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Why I Do What I Do…

26 Mar

The President gets letters. He often reads from them as a way of connecting with the public and helping the American people see the immense weight that rests on his shoulders because he holds himself accountable to the people. Sure, there’s a political motivation behind it, but it humanizes the man and the office either way, and I think that’s important.

I am not the President, but I get letters, too. The author of this particular letter has given me permission to quote it to you anonymously. I’m sharing it with you so that you can get a little bit of a sense of why I do what I do, by which I mean study in the field of health policy and health services research as well as write a less academic, much more mainstream, blog on the stuff. The reason is simple, really: I like striving to make people’s lives a little better–and this is one way in which I’m able to do that. I’ll call this woman Angela. Here’s what Angela recently wrote to me:

Dear Brad,

I’m in the midst of some lab testing for my son and I found your article in a google search “Why are laboratory tests so expensive?” Nice article. I was wondering if you can find out the reason for the expense. Is there so much that goes into testing that it amounts to such an expense? For example, how much work goes into testing samples? Is the equipment so expensive that they have to regain what they paid for the equipment and testing supplies, training the staff? Our insurance covers most common tests but will only pay half or less of what they’re asking. Because they’re in network they agreed to accept what the insurance pays them, but what about labs out of network, they throw the fee back at the patient, or reponsible party and expect the full cost. There’s times when people have to send to certain labs for specific testing and usually these labs are not in insurance networks. Is this issue covered in the healthcare reform? I haven’t seen the reform, I’ve only heard bits and pieces. If you are interested in digging for the reason for the expensive, I’d be interested in your findings.

Sincerely,
Angela

Here’s a woman whose child needs a lot of medical care–especially lab tests. Fortunately, her family is insured, but that doesn’t stop her from asking lots of great questions. She asks the million dollar question, which is: Yes, prices are higher here in the U.S., but why? In a nutshell, I would respond by saying that it has a lot to do with the lack of price transparency in the market, which stems largely from the fact that most people have insurance.

Let me use my own example. About four years ago, I was prescribed a medication that required me to have regular blood work to monitor liver function and the like. The first time I had my blood drawn at the lab located in the same medical complex where my primary care physician was located. I had high deductible insurance at the time, and ended up paying about $400 for a couple of very basic tests. To add insult to injury, I had worked as a phlebotomist for several years prior to that, so I knew that what I was being charged had no basis in terms of actual expense.

That actually leads to a secondary point, and another of Angela’s questions: Does the high price have to do with paying off expensive equipment, expensive reagents and the like? The answer to that is pretty much no. Most of the chemical analyzers run anywhere from $500,000 to $1 million or more to purchase outright. Most hospitals don’t buy the machines. Instead, they lease them–typically at no cost–in exchange for contracting to purchase the particular chemical reagents required for their use. Again, these deals are not transparent to consumers of services.

Back to my point about insurance. When I got the $400 bill, I freaked. After I got done hyperventilating, I got out the phone book and started calling around to independent labs. How much would a comprehensive metabolic panel cost? I asked. Imagine my pleasant surprise when I heard $35. Suffice it to say I took my business there from then on.

But that only worked because I knew enough about what my insurance did and did not cover, knew what “CMP” meant on the doctor’s order, and knew enough to call around to several places to check prices. I daresay that most people don’t do that sort of thing, and just end up paying whatever the statement from their insurer says.

I hope that this post has shown you why I do what I do, and I hope it answers some of Angela’s questions. As to her big one about health reform, well, I’m still too giddy to get into what reform does and doesn’t do just yet.

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Posted by on March 26, 2010 in Uncategorized

 

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