Recent interest in variability of cost for medical procedures is justified and long overdue. In an article in the New York Times on June 2, 2013, “The $2.7 Trillion Medical Bill,” Elizabeth Rosenthal writes from the point of view of a patient who has received a bill for colonoscopy. She then researches costs of the procedure in a number of markets in the U.S., finding a range of pricing from an average of $1,185 to a high of $8,577. There is an implication within this article that “doctors” are charging these prices. The truth is that physicians are often pawns in much larger negotiations among other entities.

While charges for procedures performed in an office setting or practice-owned ambulatory surgical center (ASC) are largely under the control of physicians, many of the highest prices come from hospital owned facilities — an area that is not at all controlled by physicians.

I called the lead negotiator for payor contracts at my institution and asked him about price variability for colonoscopy. It was clear from my conversation that the current arguments about colonoscopy price variation miss some key components. We need to better explore the true drivers of price variation.Professional fees paid to physicians for Medicare services are set by the Centers for Medicare and Medicaid Services (CMS) or commercial payers and prices in dollars are multiples of the Resource Based Relative Value Units (RVU’s) defined by the AMA-sponsored Relative Value Update Committee (RUC). After all is said and done, professional fees for a specific procedure fall within a fairly narrow range — in the case of colonoscopy, about $220.

The larger range of technical fee payments for procedures actually drive most cost variation in addition to other factors, such as use of an anesthesia professional during colonoscopy or the number of biopsy specimens sent for diagnosis.

Within any large health-care system that contracts as a unit there might be a three- fold difference in technical (facility) fees even at the same location of colonoscopy, dependent on specific payor contracts. The reason is as follows:

  • One payor might negotiate a single standard rate for all ambulatory surgical procedures from colonoscopy to complex outpatient spine surgery. So relatively simple procedures (colonoscopy) become expensive because this is a blended rate that has to account for an enormous range of complexity. Payors sometimes do not have the ability to do line-item negotiations.
  • Other payors still pay on % of charge since they have not changed their software in decades. Since all providers and health systems have to inflate their master charge sheet (so that brokers can negotiate a discount), a procedure like the colonoscopy has price inflation.
  • Other payors negotiate a hospital rate based on ASC rates (with increase for hospital outpatient department, HOPD). But if ASC rates are high in the region, then HOPD rates also will be high.
  • Finally, professional fees (my fees) are negotiated by hospital systems that employ specialists and, in many situations health systems that are “must haves” negotiate professional fees that are especially high.

My point is, it’s wrong to assume the high prices are entirely due to physicians.

When physicians control costs and charges, we tend to compete on price and develop more of a free-market competition, compared to areas where hospitals and health systems dominate and there are few office or ASC choices.

The price compression in Minnesota is an interesting case study. In the early 2000’s Minnesota health benefit companies began to publish prices for various procedures. Concurrently, there were public education campaigns to alert people to price variation. Public pressure, as a result of price transparency, forced high-cost facilities to reduce their prices in order to maintain market share. There was significant pressure on several of the large health systems to reduce their hospital-based charges for outpatient procedures (like colonoscopy) so they could remain competitive with low ASC rates. It was enough of an incentive (especially with the consolidated purchaser and payor market in Minnesota) to force the colonoscopy technical fees to be separated from the large (30,000 different types of service) contracts that payors negotiated with health systems.

Price transparency and a market that might enhance competition based on cost and quality — as opposed to negotiating power — would go a long way to solve the financial crisis we are in. This would not solve all problems but it would recognize one aspect of medical bills that physicians have been trying to emphasize for some time.

John I. Allen, MD, MBA, AGAF, Clinical Chief of Digestive Diseases, Yale University, and President elect, American Gastroenterological Association (AGA) Institute.

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63 Responses for “Physicians Aren’t Driving Up Health Care Costs”

  1. Jack Lohman says:

    Sorry, I disagree. As a retired 25-year CEO of a company that provided 24 hour Holter monitor scanning on a subcontract basis, I’ve seen many physicians increase their volumes once they converted to their own purchased equipment, because it increased their volume usage. One doctor went from 4/month to 17/month, I suspect because he made more money that way.

