Thursday, June 14, 2007

You Don't Get What You Pay For (QED)

This is somewhat new. Past studies have repeatedly shown US Healthcare to cost much more and yet deliver lower overall quality than in other developed countries. But now this Pennsylvania government survey as reported in the New York Times shows the same disparities among US hospitals themselves.

The hospitals with the highest costs for procedures like heart bypasses had worse outcomes and mortality rates than those that charged less than half as much. The high priced hospitals argued that their results were skewed by some very expensive procedures but even this doesn't explain most of the discrepancy.

The study hopefully also looked at median costs instead of mean costs. The former, which is what the patient at the 50th percentile or in the middle of the group would pay, removes the distortions of a few extreme payments and addresses the objections of the higher-cost hospitals. Most studies now also make so-called "risk adjustments" so that hospitals handling more complicated or difficult cases are fairly evaluated and compared.

As mentioned in an earlier post hospitals tend to be rewarded rather than penalized for their mistakes resulting in additional or extended treatment. I'm hoping these reports make Americans more savvy healthcare consumers who don't keep buying the "you get what you pay for" line. The same goes for insurers or employers who may be bearing most of the costs for their members or employees. In addition to improving domestic pricing and practices it will be a further impetus to medical tourism.


kenrod said...

First of all I think they are all "mean" prices. That is they are high, obscure and pushing everything beyond affordable:-))

Sometimes I think it's like my mechanic who breaks something in my car. Then charges me extra to fix it. What a scandal.

However, what would be the ways people would go to say, Mexico or Thailand for a surgery? Would my insurance co pay for my flight, and what would be the types of treatments they would authorize?

Sandip Madan said...

"Mean" (as in high) pricing in the US is right. :-)

People privately go as medical tourists - just Google "medical tourism" and a host of companies, news accounts and advice will come up. You can also look up the selected industry news items on our website:

Health insurers will hopefully get into medical tourism soon, with full reimbursements and even financial incentives for patients, since it can then be a win-win for patients and insurers / payers. However so far most insurers are only studying this and treading very carefully. BCBS of South Carolina has been in the news with one notable agreement with a Thailand hospital: