America’s Broken Health Care System: The Role of Drug, Device Manufacturers

Health care costs are dramatically higher in the U.S. than in the rest of the world. Yet our health care outcomes – from life expectancy to infant mortality – are average at best. Few dispute these facts.

The real debate starts when we ask why. While there isn’t one single answer, the rapidly rising cost of drugs and medical devices is a significant factor.

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Posted by: AtlasMD

January 3, 2014

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You Won’t Believe This Reddit Tape

ABC reported on a recent Reddit post of a $55,000 appendectomy bill. Yes, 55 THOUSAND dollars. Although the 20-year-old man in question got over the pain of his appendix removal, his hospital bill probably won’t be feeling better anytime soon. Fortunately, the patient was insured, so he only had to pay $11,119.23 of the outstanding bill. The shocked man of course took to the best place on earth to document all things ridiculous.

“I never truly understood how much health care in the U.S. costs until I got appendicitis in October,” he wrote on Reddit. “I’m a 20-year-old guy. Thought other people should see this to get a real idea of how much an unpreventable illness costs in the U.S.” The recovery room cost $7,501.00, which surprised the man because he spent only two hours in there. The actual surgery cost $16,277.

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The Moral Hazard Of American Healthcare

John F. Hunt, MD writes on Kevin MD, “If you learn nothing else today, I would ask you to learn that moral hazard is the cause of medical price hyperinflation.” His is a controversial post, meant to elicit click-through with the title, “The cheapest form of health care is to let sick people die.”

Obviously, Dr. Hunt doesn’t want anyone to die. However, his argument is that so long as it’s the government’s obligation to take care of people, prices will skyrocket. This is due in part to the inherent moral hazard. He explains, “Moral hazard is when the person who bears the economic burden of a decision is not the decision maker.” In healthcare, the moral hazard is a third party payer (insurance/government) bearing the economic consequences of a patient’s decision.

Dr. Hunt makes an excellent point. When there’s moral hazard, the patient cares less about drug and procedure cost, and what doctors charge. As a result, he says, prices rise when the “buyer” doesn’t care about these costs. He compares this to teens given no-reins access to their parents’ credit card. “[Then] if everyone in America let their teenage daughters go shopping for clothes… the prices would skyrocket.”

He explains the catch-22 in play here. So long as the government/insurance are responsible for payment, the actual prices of services will be hyper-inflated. The only way to break this cycle is to make the patient the person who bears full financial responsibility. The problem is that we as a populace need to make that leap of faith. Direct care patients are doing this. Direct care docs are doing this. The question is when will everyone be doing this? Only then will we see prices return to realistic levels. Seriously, the out-of-pocket cost of an ambulance trip alone would break most Americans’ banks.

READ DR. HUNT’S BLOG POST ON KEVIN MD

Atlas MD On Expanding Your Direct Services

It’s Dr. Josh here. We had a doctor write us in response to our Atlas MD price listing recently. The doc asked,

What about X-rays, MRI, and emergency visits like broken bones?

Thank you for the question. We’ll gladly expand on how we negotiate for discounted services.

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Who’d Have Thought Colonoscopies Could Explain it All

We’re glad that John Green directed us to this New York Times article from June. A story of Deirdre Yapalater’s colonoscopy illustrates many of the market failures driving up healthcare costs in America. The publication was kind enough to create an interactive map that lets you compare the average cost of a colonoscopy across the country, too. Very cool.

“… Ms. Yapalater recalled, she did not ask her doctors about the cost of her colonoscopy because it was covered by insurance and because ‘if a doctor says you need it, you don’t ask.’ In many other countries, price lists of common procedures are publicly available in every clinic and office. Here, it can be nearly impossible to find out.”

Yet again, we see the rebellious nature of our direct care model. Given, we aren’t performing colonoscopies here at Atlas MD, we ARE ADVOCATES FOR OUR PATIENTS, and will get in the trenches and negotiate fair prices. It’s in patients’ interest, and our interest, part of the beauty of the free market. But there’s more the article considers…

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SUMMARY: How A Secretive Panel Uses Data That Distort Doctors’ Pay

SUMMARY: How A Secretive Panel Uses Data That Distort Doctors’ Pay

Here’s a home run for investigative journalism. The Washington Post dug around and found that doctors’ compensation is decided by a little-known committee of doctors who help establish the value of every procedure in medicine. However, critics claim the American Medical Association (AMA), the chief lobbying group for physicians, is the wrong organization to do the work.

This is a long form article, but we’ve highlighted the key takeaways in case you don’t have time to read the whole piece.

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