The Financial Folly of the U.S. Healthcare System

Today and this month I am going to post some thoughts from a fellow blogger and physician- Rogue Dad MD! While we have never met in person, we talk quite frequently over the WWW. He is wise beyond his years and he posts on medicine, family, finance, and religion. Go check out his website or keep reading and see what you think. This post was originally on his site back in December 2017.

The Financial Folly of the U.S. Healthcare System

I write this, aware that as a physician, I am at least at times partially complicit in the financial folly that is the U.S. healthcare system.  The one which ostensibly Congress is “improving,” but which is in fact doing very little, if anything to address the myriad issues with our healthcare system (and to the extent it is addressing it those issues, it is making them worse).

Healthcare and transferancy

Southwest Airlines likes to advertise they have “transfarency” — stating you know what you are paying/getting from them when you pay your airline fare.  There are no surprise fees.

Healthcare has adopted the exact opposite approach, through an arbitrary and evolutionary system that is essentially Frankenstein, cobbled together with spare parts and ideas.  Healthcare pricing is opaque as vantablack (I don’t have time to think of a clever play on that word).

Several years ago, Rogue Two was diagnosed with pyloric stenosis — an obstruction of the stomach outlet muscle that prevented food from passing from the stomach to the intestine.  The events leading to that diagnosis is its own story, however to make the diagnosis required an ultrasound.

The ultrasound tech who looked at his stomach muscle must have been extra thorough, because they also obtained some pictures of his kidneys (and maybe other organs).  The radiologist noted that there was trace hydronephrosis on one side — the kidney was slightly dilated, but not an urgent or emergent issue.  It had no bearing on his stomach issue, and had never caused a problem.  My wife’s prenatal ultrasound did not show any problems with his kidneys.

However the radiologist recommended a follow-up ultrasound in a year to make sure it resolved.  Rogue Two had no problems in that year — no infections, no unexplained fevers, no concern from his physician (or us) that his kidneys had issues.

My wife and I forgot about it, but our pediatrician remembered the recommendation — so we went to our children’s hospital to have the ultrasound performed.

Rogue Two, over a year old, was not a fan of the non-invasive/painless test — I had to hold him down screaming for 10 minutes while the ultrasound tech obtained the images.

The ultrasound was normal.

Opacity in Pricing — A Healthcare Special

We were (and still are) on a high deductible health plan, so while there was an insurance negotiated discount, we had to pay the full cost of the facility fee for the ultrasound and the radiologist fee for reviewing the ultrasound, as we had not reached our deductible yet.

The “charge” for the US was $907.  The insurance “adjustment” was $204.98, leaving a balance of $702.02 ($25 of which paid via copay at time of service).  

Of note, since our hospital offers a 25% discount to those with NO insurance, had I not used my insurance plan at all, the cost would have been $680.25.    So we were charged more by filing an insurance claim than had we not used my insurance.  This was November, and as we didn’t meet the deductible, I may have actually saved money by not using insurance  before the new year arrived. 

The radiologist bill (from the university, not the hospital) for interpreting the US was $126, which was adjusted down to $88.77 by insurance (still not meeting deductible), a separate fee from the charge for obtaining the images.

I decided to compare the cost to two other places in town that provide pediatric care.

Place #1 — charge for the same US is $929, however they give an immediate 40% discount for those w/o insurance, bringing the cost to $557.40.  However if that is paid in full immediately, they decrease it another 25%, meaning that someone without insurance who pays in full  would pay $418.05 for the same test.  

Place #2 — charges $890 and gives a 35% discount for those without insurance, making the total $578.50.  

None of these numbers include the physician bill, though they likely would have been lower as well.

How do I have this info available?

When I received the bill, I was ticked off.  I called these competing hospitals to obtain the pricing, and then sent a lengthy email to the president of our hospital detailing my concerns regarding the cost of the ultrasound.  I found that old email and copied/pasted the information into this blog post (with some edits for anonymity).

Let me tell you — obtaining this information is not easy, and I am someone who knows the language and business of healthcare quite well.

I had a pleasant email exchange and in-person meeting with our hospital president, though I learned nothing new from the exchange.  I’m well aware of why costs are so outrageous.

While I could provide a list of reasons (price discrimination based on insurance type, location, academic affiliations, etc), ultimately this is the system we have because it’s the system we deserve.  After decades of making small tweaks that only reinforce that this is how the system should be, it is the system it is supposed to be.

We have many people arguing that Obamacare is an affront to capitalism, forced socialism, etc. and needs to be fully repealed so we can go back to what we had.  The system we have, which is not that different from what we had before Obamacare, is poorly designed and not well thought out.  It’s not the system anyone would design from scratch (neither the GOP nor the Democrats would build the current system if given the chance).

Overtesting in Healthcare

Going back — not only did the price of the ultrasound bother me, it’s possible our son may not have needed the ultrasound at all.  The original finding from when he was an infant was something found incidentally.

The purpose of the test was to look at his pylorus — that was the only reason.  The kidneys are not necessarily something they should have looked at, so one could argue we should never have known.