    By and large the best system is the VA Medical system, because their physicians are salaried and the hospitals non-profit, but that would never fly in the US. We call that “socialized medicine”. And with a campaign finance system where insurers can give campaign bribes, it will not happen in the US.

    What we SHOULD do is pass single-payer Medicare-for-all, but with bought politicians that isn’t going to happen either.

    • platon20 says:

      Jack Lohman is a bigger problem than doctors are.

      He provides ZERO real value — he is just a middleman who found a way to put his hand in the till and divert money away from patient care.

      We have thousands and thousands of “healthcare CEOs” who make small fortunes off their cut, more than any doctor makes.

      Jack Lohman is the bad guy. At least doctors provide a real service. You think we need Jack Lohman to provide Holter/EKG equipment? LOL

      • Jack Lohman says:

        I never thought I’d be defending myself based on what an “anonymous” said, and maybe someday he’ll have the balls to use his real name. This guy/gal is obviously hurt by my claims. But I ran a company that sold a medical service that by the nature of our competitive free-market had to be less costly and better than doing it in-house with purchased equipment, and I had competitors in the field that I had beat in price and accuracy. By the nature of his/her/its remarks he/she/it doesn’t have the foggiest idea of the industry.

        • platon20 says:

          READ THE WORDS COMING OUT OF MY MOUTH — NOBODY NEEDS YOU AND YOU DONT PROVIDE ANY KIND OF VALUE TO THE SYSTEM!

          CEOs like you are a dime a dozen. You get your greedy filthy pig noses in the trough where you dont belong.

          Now you got to come here and whine because doctors found a way to cut you out of the loop! Sounds like you COULD NOT COMPETE in the marketplace and now you want to tell us how unfair it is. LOL

          • Jack Lohman says:

            Uh, Mr. A-Hole, or Dr. A-Hole, I’m 75 and spent 25 years servicing doctors, with a company of 70 employees in 4 states. I was successful because I hired good nurses, not because I played with people’s lives. I left the industry when I sold my company and retired. But I do agree that doctors are not the MAIN source of high costs. They are only part of it. Insurers drain 20%+, and hospitals get their share of the excess care. 80% of doctors are absolutely superb, and some are A-Holes. Did I hit home?

        • THCB Staff says:

          Platon20:

          Please e-mail editor@thehealthcareblog.com with a valid email address so that we are able to reach you in the future.

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          A reminder to Platon20, Jack Lohman, and everyone else:

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      • Peter1 says:

        platon, since you seem to be good at percentages maybe you could give us what percentage of overall health care CEO compensation contribute.

        I’m no fan of overly compensated CEOs (anywhere) but you appear to think they’re the real cost of care. Number please.

        • Jack Lohman says:

          I certainly agree, Peter. In 2004 my CEO salary was $50K and I had six (nurses and marketing) people making more than me. By and large there’s not a CEO in this country worth more than $1M, but they share their income with the politicians who set the rules. Hospital CEOs are typically $2M to $10M per year, though bankers reach $75M. “Creative” doctors are at about $1M per year, but most are less than $200K.

    • I am sorry too but must strenuously disagree with you Mr. Lohman. Doctors are induced to bill more and do more tests because of a skewed insurance payment system, including Medicare. There is no truly free market for medicine and testing other than non-insurance covered procedures like plastic and LASIK eye surgery. In these areas, where the free market truly works, prices have fallen over the years.

      As for the VA system, I, and most doctors have trained extensively in this environment, and it is bad . My father-in-law died in the VA system and as a brittle insulin dependent diabetic, was shuttled in and out of the ER without an admission until we demanded it. Then he was in and out in two days and seen only by an ARNP for the endocrinology service. He had one leg and and two damaged hands from WW II and was denied a wheelchair because his “heart and mind” were good. After complaining to a local congressman they ultimately paid for one-and it was non-motorized to boot.

