Explaining Runaway Costs: The Lobster or the Salad?

LOBSTER_GRAM_300Have you found yourself ‘splaining to friends and family why the healthcare system is so damn expensive? I’ve been teaching health policy for a couple of decades, and I’m surprised that my two favorite stories haven’t yet surfaced in all the discourse. Here they are, in the hopes that they help you, or someone you love, understand why medical care is bankrupting our country.

Let’s start with the Expensive Lunch Club, a story I first heard from Alain Enthoven, the legendary Stanford health economist. It goes like this:

You’ve just moved to a new town and stroll into a restaurant on the main drag for lunch. None of the large tables are empty, so you sit down at a table nearly filled with other customers. The menu is nice and varied. The waiter approaches you and asks for your order. You’re not that hungry, so you ask for a Caesar salad. You catch the waiter looking at you sideways, but you don’t think too much of it. He moves on to take the order of the person sitting to your right.

“And what can I get for you today, sir?”

“Oh, the lobster sounds great. I’ll have that.”

You’re taken aback, since the restaurant doesn’t seem very fancy, and your tablemate is dressed rather shabbily. The waiter proceeds to the next customer.

“And you, ma’am?”

“The lobster sounds good,” she says. “And I’ll take a small filet mignon on the side.”

Now you’re completely befuddled. You tap your neighbor on the shoulder and ask him what’s going on.

“Oh, I guess nobody told you,” he whispers. “This is a lunch club. We add up the bill at the end of the meal, and divide it by the number of people at the table. That’s how your portion is determined.”

You frantically call back the waiter and change your order to the lobster.

“If the waiter makes a 15% tip on the total bill and you ask him to recommend a dish,” Enthoven asked our health econ class, a glint in his eye, “do you think he’ll recommend the salad or the lobster?”

“And if most of the lunch business in town is in the form of these lunch clubs, do you think you’ll find more restaurants specializing in lobster or in salad?”

I have always found this story to be the best way of explaining how the fee-for-service incentive system drives health inflation – and how it isn’t just the hospitals, or the providers, or the patients who are the problem. It’s everyone.

The second story involves one of the great innovations in the annals of surgery: laparoscopic cholecystectomy, or “lap choley” for short. As you may recall, the old procedure for removing a gall bladder involved an “open cholecystectomy,” a traditional “up to the elbows” surgical procedure. It was a nasty operation: patients stayed in the hospital for a week, recuperated for a month, and ended up with a scar that began in their mid-abdomen and didn’t end till it reached Fresno. The surgery was exquisitely painful, and had a high complication rate and a non-trivial mortality rate. And it was hecka expensive.

In the late ‘80s, along came lap choley, in which the surgeon makes a few inch-long slits in the abdomen, then inserts narrow mechanical arms that can cut and sew while allowing him to monitor the patient’s innards through a tiny camera. With this revolutionary “keyhole” procedure, patients had shorter hospital stays (1-2 days instead of a week), a much shorter convalescence, and a far lower complication rate (and negligible mortality). And costs were reduced by about 25 percent.

This was innovation – the new procedure was safer, less painful, and far less expensive. So what do you think happened to national expenditures for surgical management of gallstone disease after the advent of lap choley?

You know the answer. During my training in the 1980s, we were taught that you only removed a gall bladder containing gallstones when it was infected (“cholecystitis”), unless the patient was diabetic (the much higher complication rate of cholecystitis in diabetics justified prophylactic cholecystectomy). We told all the other patients with known gallstones to avoid fatty foods and to come to the ER promptly if they had severe belly pain, developed a fever, or were mistaken for a pumpkin. Most of these patients ultimately died with their gallbladders still in their abdomens, not the pathology lab.

But lap choley led to “indication creep” – the surgery now seemed benign enough that we began to recommend cholecystectomy for anybody with “symptomatic gallstone disease.” Since everybody ends up with an ultrasound or CT at some point in their life, we find lots of gallstones. Symptomatic? How many people do you know who never have belly pain? Do you? (Perhaps you need your gall bladder out.)

So, whereas technological innovation usually lowers costs in other industries (Exhibit A: Moore’s Law), in healthcare it often raises them as the indications for expensive procedures change faster than the unit price.

Is there a way out of the lap choley conundrum? Perhaps comparative effectiveness research will help – it might tell us precisely which patients will, and won’t, benefit from lap choley. All the usual issues must be navigated.

The expensive lunch club and the story of lap choley are two reasons why our healthcare system consumes 16% of our GDP. Sure, there is waste, greed, and fraud in healthcare, but I find the stories helpful because they illustrate how the actions of perfectly reasonable doctors, patients, and administrators will lead to inexorable inflation if the system isn’t changed in fundamental ways.

That increasingly seems like an awfully big “if”.

Robert Wachter is widely regarded as a leading figure in the modern patient safety movement. Together with Dr. Lee Goldman, he coined the term “hospitalist” in an influential 1996 essay in The New England Journal of Medicine. His most recent book, Understanding Patient Safety, (McGraw-Hill, 2008) examines the factors that have contributed to what is often described as “an epidemic” facing American hospitals. His posts appear semi-regularly on THCB and on his own blog “Wachter’s World,” where this post first appeared.