John Q. Rational here. Let's discuss healthcare cost in America. Specifically, let's talk about the specific cost or the per-service/per procedure cost of healthcare here. It is already well documented that we americans are blessed with a mediocre system with the highest per capita cost on the planet.
Now, notice that what I am about to do is in stark contrast to what most "conservatives" choose to discuss, which is overall cost. In most cases, conservatives wish to contain healthcare costs simply by reducing the payor burden by old school cost-shedding measures...in other words, that means less people getting healthcare. It's the same type of game most of corporate america is obsessed with these days: cost minimization rather than profit maximization. It never ceases to amaze me that people believe accountants (or lawyers) know how to run a business, yet everyday we see overwhelming evidence of their extreme-narrow-focus mentality in the strategies and operational attitudes used by Big Business and our increasingly Big Government.
So let's begin. Since I have a wife who works at a Fortune 500 company that makes MRI machines, let's discuss imaging costs. I made up a spreadsheet model (see below) for a workaday 1.5T MR system, and your typical CT machine. End result...assuming a 30% cost plus model, a non-contrast MRI should not cost more than $595, and a non-contrast CT should not cost more than $278 (in both cases the radiologist interpretation of the image is a separate charge and is typically $250 to $400). So, why does it cost typically triple those amounts...you got me. I've accounted for virtually all reasonable costs associated with running an imaging center, right down to the janitor and receptionist. I suspect that the army of people paid to harangue insurance co.s all day for payment, as well as general bureaucratic bloat syndrome has a lot to do with the specific cost discrepancy.
If you go through the spreadsheet, you will notice the effect of having less people receive an image - it drives up the specific cost! Healthcare is a very capital intensive service industry...the less people getting services, the higher the per-patient cost because the capital equipment has to be paid off whether used or not! The pseudo-conservative argument of cost-shedding via reducing access to healthcare is not only morally suspect, it makes everything more expensive for those of us who pay insurance premiums!
But there is another point I want to make here: it is obvious that, even given the capital intensive nature of healthcare, and the need for highly trained help, we can do a lot better both in terms of cost and availability. Other countries have done better, for less money. Like a lot of industuries in America, healthcare has gotten fat and lazy by using the government as a tool to reduce or eliminate "pesky" competition and common-sense regulations. It does not make sense to deny healthcare until people become so ill as to need to use the ER. It does not make sense to over-regulate the healthcare scene to the point that healthcare providers can operate in an oligopolistic fashion. It does not make sense to allow patent law (e.g. Myriad Genetics) and clinical trial regulations to slow medical research to an absolute glacial pace.
We can and must do better, or we will go broke. We're already paying 1/6th of our GDP towards healthcare, and that fraction will get worse as time goes by both because demand will increase (boomer retirement) and because the specific cost continues to rocket skyward. I suspect we will wait 10 or 15 years until the Babyboomers are destitute before any real action occurs...but I hope I'm wrong.
So, in the coming posts, I will share some of my solutions...RATIONAL solutions...stay tuned!
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