Why Health Care Costs Are So High

Conversation in the exhibition hall at a major international medical conference:

E@LSo how are things going for Company A (in Country X)

Company Rep: Things are OK but could be better. It's Company C. They're making it hard.

E@L: What's the problem?

Company Rep: They keep coming in with lower price. It is upsetting the market...

E@L: Well they always do that, they do it an all countries. They have a tax incentive back home, in Country Y*.

Company Rep: Yeah, but Company A and Company B, we had a good agreement, kept a good price, make more profit, but Company C, they won’t listen to us.

E@L: (Nods. … Thinks: not often someone flat out admits illegal activities like price-fixing and collusion. Ah, capitalism.)


* Profit in foreign countries are taxed in the home country as well as in the foreign country where the sales are made. Given the large difference in relative profits (Home >>> Foreign), it is better for the company to NOT make any profits in the foreign country, indeed making a loss can result a substantial tax reduction. Therefore, they can do what they like with prices, undercutting companies that ARE trying to make a profit in that country. Not mentioning any names - That Others Show Help Is Better Also and Good Enough.

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On the subject of Health Care reform (and the imanent Great Socialismization Of The US of A), the rather left New England Journal Of Medicine has several free articles worth picking over.

One article nails the main limitation of "for profit" health delivery -

"Whereas fee-for-service medicine can be lucrative for providers because of financial incentives to deliver more (and more costly) services, it typically does not offer incentives to improve quality or efficiency or to deliver care that has a low profit margin, such as preventive services or patient education."The End of Fee-for-Service Medicine? Proposals for Payment Reform in Massachusetts,Robert Steinbrook, M.D. NEJM, Volume 361:1036-1038

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At the conference last week, another of the conversations was how about relatively cheap ultrasound scanning (the conference was all medical ultrasound) is used extensivley as the first-line diagnostic test for many muscular and nerve injuries (etc...) in the pan-Asian countries, with CT scanning and MRI reserved for difficult or ambiguous cases or for cases where bone disease or damage is suspected.

In the USA expensive MRI scans are used without qualm as the front-line diagnostic method as well as for follow-up studies. Bang, there goes your costs, sextupled.

The MRI-ologists would argue that their sonographers are not as experienced in musculo-skeletal scanning, but of course that is a circular argument: They don't do enough scans to enable the people to learn adequately. They need traiing, but there's no money in that becasue there's no money in U/S, not while MRI is such a huge profit-earner. After Obama's reforms, maybe that will be less of an issue.

Training: perhaps that is where you'll find E@L's career in its twilight.

E@L