      I could save the government billions of $ by converting the VA Health System to vouchers for veterans who could then obtain care in the private health system, but that will never happen due to politics.

      I understand your bias due to being an owner of a Holter company. You pushed these devices to doctors, many non-cardiologists, with little qualifications to interpret them, because of Medicare reimbursements.

      The problem is insurance. The solution is free markets and competing for business based upon quality and price. The VAH is hardly a shining example of how employing doctors helps anything.

      • Jack Lohman says:

        The VA is not perfect and clearly needs help, but their “salaried doctors” offers fuel for discussion. And indeed I was not happy when doctors abused their latitudes, but that’s why I only hired nurses with high cardiac arrhythmia experience, better than most cardiologists.

        But that said, you’ll never get to “free market” without insurers and their charging employers and costing jobs, and insurers add 20% to the costs.and we’ll still need coverage for the unemployed and non-insured.

        The BEST models are Sweden and other single-payer models that others use, but we DO NOT use systems that others use. :-)

        • I don’t know much about Sweden’s system but I do about the UK and Canada. And both of those single payer systems are now offering private alternatives because their citizens want a choice to rationed care. Also I would venture to say that most single payer system’s do not have the insane malpractice climate which we tolerate here. This adds billions to our costs via defensive medicine.

          Part of the problem is this country is historical. Post WWII there were wage controls and so to entice employees health insurance was offered since an increase in wages could not. This habit has never gone away and employment and health insurance as a benefit have since been intimately linked. But an employer doesn’t pay for home owners or car insurance. They usually don’t pay for your life or disability insurance either. Why should health be any different?

          When someone else is paying the way, the inclination is to use it. Auto insurance doesn’t pay for oil changes or car maintenance. Why shouldn’t heath insurance be the same? That is for catastrophes. Then the patient consumer would pay more attention to prices and costs.

          • Jack Lohman says:

            Indeed our malpractice system should be converted to a three-judge panel, but let’s not ignore that campaign bribes are passed to the politicians to keep that system broken. Money works, especially with politicians! Eliminate those scumbags and healthcare will be fixed overnight.

            But life and disability insurance are not as critical. Even still over 60% of doctors prefer Medicare-for-all, and that’s a good start. And most would support a premium for premium care, even on single-payer. But the insurance industry won’t buy into that, and the paid $125 million in campaign bribes to keep single-payer off the table.

          • Jack Lohman says:

            And David, I don’t see patients ever being concerned about price when they are laying on the table, though I do see prices going up for elective cardioversons and the like.

  2. Oscar Nelson says:

    Let me tell you how this response got here. The pr group within AGA or the company that works with AGA felt a response was in order. They wrote something and sent it to the NY Times. The Times refused to publish it. Then they altered it and sent it to 2-3 different outlets, which all rejected it before it ended up here.

    Patients are sick of the pr from doctors. We want lower prices.

    • platon20 says:

      Oscar, nobody is forcing you to do anything. You dont like the price, then dont come to a hospital or clinic begging to be seen. Go off and fix it by yourself if you dont like the price. Good luck with that!

  3. Frank Pasquale says:

    Good job…Go after the hedge funders and insurance CEOs first.

  4. Sandy Best says:

    No they are not !

  5. Molly Moore Mann says:

    Opaque prices are the culprit.

    • Jack Lohman says:

      I don’t think so. If a doctor says “you need a Holter,” which is a 24-hour recording of the patient’s heartbeat, about 95% of patients will say “okay, Is it covered by insurance?” FEW will ask the price, and even if told, they prefer that to dying.

      • platon20 says:

        Meanwhile Jack Lohman never saw a patient (i.e. customer) who didnt need a Holter. CEOs like him put pressure on doctors to write as many scripts for equipment as possible. Hell he’d sell his own mother down the river if she could get 5 paying customers to sign up for a Holter.

        • Jack Lohman says:

          Wow, are you an idiot? Understand the industry before you stick foot in mouth.

