Friday, May 18, 2007

Surgical Warranty Or Gimmicry?

Remember the Firestone tire defects of the late 1990s and 2000 that caused Ford Explorer SUVs to be involved in several accidents and deaths? How much would it matter if compensation for any accident and injury also included the free replacement of the defective tires?

Using this analogy I was initially underwhelmed by the Provencare offering of Geisinger Hospitals Group of Philadelphia that featured in a May 17 story in the New York Times . Geisinger offers a "90 day warranty" on some surgeries that it performs, promising not to bill insurers if extra procedures or care results from any complications.

If negligence on the hospital's part causes complications, the cost of follow-up surgery would pale in comparison to malpractice claims, and in any case I'd expect such care to be offered for free by any hospital to stave off a lawsuit. The 40 point checklist of care that Geisinger introduced is also not a new concept. And they've only introduced the system so far for one type of procedure - heart by-passes.

On more reflection and a little research though, there are good things to be said for the Geisinger initiative. At least they're starting to do what all US hospitals should have been practicing all along - offering a flat rate for standard procedures, and hopefully having a more transparent and simplified pricing system.

I'm amazed how hard it is for patients to get the "real" pricing information - even average or ballpark - out of US hospitals when many good foreign hospitals including those serving medical tourists will readily provide a "tariff list" that details the package and individual costs that patients will need to pay. US hospital bills come piecemeal even for a single procedure. Apart from this being an offshoot of a chaotic and complex billing system I also suspect that hospitals don't want the total charges to be easily known, as they're so high in absolute terms as well as compared to hospitals abroad.

Back to the story in the NYT, from the reported figures it looks that Geisinger would charge a total of about $37,000 for a "warrantied" heart bypass. If true, that's a bargain as the discounted or negotiated insurer rate without any such warranty averages almost twice as high for a typical US hospital. Geisinger's heart surgery outcomes and statistical information also looks very favorable compared to peer US hospitals.

So in the end I'll set aside my initial skepticism of this being just hype, assume the facts are correctly reported, and cautiously applaud the initiative at Geisinger as a precursor for better practices.


kenrod said...

Medical billing is one of the most arcane fields. A procedure can vary by hundreds of percentages depending on the codes that are used in billing. And it's a constant cat-and-mouse game between the biller and the payor as to what will trigger an audit.

If what you say is true it will be a vast improvement over what we have. Of course patients come in all kinds. How would they differentiate between the mild stroke and the terminal case?

What the US sorely needs is a rating system of hospitals for different procedures. One hospital may be good for heart surgery but bad for hip replacement. And costs can vary widely between medical facilities. So a patient could say this hospital is really good for this but costs too much. But we usually rush patients to "brand name" facility that's in the neighborhood.

I also have my doubts about medical tourism. While I think it is good to hold the line on costs they can only be done on very standardized procedures like cataracts. But if my insurance company is paying for it what incentive do I have to fly to Thailand or India to save money. My friend in England flies to India for heart treatment because the waiting time in the UK is too long for heart specialists. But for someone in the US who has insurance it's a non issue.

Sandip Madan said...

Kenrod, you make great points. US hospitals in many states have now been forced or pressured to disclose outcomes and quality data, so that's good. Now they all should be required to do so.

The coding and upcoding game is also one of the practices that should be addressed better, though Medicare and insurers have been doing so presently. There should be transparent flat tariffs like in foreign hospitals, but most if not all US hospitals fiercely resist this.

About medical tourism you're right about insured patients having no incentive to go abroad - unless they are financially incentivised which is how it is proposed to be done.