Sunday, September 20, 2009

Markets In Everything: 99% Medical Savings

The chart above (click to enlarge) shows surgery costs in the U.S. compared to other countries that promote medical tourism, data are from the Medical Tourism Association. Note that savings are as high as 99%, e.g. for a heart value replacement in India for $1,200 versus $170,000.

18 Comments:

At 9/20/2009 10:22 PM, Anonymous morganovich said...

this is not really an apples to apples comparison.

"Note: Prices do not reflect PPO discounts. Prices will vary based on zip code, region, provider, and other factors. Prices are an estimate and do not include airfare or hotel accommodation for the patient or a companion"

PPO or medicare/aid discounts are VERY steep. i often see $150 blood tests reimbursed at $25 by my PPO.

what this really indicates is the utter gouging our system imposes on outsiders. this is like paying full rack rate at a hotel or full fare on an airline. sure, you CAN pay $1500 to fly SFO/JFK in coach, but you'd be a fool to do it.

if systems like medicare/medicaid and increasingly the private insurers have set/negotiated rates down so low that it's difficult to make money, then you have to gouge where you can, but there is no way these prices are being charged to most patients. hospitals would be massively profitable if such were the case, and they are not, nor are the doctors. both show declining profitability.

 
At 9/20/2009 10:37 PM, Anonymous Anonymous said...

Why is the hysterectomy so expensive in India?

 
At 9/20/2009 11:18 PM, Blogger randian said...

what this really indicates is the utter gouging our system imposes on outsiders

Which makes me wonder how people paying cash for their medical care can honestly claim to have saved money, when the doctor/hospital is going to charge them full rack rate for it to make up for what they're losing on insurance reimbursements.

 
At 9/20/2009 11:32 PM, Anonymous Anonymous said...

Yes one sees the rip off that the un-insured get on medical care if they can pay. It would be interesting to see the Medicare reimbursement for the same proceedures. However I doubt that the discounts are in the 75% plus range. Likley about 50%.
This does suggest as noted in a prior post that insurance should pay a first class ticket and so forth for things like hip replacements in Costa Rica or Singapore.
Note that even in 3rd world countries there is likely an excellent hospital in the capital as there are folks there that can pay for the best. (This is another hidden issue in the health care debate, the rich are never subject to resource rationing)
Note that the market has responded to this with discount plans such as the one by United Health. It is in the insurers interest to expand the pool of folks it can negotiate for giving it more buying power.

 
At 9/20/2009 11:40 PM, Blogger Michael said...

The cash price is often done through a similar process. The doctor tells the "billing" nurse the discount rate but gives the patient a bill for the full price and tells them to call the billing company. You call the billing company and they tell you the cash price and where to send the check.

I've worked with a few doctors setting up computer based medical systems. A modern day doctor's office really isn't designed to handle payment for services. This can make HSA's a bitch because when you call a doctor's office for a treatment price, they can only give you a treatment code. It's up to a third party to turn that code in to a price. The exception being a doctor that processes billing in house.

 
At 9/21/2009 2:24 AM, Blogger 1 said...

Well is the Medical Tourism Association really a 'non-profit' outfit?

When trying to get credible info on something as important and complex as these medical proceedures wouldn't it be better to talk to people who have something to win or lose depending on the quality of their service?

 
At 9/21/2009 4:14 AM, Blogger andre said...

its about currency and tax and that why its so expensive in 3rd world country

 
At 9/21/2009 5:19 AM, Blogger OA said...

Well the international figures may not be so accurate either. My dentist in Thailand which caters to tourists, expats, and upper income Thais is listing implants for $1,600 to $2,200. The chart lists $3,000, which is probably for the dental clinics at the hospitals.

 
At 9/21/2009 7:48 AM, Anonymous Anonymous said...

We're pretty competitive in breast implants.

Seriously, why don't we encourage medical tourism. I don't believe medicare covers it. Probably because the AMA doesn't want it.

 
At 9/21/2009 10:56 AM, Anonymous morganovich said...

randian-

it's actually easy to save money paying cash. i negotiated a cash rate for a wrist surgery (tendon repair post a nasty ski accident) with an out of network DR that was well below the PPO rate. they are happy to do it for you if you pay upfront. PPO's and medicare wrangle over pricing, mess up claims, and pay very late.

if you can pay cash upfront, you can do better than the PPO's. i got about an 85% discount in about 10 minutes of negotiation. all you have to do is ask.

i have no idea who pays these "scheduled rates" listed, but i'd be astounded if it was and significant number. it's just too easy to get around.

on the other hand, medical care tends to get consumed without EVER asking about price. if you bought a car that way, you'd expect to get soaked. why would healthcare be any different?