          • platon20 says:

            Which industry? The one you couldnt compete in and got cut out by the doctors getting their own holter monitoring equipment?

            wow you got your ass kicked in the marketplace so you come on here and tell us how evil doctors are. you are a joke! no wonder you went out of business.

  6. Boris Katz says:

    The most economical healthcare would be one where there is nobody between patients and healthcare providers because nothing drives prices down better than competition and customer (patient) concern about their money. The insurances being in control of our money with their “pay per service” policy as well as large “non-profit” hospitals with multimillion CEO salaries are the true reason for what we are having today. But they are not to be blamed. As any other bureaucracy they are concerned about their own well being rather than ours. Two simple measures could bring them back under our control:
    -Insurance policies should be sold directly to the public with no employers (or any other group policies);
    -Each hospital and practice may set their own price – but the price should be one for all insured and non insured patients.

    • Jack Lohman says:

      Yea, as long as we had no such thing as collusion, but then I look at gasoline prices and know that not to be true.

    • Sandra_Raup says:

      The problem with your solution, Boris, is cherry picking. It works with auto/other insurance because even if it’s high cost it’s affordable or you go without a car. If you don’t require health insurance, at least today it’s too expensive for those who need it. People who need it can’t afford it and it bankrupts them. As a society, the larger group you put at the mercy of an industry that can ruin people financially, the weaker the society is as a whole. IF we could find a way to (1) make health insurance and healthcare low enough in cost that it makes economic sense for most (if not all) healthy people to purchase it, and (2) we could then probably have charity care take care of the truly catastrophic cases, then we could have a system where if you pass out in a store, and someone takes you (without your consent) to a hospital emergency room, and you don’t have insurance because it does not make economic sense to purchase it (i.e., you would have to be homeless to afford it), then it could possibly work. Rather than figuring out who to blame, let’s come up with some implementable solutions.

      Example: A few days ago someone said that there are companies that take care of (for a fee, of course) Meaningful Use reporting requirements. Another expense. I would think if you’re “meaningfully using” your HIT you should be able to easily demonstrate that – but apparently the reporting requirements are significant enough to require this added service. Another expense for providers that they didn’t have before! I don’t want to let anyone off the hook, but really?? A whole new layer of people not adding value but rather helping with compliance? Please let me know if I’m wrong here!

      • Boris Katz says:

        Sandra, you addressed two different topics: 1) how to modify the current healthcare system and 2) the government not addressing the real needs but instead making the situation worse. The irony here is that the government interferes in areas where it should not and does not do enough where it should. Let me briefly respond to both topics – the detailed discussion may take a lot more than this forum permits.
        1.This is where government is needed with more regulations. In short, “cherry picking” should not be allowed. On another hand, the health care expenses are not purely related to health care. For example, a hospital may have plain painted walls instead of covered with wood and marble, rooms with 5-6 patients instead of private/semiprivate, etc. People without insurances (or with intentionally low cost insurances) may go/be taken only to the “cheap” facilities. Let me be straight here” I do not suggest to have different levels of clinical care, but “cheap” facilities may have less “bells and whistles”. Just to clarify my thoughts: nobody dies from hunger in this country and there are facilities which offer free meals for poor. These facilities and their food are certainly not as attractive as at good restaurants, but nobody suggests obliging the restaurants to feed anyone who says that he/she does not have money.
        2.The “Meaningful use” certainly has nothing meaningful to patients and physicians. It has meaning only to the bureaucracy. Moreover, it only brings additional trouble to the health care not only financially but clinically as well. If a physician has to do more reporting or search within way more ICD10 codes – he/she will not treat me any better. Right opposite, he/she will have less time to talk to me and to clinically address my problems. I am an EMR/HER software developer/architect and can bring many more ridicules examples of both: too much government intervention where it should not be and too little or no where it should be.