That’s a mixed bag — sometimes you find cancer by accident and are glad you did, and sometimes you find an incidentaloma and waste time and money and hurt the patient by chasing down things that are inconsequential.  This was most likely an innocuous finding.

I tell residents I work with all the time — if you are going to order a test, be prepared to handle the results.  Don’t go looking for a problem if you can’t handle the results.  Sometimes we evaluate things with blood tests or xrays or ultrasounds just because we can, often because we think the results will reassure us.

Then we obtain a test result that is not normal, incur cost and inflict anxiety and stress, and end up doing nothing anyway.

Playing the Game — The Good Ole Boy System

The reason for this post is not this ultrasound from three years ago.  It came back to me today after I learned Rogue Three likely needs ear tubes because of many recent/recurrent ear infections.  The reason for this flashback hopefully will become clear.

We’ve already met our deductible for the year so are in the phase of the year where healthcare costs are subsidized — as a family using a HDHP, that’s a big deal.

The difference between surgery this month and next month is potentially thousands of dollars out of our pocket.  Surgery this month is 80% or more covered by insurance.  Surgery next month means we have to meet our deductible again before insurance pays anything.

Having been through this before, the 5-minutes it takes for an experienced ENT to insert the tubes will easily generate a few thousand dollars in bills.  The doctors are the cheapest part — an ENT surgeon and anesthesiologist won’t charge a thousand dollars.  The hospital will charge much more than that for use the OR, the cost of the anesthesia medication, the post-op room, the post-op Tylenol, etc.

Our hospital is not atypical — this is how it is everywhere.

Well, the ENT clinic couldn’t fit us in until January — after all, it’s mid-December and the holidays are close.  This condition is not life-threatening — he does not need it right away.

No, if it’s going to happen, want it to happen this month so we can save thousands of dollars (potentially — if we hit our deductible next year for other reasons it wouldn’t matter, but I can’t predict 2018).

Again, another ridiculous part of our system — the amount billed by the hospital/doctor does not change because of the New Year, but the cost to the consumer changes completely.  It is not a capitalistic effect — supporters of the current system who decry socialism should remember that.

The supply of the surgery is not changing, the demand is not changing, the cost to the provider to do the surgery is not changing, the amount billed by the provider is not changing.

The only thing is changing is a new year means the deductible starts over.  So it behooves me to use a TON of healthcare now, and avoid healthcare use when possible until I am forced to because of other things.

So I leveraged the good ole boy system (as my wife said) and contacted the ENT directly to see if they could squeeze us in this month to assess officially for the need for the surgery, and perform it this month if officially indicated.

Thankfully we have access to a wonderful and responsive ENT who should be able to accommodate us.

While I recognize I’m fortunate to have the ability to make that connection, it bothers me that I need to do so.  I do not like asking a professional colleague to inconvenience themselves in this way, and especially not because of financial reasons.

I was honest with the surgeon about my motivation when contacting them, because it’s fair for them to know, and because I wanted them to have an out to say “no” by just telling us they were not available if really was going to be a pain to fit us in or didn’t appreciate my motive.

However similar to the tax bill and charitable donations I discussed last week, this is the system we designed and the behavior we are encouraging.  This is not gaming the system — this is the system.

To My Physician Colleagues

Remember the downstream consequences of what we do.

A “painless” test can cause distress in unforeseen ways.

An innocuous diagnosis can reverberate in ways we never consider.

We’re human and we’re going to falter.

Keep your patients and your colleagues in mind at every step — it’s really the only option.

With that in mind, remember that perfect and pure motivations within an imperfect system can still cause harm, and we need to know the system well enough to make it work for us and our patients.

 

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DadsDollarsDebts

I am a Dad and Doctor trying to find financial freedom by owning my dollars and debts. Helping dads with their finances so they can focus on the family.

4 thoughts on “The Financial Folly of the U.S. Healthcare System

  • February 7, 2018 at 7:09 am
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    Yep, there’s a lot that doesn’t make sense in healthcare in the U.S.

    $7 for an Advil?! A single Advil?! [Yes, this happened to my grandmother. And this was probably about 10 years ago; I shudder to think what it would be today]

    Reply
    • February 7, 2018 at 9:13 pm
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      True that. It is crazy how expensive things can be in healthcare. I think it is often a mark up for the insurance companies…

      Reply
  • February 5, 2018 at 1:23 pm
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    The lack of transparency bugs me the most. Until all the bills come in I have no idea what I’ll be charged. It’s the only industry I know of where that happens.

    Reply
    • February 5, 2018 at 1:32 pm
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      FTF — as someone who works in the healthcare industry, I hate the lack of transparency.

      In some ways we used to be trained to ignore the types of insurance our patients had, because we didn’t want to provide inferior care to a patient based on socioeconomic status. If something needs to be done then we should do it.

      However we often forget that some of what we do is not written an stone as a requirement and that they are stepwise methods to do tests/meds etc as well as other ways to get to the goal. And it does make a difference in patient’s personal well being if their bill is for $500 instead of a $1000 (let alone $5000 vs $10000 or whatever it ends up at).

      Reply

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