benefit. There was a universal code of belief everywhere I worked before I came to the USA that we do not torture patients in the off-chance they might live a few extra weeks or months.

    I arrived in the USA and everything was quite different. Tests were ordered because apparently nobody trusted anybody's clinical examination and there was a fatuous need to "document" results in the chart. The medico-legal excuse for this is way overstated! I never once heard in five years of Residency an attending questioning the ordering of a lab test or imaging study as to whether it was cost efficient. The most extravagant operations and forms of therapy (and here the almost universal prescription of unbelievably expensive chemotherapy, completely outside clinical trials on virtually dead patients was the most obvious among many causes of the hemorrhage of money and resources) were carried out with nary a whisper concerning the likely effectiveness and whether in view of this the cost could be justified. And, ultimately, I witness to this day patients who back in the UK would be allowed to die pain free of their incurable disease (medical heroin (Diamorphine to us) is a wonderful pain controller for the terminally ill) being presented again and again at Tumor Board where extremely intelligent doctors (again, outside of clinical trials) prescribe drugs priced at $100K a year so the poor patient can waste away in abject misery for a few more weeks and months before their sordid demise. Always we, the doctors, act with our head completely in the sand as if there was and always will be, an infinite amount of money available in the system. Until the training of student doctors starts to include concern for the budget, the inexorable and almost logarithmic rise in Health Care costs will always be with us.

    Physicians complain all the time about the bean counters at HMOs and Insurance Companies and CMS intruding on our clinical decision-making with their cost-based restrictions, but WAKE UP everybody, in the real world cost efficiency matters and there is no magic exception for Medicine. We refuse to practice medicine more judiciously: 350 pound patients still get hip replacements and Internists everywhere buy machines for their offices so they can do procedures inexpertly in order to increase their incomes, 25 year old patients with a spot of blood on the toilet paper get total colonoscopies, etc., etc. and we wonder why the reimbursement for every medical service has plummeted since the early 1990s. We whine about all those big medical corporations and their greed (and they are very, very greedy - like all corporations these days) but I see the enemy, as the saying goes, and the enemy is us.

  3. Mark, I want to thank you for your outstanding comments, many of which you will find echoed throughout this blog. I have averred repeatedly that the health care system could be easily reformed using only the funds that are currently used on unnecessary medical care. For some, the definition of unnecessary is somewhat fluid, but most honest practitioners know it when they see it. Politics intrudes since wasteful medical care represents someone's income. I hope we will enjoy the pleasure of reading your insights again.

  4. Our new startup UMA Health is designed to take the excess cost out of healthcare by allowing patients to skip insurance for routine doctor visits and procedures. We offer a transparent marketplace and are available in New York for now. Our vision is to allow patients to know what they will pay ahead of time and never be faced with many future bills or surprises.


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