        • Sandra_Raup says:

          Boris, I agree with both your points entirely. But the barriers to entry do not allow/enable “low cost, low frills” healthcare. Instead of more options, we have seen consolidation of existing clinics/hospitals. Note the reality of others who have said that a hospital owned clinic can charge a “facilities fee” and receive greater payment than an independent clinic for the same service. I agree, also, that Meaningful Use has done more to favor the large EHR vendors with its complex requirements. I would not be so concerned about that if it meant that the large vendors were creating low cost systems (much like Microsoft did for the business community in the 1990′s that greatly improved the ability of a small business to compete). All I can see is more layers of costs that are difficult to be borne by smaller, leaner organizations. To me, that means we won’t be seeing the end of cost increases any time soon, and low income and even average income people will be squeezed. We’ll see what those people will bear.

          • Boris Katz says:

            Sandra, while many rightfully advocate for “less government” as ironic as it may seems, in many cases I would like to see “more government”. Here are just a few examples:
            CNN recently published a list of the worst charities where the actual percentage of funds going to those who the charity claims it is for, does not exceed a few percent. This is when I want to cry “Government! Where are you?”
            Also recently there was an article in Times magazine about famous “non-profit” hospitals and their executive compensations. Specifically, MD Anderson (which I sincerely respect for their clinical achievements) pays their CEO over 2.8 million dollars a year (I guess other executives have similar compensation). How ironic, that every few months MD Anderson sends me a letter asking to make donations to them (which I have done for many years probably with many others and we all “helped” their executives to get their salaries and bonuses). This is when I want to cry “Government! Where are you?”
            Last example related to EMR. You probably know that laboratories communicate with all the EMR/EHR systems via HL7 interface. But the interface standard is so loose and not enforced that e.g. my company had to develop and support two different software components for Quest Diagnostics and LabCorp – two major laboratories in the country (not to mention hundreds of smaller labs). Is there an objective necessity for these differences which are translated to higher cost? This is when I want to cry “Government! Where are you?”

  7. Boris Katz says:

    At least it would be illegal and as such better or worse prosecuted. Now we have it perfectly legal and blooming.

    • Sandra_Raup says:

      Boris, Just a comment on the HL7 interfaces. I believe the paradigm is changing to one of interoperability rather than system to system interfaces. This way data can be shared among multiple providers and patients themselves, and it allows for more flexibility in data management in the future. We believe that the FHIR and other more Web 2.0 approaches will foster an environment for much more robust data sharing – beyond system to system sharing between siloed databases. Does that make sense to you?

      • Boris Katz says:

        Probably, but this is not included in the current requirements for EMR/EHR systems. And if the requirements become once again loose and not inforced – we will have the same issue as we are having today. What I see hapenning is that new initiatives requiring big expences get established almost every day and the old ones with do not require big expenses get forgotten and not followed through. Another HL7 example: Quest requires that the ICD9 code supplied within the HL7 data has no dot, e.g. hypertension 401.9 to be supplied as 4019. This is a direct violation of the ICD9 standard. Why Quest is allowed to get away with this? To fix this stupid requirement it would be enough to fine Quest a million dollars a day after giving them a grace period to fix this. Simple, does not require any invetments – I can come up with hundrends examples similar to the above.

        • Sandra_Raup says:

          Check out the MU2 requirements for C-CDA to be used for interoperability. It’s probably not perfect but certainly moves the ball, and if there are enough people promoting and enhancing interoperability, we may get there sooner than you think. At least that’s what we’re working on. Billing requirements may be another story – we’re working on clinical information interoperability at this time.

          • Boris Katz says:

            I will, but the problem is not in the lack of good intentions. These issues had to be discussed and implemented first without spendig so much money and adopting so many useless (benefiting only the beaurocraty) measures.

  8. Peter1 says:

    Insurance – it’s not us, pharma – it’s not us, hospitals – it’s not us, doctors – it’s not us. Sure wish I could find nobody because it’s got to be him.

    • platon20 says:

      This isnt rocket science — doctors are NOT the primary reason for high healthcare costs.

