In the vein of "it's not how you pay, it's what you order" postings I'm making, I'll continue with some interesting breakdowns of excess cost. From the McKinsey research on US healthcare costs, the staggering cost of Scanning Humans in the US is phenomenal, and has not led to improved outcomes.
How prevalent is scanning? Start with these statistics. In 2006, around one out of four people in the US will have a CT scan. Scanning one of the fastest growing cost segments for healthcare. Some estimates show that a third of all scans are pure waste.
So, I'll start with a story of a bad knee.
A Story
In the late 70's a kid had a mild motorcycle accident - stopping on a bad part of the road, the bike slipped from underneath him, and he skidded on his left knee skinning it deeply. It took a month to heal. While the skin healed, and left a nice dollar-coin-sized scar, for years that knee every now and then would become quite painful, as though he had twisted it somehow.
25 years later, that kid was a business guy. Flying frequently on long (9-10 hour flights), his left knee began to bother him. In those flights, his leg was held in a bent position, immovable, in economy seats. One winter, flying to Sweden, when he came to his hotel, the pain of trying to walk up the steps to the hotel door was excruciating. It was a sensation that someone was trying to pull his kneecap off. Thankfully, if he would lie down, or keep his leg straight, the pain and swelling would tend to go away. His knee was hot. He took aspirin which helped a bit but tended to produce nosebleeds.
When home, he saw his GP who recommended a sports doctor. The doctor examined his (swollen) knee and declared that he may have a torn meniscus (what we used to call "cartilage" in the 70's). He had an X-Ray, and there it was, a tear on one side, corresponding to where the motorcycle accident had been 25 years earlier. Course of action? Surgery to remove the meniscus, trim the tear, or perhaps a transplant. the business executive was fairly conservative with surgery. His view was that it was a kind of war, and once you start you can't quite predict where it's going to end (conservative with surgery, left-wing liberal with politics to the dismay of his family). The doctors requested more x-rays and now CT scans. It all seemed... excessive because all they did was produce more images of the already-seen tear.
The business guy took Aleve, which didn't produce the same side-effects as aspirin. His knee felt much better, and after two weeks of Aleve, his knee was back to normal. No surgery, no more scans, and no more follow-up. Issue solved, though root cause remained. The knee remains fine to this day, four years later.
But all those scans for something that was taken care of with Aleve?
Excess Capacity
No other nation but Japan has as many MRI and CT scanners per capita (we have 7 times as many scanners per capita as compared to Germany). Those scanners cost money!
The US has four times the number of CT scanners per person vs the UK. The US performs four times the number of CT scans than the UK does. Emergency Room physicians in the US routinely ask for CT scans, while in the UK only major trauma centers do.
There is a direct correlation between number of scanners and number of procedures performed e.g. regardless of health and problems, the more scanners you have the more costly scans you perform. You're a doctor, and you rent a scanner and... then direct patients to have a scan when they have a problem. Even if the problem doesn't require a scan, scans can be produced because... they're marketed.
MRI (Magnetic Resonance Imaging) scans used to be called NMR (Nuclear Magnetic Resonance) scans. But you know what? You couldn't sell NMR - it had that poison-pill word "Nuclear" in it. The very existence of "MRI" is a testimonial to the need to market - rather push usage - the test. Or to market the excess capacity.
There are companies that will help you with marketing your radiology scanning! Thank goodness insurance pays for it all. Unfortunately that raises insurance costs for health insurance for everyone... And it comes from your paycheck.
Excess Cost
So, does all this scanning show up as cost? Sure - cost for the scans, and of course (what's not mentioned) is the cost for all the paperwork and transactions surrounding the payment for the scans.
In direct cost, those scans according to McKinsey create roughly $40 Billion in excess cost to the US healthcare system. Think of that. We're getting scanned to death - one in four US citizens is likely to get scanned in 2006. In terms of medical costs, this is just the cost for the scans - forget prescriptions, doctor fees, unnecessary surgical procedures, hospital fees and insurance paperwork fees... Just scanning!
Now, it's not just the fact that we're using expensive scanning at such an amazing rate. We're getting charged through the nose for it!
Prices charged to commercial insurers are higher than medicare, and of course for uninsured higher yet. In fact, for commercial insurance, the cost is 6-8x higher than medicare costs.
Here's some median rates:
Brain MRI without dye: Medicare - $353; Insurance - $1640 (50th percentile).
Brain MRI with dye: Medicare - $381; Insurance - $1886
Head/Brain CT without dye: Medicare - $184; Insurance - $756
Head/Brain CT with dye: Medicare - $250; Insurance - $870
Chest X-Ray: Medicare - $43; Insurance - $95;
Chest X-Ray & fluoroscopy: Medicare - $76; Insurance - $164
Now you can see that not only are we getting too many scans (1 in 4) those scans that charge to our insurance systems (hello BCBS) also cost too much! Is there any wonder that insurance costs so much? Remember - One in Four Americans has this done. We're talking between $50 - $139 Billion in cost. But wait. There's maintaining the equipment.
Scanners in outpatient facilities in the US acquire Extra costs associated with "clinical labor" - patient care, managing equipment, scheduling, payments and so on. So that nice neat little high-tech scanner in that little clinic on Main Street costs even more than one in a hospital. And those costs go to the american public.
Excess Use
Self-referring physicians (having a scanner in the back office) prescribe scans 2x to 8x more than the average physician according to the Pennsylvania Health Care Cost Containment Council. Yup. You can rent a scanner, and then direct patients to have a scan, regardless of the need. In fact, if you're a doctor and you have a scanner, that's exactly what you'll do. Do you want your own personal scanner set up - start an MRI business today? Just click here.
30% - 40% of diagnostic imaging is inappropriate or noncontributory. These numbers are coming from an audit by the National Imaging Associates Audit, and if you want to see detailed information about their own research on "abusive coding" and the like, you can see it here.
So, taking this in, and assume that scans Cost $100B annually. That means that $30 - $40 Billion in scans are "inappropriate or noncontributory". A billion here, a billion there, soon it adds up to real cost!
It's Not How You Pay, It's What You Order
So when self-referring doctors prescribe at 8x the annual rate, or ordinary and self-referring doctors prescribe 30% - 40% too many scams (oops, scans), those costs add up. When they're put into the insurance system, then the insurance system passes them on to their policyholders, and as well you get all the overhead costs of paperwork, clinical staff and passing the buck around.
Even if you could, with waving a magic wand, eliminate all insurance overhead, the US is still spending $40B too much in scans annually. Remember hearing about how the public option on insurance would cost $1 Billion over 10 years - a scary number! Well, excessive scanning costs $400B or more over 10 years. Would we be able to insure almost half the country on only the excess costs of scanning? What a scary thought!
The question isn't just how you fix insurance, it's how you fix this outrageous over-treatment!