How much for that appendix? In Russia?

The recent news about the cost of healthcare in the United States has gotten me thinking. While critics say that transparency will not lower costs, it’s hard to imagine how hospitals will be able to continue to justify dramatic differences in costs for procedures between organizations or between countries. With numbers like this, is it any wonder that medical tourism is on the increase?

According to the Atlantic magazine, “getting your appendix out can cost between $2,000 and $180,000Hip replacements run from $10,000 to more than $100,000″.

The New York Times shows comparative pricing between the US and other countries, in the article “The 2.7 Trillion Dollar Medical Bill

Comparative Procedure Costs

Comparative Procedure Costs from the NY Times

“In the U.S., we like to consider health care a free market,” said Dr. David Blumenthal, president of the Commonwealth Fund and a former adviser to President Obama. “But it is a very weird market, riddled with market failures.”

One of the things that makes this such a weird market is that healthcare can be one of the biggest household expenses and yet people have no idea of the costs. This is true in both socialized medicine and an insurance-based system like the US. A number of years ago, my friend Bob tore his Achilles and needed surgery. As Bob, our friend Henry, and I were chatting about the procedure, Henry asked how much it would cost. Bob had no idea: the thought had never crossed his mind. We all worked at Microsoft HQ in Washington state and at the time, Microsoft had bar-none the best healthcare plan in the United States. (Microsoft has since changed their plan from this all-you-can-eat service.) The surgery was probably in the $25K range but Bob had absolutely no idea because he knew his insurance would cover it.

Like me, Henry had been raised in Canada with socialized medicine and before anyone got smug about the problems in the US system, he pointed out that neither system held people accountable for costs or decisions. We had no idea how much the surgery would cost in Canada either. This was the first time I really thought about healthcare costs, the amount of money changing hands, and how the beneficiary of the service had no idea what was being paid.

A few years later, my friend Diana, held a wonderful party in Seattle to celebrate overcoming breast cancer. One of the activities at the party was a contest to guess how much her breast cancer had cost. Diana and her husband are teachers, and while their salaries may not be particularly high, they do have good insurance. Total bill: $250,000, or 5 times the average annual salary for a Washington state teacher.

As I mentioned, I grew up in Canada, where thanks to Tommy Douglas, there is universal healthcare. Canadians do not need to worry about going bankrupt if they get sick. Canadians also do not get the kind premium service that the best insurance plans in the United States offer, and if you look you’ll find plenty of skeletons in the closet about wait times for procedures and so on. Although the individual does not know the costs of treatments, the healthcare system as a whole does a good job of ingraining the need to “not overburden the system.”  What this means is that people often second guess whether they are sick enough to go to the doctor or hospital, often because there is guilt associated with using the system unnecessarily. My friend Harriet describes this perfectly this in her blog post about her son’s asthma.

“This really isn’t right;  I should take him to the hospital.” But I hushed my inner voice thinking that once daylight hit, things would improve. And besides, I didn’t want to waste the taxpayer’s money on an unnecessary ER visit.”

Canadians are often smug about our healthcare, and I suppose considering that the entire country receives free healthcare at a cost lower than what the US spends, maybe there is some justification. However, in 2001 when I moved to the US and experienced the “Cadillac of healthcare programs” while working for Microsoft, I have to admit it was pretty amazing. Unexplained coughing? Let’s see a lung specialist for airway testing. Psoriasis? Here’s an appointment with an expert at University of Washington. Contrast that to Canada where specialist referrals need to be renewed every 6 months by your GP. When I finally saw a dermatologist, we talked about how ridiculous it was that he couldn’t continue to treat me for a chronic skin condition without a note from my GP. Now who’s wasting taxpayer dollars?

Like Harriet, I have also internalized the “you’re okay, don’t see a doctor” mentality, exemplified when I experienced severe abdominal pain while living in Russia in early 2010. I moved to Moscow in 2008 for a 3-year posting with Microsoft, and was still supported by the best healthcare a corporation can buy. At 3am, with 12 hours of severe abdominal pain, I was still second guessing whether there was really a problem. It took an instant messaging chat with a friend in San Francisco to convince me to go to the hospital.

Again, thinking it couldn’t be that bad, I didn’t call an ambulance, but drove myself to the European Medical Center, a private clinic catering to expats and wealthy Russians. To put things in perspective, the healthcare plan that my Russian Microsoft colleagues had did not enable them to go this clinic; it was out of reach for their coverage. Within half an hour, I had an EKG, blood tests, CT scan, and a differential diagnosis of appendicitis. By noon the next day, I was minus one appendix.

The author and her Russian team in Moscow

Now here’s where the story might start to seem a bit ridiculous to you. Once my appendix was out, the rest of my hospital stay was so pleasant I didn’t want to leave. It was quiet, clean, with attentive staff, and a extremely comfortable bed with a down duvet.  I had a shared room with a Swedish woman who said the food was some of the best she’d had. (I wasn’t allowed to eat sadly.)

The final bill? $3500 Euro ($4900 at that time). Seems pretty reasonable doesn’t it? For comparison, my follow up visit with the surgeon was $90 Euro which is not cheap for a 15-minute consultation. This was one of the best facilities in Moscow, out of reach for most of the population including my affluent colleagues, and yet the costs of my surgery were not outrageous. It wasn’t as cheap as the $2000 lowest price cited by the Atlantic article but nowhere near their high-end of $180,000 plus I had CT scan (which can start at $1200 in the US), general anesthesia, laparoscopic surgery,  time in the ICU, an overnight stay, and some pretty amazing pain drugs.

Where does this leave us? Socialized medicine isn’t perfect but the free market isn’t working either. Prices can’t vary so widely. People need to understand their options and the costs of those options. Price transparency will help stop the gouging that happens at the high-end. The Obamacare mandate to cover more people will require less expensive solutions. Prevention and less expensive ways to manage health are key. New ways of paying for outcomes rather than diagnosis and procedures could help too.

At Wellpepper we’re passionate about improving the value of healthcare delivery while decreasing costs by extending the reach of the healthcare professional outside the clinic. We believe that technology, used by caring healthcare professionals can provide some solutions to these problems and we’re hoping to be part of the solution.

Author’s Note June 4th: Maybe Harriet and her family are stoic, or maybe we have some more problems in the system. Today after finally demanding x-rays her husband found out he’d been walking on a broken ankle for a month. The first doctor gave him painkillers and sent him on his way.

Posted in: Healthcare Disruption, Healthcare Technology

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