      Dont take my word for it — here’s a graph:

      http://www.aarp.org/health/medicare-insurance/info-10-2009/fs144_costs.html

      Physician reimbursements account for 20% of total healthcare spending. Out of that 20%, 50% goes to nurses, secretaries, billers/coders, clinic utilities, etc.

      That means that doctors pre-tax incomes account for only 10% of total healthcare costs. You could cut their income by 50% and yet total costs only go down by 5%. Hardly any kind of real savings.

      • Peter1 says:

        “Physician reimbursements account for 20% of total healthcare spending. Out of that 20%, 50% goes to nurses, secretaries, billers/coders, clinic utilities, etc.”

        Not sure where you get those %s but at my wife’s hospital, the docs belong to a group. The group pays for the docs group support staff, billing etc. The hospital pays the nurses 100%. The doc billing is that portion (determined by the docs) not covered by insurance. But that’s beside the fact since you think docs are exempt from adding to the total cost of health care inflation. Separate out any component from total input and you find know one is to blame yet we pay the highest prices in the world – including docs compensation.

        • platon20 says:

          “The group pays for the docs group support staff, billing etc. The hospital pays the nurses 100%.”

          Right. The group just conjures money out of thin air to pay for all that stuff (roll eyes)

          Here’s a hint: the “group” is using the doctors’ reimbursements to pay for all the overhead.

          A Medicare 99213 level code pays $75.32 in Boston. Out of that $75.32, the doc only gets about half. The rest goes to all the supporting staff/overhead.

        • platon20 says:

          “The doc billing is that portion (determined by the docs) not covered by insurance.”

          Right. What you are describing is known as balance billing. I’d like the name of an insurance company that will allow “balance billing” above and beyond the insurance reimbursement.

          Here’s another hint: insurance company contracts outright ban “balance billing” and the only way docs can do that is if the patient is out of network.

        • platon20 says:

          “my wife’s hospital”

          1. If your wife is not a doctor, then you have no clue how the billing works (which I’ve already proven). So quit lying and making up BS.

          2. If your wife is a doctor, then you need to tell her to give half of her income back to the group (after all, arent you claiming that doctors are paid too much)? Put your money where your mouth is.

  9. Joe Flower says:

    There is no argument, actually, between what Jack Lohman says about Holter monitors and what Dr. Allen says about colonoscopies, and taking a look at why offers a further insight into the real economics driving healthcare costs. A colonoscopy is something that your doctor tells you that you need, but it’s not an emergency (usually), the procedure is pretty standard, it’s quite separate from any other therapy or test you are getting, and you can get one at any facility you choose. Such a unit of healthcare is perfect for real price/quality competition at the customer level, and I am not surprised to hear that pricing transparency in a market with significant high-deductible plans would lead to lower prices.

    A Holter monitor, as I understand it, is usually prescribed as part of a larger cardiovascular investigation. In other words, you are already at your cardiologist’s office getting examined. And it takes an expert to get it on right, and properly set up. You are much less likely to go comparison shopping, and go to someone else’s office because it costs less.

    Most of the huge price variations we see in healthcare are not due to underlying costs, they are due to the “deal,” the nature of the contract negotiations with insurers. So they are not, in their current form, very susceptible to real competition on price and quality.

  10. Eric E says:

    Jack,
    I worked for 9 years at a small diagnostics company, and what you say is entirely true. This also fits with what Dr. Allen says about areas where ASCs or other private entities set the price.

    From what I’ve seen the exact same dynamic applies with ablation of Barrett’s esophagus. Once an ASC or practice gets the Halo equipment, their incentive is to maximize the number of procedures they can do This applies even without purchasing the equipment, as I believe the arrangement with the Halo equipment is that the machine is leased or loaned and the practice buys the consumables from Covidien.
    This is perfectly sensible way to run business, but in medicine its in bad form to say that one does this.

    Eric

    • Boris Katz says:

      Eric, let’s compare medical business with the auto service. If a garage buys an equipment, e.g. for wheel alignment, they also want to maximize its usage. But the difference is that when I go to a mechanic and have to pay my own money I am way more concern if it is trully necessary than if it cost me nothing (or very little).

