Does the financial model of healthcare in the USA make it expensive?
I recently came across a blog post by KevinMD as to why he believes our healthcare costs continue to stay high. Nothing makes me more frustrated than when I hear about a patient losing their home to medical costs (which is something I recently heard) or again our insurance costs more and covers less.
As I have often said to patients; healthcare is expensive because we make it that way. Doctors often throw out crazy prices, as do hospitals and drug companies for new products or procedures that may or may not have any benefit. Often fear or desire are the reasons people require these expensive procedures, made even more expensive by greed. How much is a medical procedure worth, or an MRI for that matter? That of course depends on whether you have insurance, pay cash (900 with insurance for an MRI, about half that for cash; huh?).
The biggest reason for this problem is as lack of real competition on price by most doctors, facilities and drug companies due to lobbying, protections and laws these special interests used to create a moat around their businesses. Perhaps, when legislation is enacted, we need to pay better attention. Primary doctors have competition from the walk in clinics, but your local orthopedist?
The doctor in this article blames fee for service for the high cost of care. The reality of fee for service is that it can be compromised, used to unbundle services however, global fees such as the one we deal with through Qualcare shows they could care less about quality, time and complexity of a case, forcing doctors to compromise what they do to fit their financial whims. There is no one size fits all however, we need to question whether we received value for the money we spend on the service, whether cash (we pay) or insurance (someone else pays for us).
Check out this doctors essay on healthcare costs here
The high cost of health care: Blame the financial model
The primary debate in health care reform this past year centered on insurance coverage. The next great debate will focus on the cost of providing health care.
For decades, the way we’ve paid doctors and hospitals has driven up health care costs. And while the pace of health care spending has slowed the last four years, it continues to rise faster and more noticeably than improvements in U.S. health care outcomes.
The reason is not the people. It’s the financial model. U.S. health care rewards quantity over quality
Imagine you’re planning to remodel your kitchen. You hire a contractor and opt to defer entirely to his judgment on the kitchen’s aesthetics and the source of his materials.
Instead of requesting a competitive bid or choosing exactly what you want, you agree to a time and materials contract. By the end of the remodel, the contractor has billed more hours than you expected, marked up the cost of the materials and charged you twice for his construction errors.
Chances are you’d never agree to such a lopsided arrangement for your kitchen. But that’s the approach most Americans take when they go for medical care.
The U.S. health care system pays physicians based on a fee-for-service (FFS) financial model. In short, it’s that “time and materials” contract you’d never agree to for your kitchen.
The result is that health care costs over the past several decades have risen twice as fast as general inflation. Without the right financial disincentives, we would expect both kitchen contractors and physicians to act in ways that maximize their own economic benefit. And they do.
But it’s not the doctors or hospital administrators who are the fundamental problem. It’s the financial model.