 
At 9/21/2009 11:20 AM, Anonymous Anonymous said...

This explains the reason why you're a fool not to have health insurance...The insurance company has the clout to knock down the list price. Additionally, a lot of companies are self-insured and the insurance company is just a plan manager; so the companies pay the insurance company to negotiate the best price....Of course, those bureaucrats in Washington don't have a clue about this.

 
At 9/21/2009 1:25 PM, Blogger orthodoc said...

No offense, but the numbers for the US, at least for those covered by Medicare, are complete fiction.

The "charge" has nothing to do with what is actually paid. The payments to hospital and surgeon are set by CMS, and vary very slightly according to geography (New York is more expensive to practice in than Montana, so 25% of the difference in practice cost is covered by the reimbursement).

For hip replacement, hip resurfacing, and knee replacement, the surgeon reimbursement from Medicare is about $1200. The hospital reimbursement is about $12-14,000. So the total is about $15,000.

Medicaid differs from state to state, but is generally about 60% of Medicare, and is below the cost of providing care. This is why very few providers get a thrill up their leg from Medicaid patients.

Most insurance carriers work off Medicare rates but multiply them by a bit; generally the total is about 125% of Medicare. There are a very few which pay a set percentage of charge, which is why we set the charge higher (let's say said insurance carrier pays 35% - if you set your charge too low, the 35% drops below Medicare rates, and the Federal government files a criminal indictment that you are charging the government more than the going rate).

Typically, the noninsured patient either
a. gets signed up for Medicaid in the hospital
b. gets charged the Medicare rate
c. gets a free ride, because it's not worth pursuing payment from a deadbeat.

Bottom line: wage and price controls are alive and well in health care, and work as well as expected, which is to say: not at all.

 
At 9/21/2009 2:04 PM, Blogger BMWright said...

Very interesting chart. Seems like it's just more proof simple free market economics doesn't work in USA health care.

"Why is the hysterectomy so expensive in India?" good question -why? Quick let's get India to send us the business in exchange for our heart surgery business! Win-Win (except for the people who get the outrageous fee -but hay, they are the same people who believe in outsourcing and NAFTA until it hurts their pocket book)

And with all the volume of business you would expect America to be lowest in something (if you assume free markets work) We should at least have the lowest cost for breast implants given the volume we do in America.

"what this really indicates is the utter gouging our system imposes on outsiders." I agree and let's not forget how the system motivates providers to get big tax right-offs and to claim a medical screw cost $1,000 when a regular hardware screw only cost $1. Either way we get screwed.

 
At 9/21/2009 4:16 PM, Anonymous Anonymous said...

Why is the hysterectomy so expensive in India?

This is a typo in Prof. Perry's table. The "price" given on the MTA website is $5,500 and not $55,000 as stated here.

 
At 9/21/2009 4:26 PM, Anonymous Anonymous said...

What do these prices have to do with Medicare? The prices in the table are for Medical Tourists. Aren't Medical tourists already traveling for price and/or quality?

 
At 9/21/2009 9:58 PM, Blogger orthodoc said...

"What do these prices have to do with Medicare? The prices in the table are for Medical Tourists. Aren't Medical tourists already traveling for price and/or quality?"

Presumably, most medical tourists are Americans. I'm simply trying to point out that the numbers quoted are not accurate, and to explain what a patient would actually pay.

 
At 9/23/2009 1:56 PM, Anonymous Anonymous said...

orthodoc: Presumably, most medical tourists are Americans.

This is not the case. In India and SE Asia, most medical tourists are from Asia and the Middle East. Americans, Canadians & British visitors are a small (<10%) minority.

I don't know about Central & South American destinations though.

 
At 9/30/2009 6:42 AM, Anonymous Medical Aesthetics Employment said...

I strongly agree with Morganovich. And the comment about the discounts in India is definitely coming from someone who has not been to India. Yes, the rate is cheaper, but the actual chances of even feeling slightly safe in India are very slim. They even have scams that they play on the sick. They charge massive amounts of money to take you around India for hours, searching for a doctor, and then return you to your original destination without your money or treatment. I don't want to say that your research is fabricated, but I just think that each person has a responsibility to research and be 100% sure that it will be beneficial to them to opt for a less expensive surgery.

 

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