  11. THCB Staff says:

    Friendly reminder from THCB to keep conversation civil.

    Thanks!

  12. tom says:

    That is the wrong question. It is clearly doctors who order unnecessary and redundant tests and increasingly perform utterly unnecessary surgery on patients.

  13. Botetourt says:

    This used to be a blog that was interesting, topical, and civil. What happened, and where did the people who used to post here go? Matthew, this is neither information nor entertainment.

    • Bobby Gladd says:

      I have to disagree. THCB is one of my priority daily stops. In general it is way more civil than before in the comments (some of the more absurd resident trolls having departed). This post is a bit of an anomaly, but still, these potshots are way less acrimonious than those of prior years.

      THCB provides a ton of timely relevant info from a breadth of perspectives. You have plenty of alternative choices for “entertainment.” Use them.

  14. Just wanted to weigh in on two separate points:

    First, the NYTimes article was critical of physicians, sure, but it was clearly not making the case that high physician costs solely explain the cost of a colonoscopy in the United States. I doubt that’s what the average reader would take away.

    More likely, the reader would be astonished at the systemic imbalances and failures that lead to both the use of the colonoscopy procedure (and its subsequent overuse) and the way in which the procedure itself is carried out.

    I don’t have the background or the time to research to understand if a colonoscopy is qualitatively better for a patient when it comes to screening for colon cancer. That’s part of the reason why organizations such as the US Preventative Task Force exist, and physicians should help patients understand what options are available and what their recommendation is.

    For the sake of this, let’s assume that the author is fairly explicating the prevailing medical consensus (let me know if she’s not!) and that a colonoscopy is truly no more effective than other methods. It’s remarkable, then, that the procedure is carried out as often as it is.

    Why that is would take more research, but I suspect that it has to do with a) public perception – the “Katie Couric Effect” writ large; b) rent-seeking lobbying groups with an interest in keeping the status quo – and yes, that does include some organizations that act on behalf of physicians; and c) a lack of patient understanding of what’s effective and what’s not (as an aside, I can guarantee you that my father would not be getting a colonoscopy if he knew there was a diagnostic just as effective – and I imagine many other patients are the same way).

    But let’s grant that a colonoscopy is going to be used often in American diagnostic medicine. Then, I suspect the next piece of the article that would astonish the reader is the use of an anesthesiologist in the procedure; except for rare circumstances, it seems like this is unnecessary for the safety of the patient and the efficacy of the procedure. Again, some of the above reasons may contribute to why this occurs – in addition to the paeans to safety that lobby groups expound.

    What this boils down to, then, is that payers are paying for procedures that are unnecessarily expensive and include unnecessary clinicians. It’s a situation where the green pill and the purple pill have the same effect, but the purple pill is multiple times the cost of the green pill.

    This is why many are hopeful about PCORI, the IPAB, and comparative effectiveness research in general; with enough of a mandate (which they don’t currently have, it should be noted – but may in the future) they can drive payers to pay only for what’s necessary.

  15. Rob says:

    Who is more to blame: the mafia boss, the triggerman who does the dirty-work for that boss, or the corrupt system that makes organized crime possible? In truth, they are all to blame. None of them has any moral high-ground on which to stand. But the way to fix the system is not to go after the triggermen, or even the bosses, as they will simply be replaced by others. The way to get rid of the problem is to create a system in which mafia bosses and triggermen are not profitable lines of business.

    Hospitals, health systems, and perhaps insurance companies are the bosses. Doctors are the triggermen, ordering the tests that cost so much. We all share our own portion of the blame. But focusing too much on the players in the game ignores the reality that the game itself is the problem. I left the system because the only docs who survived were the ones willing to play the game, and the ones most rewarded were the ones who had the least conscience.

    I cringe at discussions like this because they try to make individual groups the villains in the story. This is why I am no longer in this game. I couldn’t ignore the fact that the loser in all of this is the one for whom the game was invented in the first place: the patient.

  16. Jack Lohman says:

    Rob, follow the money. The guy at the top is the politician that pockets the bribes. $125 million just to keep single-payer off the table and pass an insurance industry dream.

    • Rob says:

      It’s not who’s writing the checks that’s the problem. It’s the size of them. Single-payer will simply give the Titanic another captain. It will have some good to it and some bad. The problem is more basic than you say. We are paying for sickness, drugs, procedures, and documentation. Guess what our system produces? All of the above.

      We don’t need a new boss. We need a new business.

      • Jack Lohman says:

        I disagree Rob. Single-payer Medicare-for-all is 95% private. The bosses will create little or no change, except that it will put doctors more in charge. (PS, I’m not a doctor, and at 75 you wouldn’t want to go to me anyhow.)

  17. Rob says:

    As a doctor who once accepted Medicare and left, I can say that Medicare did nothing to “put doctors more in charge.” I’ve written about this in detail (much of which has been/will be posted on this blog. Besides the obvious fact that Americans will have no part of a single-payer system (mistrust/fear of government being one of our most consistently held beliefs), my perspective says that we need to change it far more radically than turning it over to the government.

    I guess you could say I do believe in a single-payer system, but I think that payer should be the patient, and they should pay the doctor, not the “payers.”

    • Jack Lohman says:

      Rob, as a doctor you must know that when patients themselves must pay, they will delay treatments until they are more serious and costly. NO savings will be had, except for those who die early.

      I know… let’s eliminate campaign bribes and then see what the politicians decide!

    • MD as HELL says:

      Yes!!!!!!!

  18. Barry Carol says:

    It’s true that physician and clinical fees account for roughly 20% of healthcare costs in the U.S. of which about half goes to doctors and half to practice expenses. However, doctors’ decisions to admit patients to the hospital, order tests, prescribe drugs, refer patients to specialists, consult with patients and perform procedures themselves drive nearly all healthcare spending. Some of these treatment decisions are money driven, some are intended to protect against potential lawsuits and some are aimed at meeting often unreasonable or unrealistic patient expectations. Most, hopefully, represent the doctor’s judgment about what is in the patient’s best interest. Often two or more factors may be at work.

    Pricing of services, tests and procedures is a separate issue. Hospital consolidation, including buying up physician practices, is driving up costs by increasing hospital market power and enabling them to extract higher prices from insurance companies. I think Medicare needs to change its rules to reimburse hospitals at the same rate as what independent doctors are paid for services that can be performed perfectly well in a doctor’s office. I’m also not sure that facility fees are appropriate for outpatient care like imaging and colonoscopies when performed in a hospital setting.

    Price and quality transparency would be enormously helpful in making it possible for both patients and referring doctors to identify the most cost-effective high quality providers in real time and direct more of their business to them. At the same time, we need reasonable limits on how much hospitals can charge insured patients seeking out of network care as well as uninsured patients for care delivered under emergency conditions, which, by definition, cannot be scheduled in advance. Some modest percentage above the Medicare rate seems most reasonable to me.

    The single payer crowd doesn’t appreciate that government can probably do little to drive down healthcare utilization though it may be able to reduce reimbursement rates in the short term. There would probably also be adverse intermediate to longer term effects on medical innovation and we could easily wind up with much longer wait times for non-life threatening surgical procedures like hip and knee replacements.

    There are a lot of interesting things happening in healthcare and health insurance these days which actually make me quite optimistic that we will be able to bend the medical cost growth curve over time mainly by bringing more price discipline to hospital based care. Tort reform that would give doctors safe harbor protection from failure to diagnose lawsuits would also be helpful as would a more sensible approach to end of life care. Recently introduced bipartisan legislation in Congress that would make the Medicare Claims Database available to the public for free could help to mitigate fraud. Large employers are starting to embrace reference pricing for standard procedures like MRI’s and colonoscopies. Stay tuned.

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