Here's more from Elisabeth Rosenthal about the health care industry is destroying America...
http://www.npr.org/templates/transcript/transcript.php?storyId=523005353How U.S. Health Care Became Big Business
April 10, 201712:01 PM ET
TERRY GROSS, HOST:
This is FRESH AIR. I'm Terry Gross. Have you ever looked at a hospital bill and been aghast at how expensive and incomprehensible it was, or tried to figure out which health care plan to choose and played the odds about whether you should go for the high deductible plan or not? Patients are told to be good consumers, but we're navigating a system that isn't exactly user friendly.
The new book "An American Sickness" explains how health care became big business and how the pricing and billing of medical services, devices and prescription drugs became so complicated even a lot of doctors don't understand it. My guest is the author, Elisabeth Rosenthal. She's the editor-in-chief of Kaiser Health News. Before that, she was a reporter at The New York Times. When she was covering health care for the Times, she wrote a series called "Paying Till It Hurts." Before becoming a journalist, she was a physician.
Elisabeth Rosenthal, welcome back to FRESH AIR. Let's start with some of your economic rules of the dysfunctional medical market. You say more competition doesn't mean better prices. In fact, it can drive prices up. That's a very interesting thing to say considering how much we've been hearing that if we repeal and replace Obamacare and make the market more competitive, it will be more favorable in terms of price for medical consumers. So why do you say that more competition can actually drive prices up?
ELISABETH ROSENTHAL: Well, what we see in health care is not like what we see in any other economic market. I mean, it's sad. It's amusing. It's baffling, which is partly why I undertook this book. But basically if you look at drug prices, for example, there was a miraculous drug called Gleevec which really changed cancer patient's lives when it came out maybe 10, 15 years ago.
Now there are many, many kind of copycat versions of Gleevec. We call them in the profession sons of Gleevec. And they're all four or five times more expensive than Gleevec was when it came out. So if you were looking at a world where an economic market worked, you would think, wow, there are 10 of these now so the price should have come down - it hasn't.
GROSS: Why not?
ROSENTHAL: Well, because the standard in health care has been usual and customary. So that kind of doesn't let the market work. You may have seen that on your insurance bills, or you may have seen that when your insurer is saying this is how much we're going to pay. It's the usual and customary in your area. Well, what happens if everyone is charging five times as much as is reasonable? Well, then five times as much becomes usual and customary.
And it's a very inflationary concept over time. So what you see because of usual and customary is that maybe a gallbladder operation will cost $50,000 in Nassau County on Long Island, but it might cost $10,000 five miles away in Queens. And that's because the usual and customary in those two geozips are very different.
GROSS: So you're saying prices rise to whatever the market will bear?
ROSENTHAL: Well, that's the ultimate lesson of much of American health care is that prices rise to whatever the market will bear. And another concept that I think is unique to medicine is what economists call sticky pricing, which is a wonderful term. It basically means - and you see this over and over again in the drug sphere and also in the hospital chargemaster sphere -
once one drug maker, one hospital, one doctor says hey, we could charge 10,000 for that procedure or that medicine. Maybe it was 5,000 two months ago, but once everyone sees that someone's getting away with charging 10,000, the prices all go up to that sticky ceiling.
Maybe they come just a little bit below. What you see often now is when generic drugs come out, so there's lots of competition, the price doesn't go down to 20 percent of the branded price, it maybe goes down to 90 percent of the branded price. So we're not getting what we should get from a really competitive market where we, the consumers, are making those choices.
GROSS: But the premise of the competitive market is that we'll be shopping for the hospital or the doctor that does the procedure for the cheaper cost and that will bring prices down. Apparently things aren't working that way.
ROSENTHAL: Well, this concept makes me a little nuts frankly because we're told over and over again - and this is part of why I'm so obsessed with this - we're told over and over again, oh, you should be a good consumer of health care. OK, right. What do you need to be a good consumer? You need to know a price. OK. I need - say my doctor tells me you need to get that wrist X-rayed after you fell. I may call 10 X-ray centers. No one's going to tell me the price. They're all going to say it depends on your insurance or we don't know.
So how can I shop around? Even in that kind of elective situation, I can't really shop because I don't know the prices. And P.S., a lot of medicine isn't so elective. Your doctor says hey, you need to have your hip replaced. Or your doctor says, I'm going to fill out a requisition for this blood test. Here's the lab I'm sending it to. You don't have a lot of choice.
Now, part of what I'm saying is you should ask for that choice. So if your doctor says, I'm going to order this blood test and here's the lab you should go to, it's beholden on us now to say hey, which labs are in my network? I'm going to go to one in my network because I don't want to be hit with an out-of-pocket cost for that test.
GROSS: OK. I'm going to name another one of your economic rules of the dysfunctional medical market. And that rule is a lifetime of treatment is preferable to a cure. Preferable for who?
ROSENTHAL: Well, you know, you've got to look at every medical problem from two sides - what's right for health care and what's good for business. And you have to remember, we've trusted a lot of our health care to for-profit businesses. And it's their job, frankly, to make profit. Much as that makes me uncomfortable and I might not like it, you can't expect them to act like Mother Teresa's - they're not.
So if you're a pharmaceutical manufacturer and you have a problem like diabetes, for example, if I invented a pill tomorrow that would cure diabetes, that would kill a multi-billion dollar business market. It's far better to have treatments. And, you know, sometimes really great treatments, very effective treatments, so that's good. But you kind of want the treatment to go on for life. That's much better than something that will make the disease go away overnight.
Now, one expert in the book joked to me - kind of tongue-in-cheek, of course, because no one would think of this as a good outcome - that if we relied on the current medical market to deal with polio, we would never have a polio vaccine. Instead, we would have iron lungs in seven colors with iPhone apps.
GROSS: If you're just joining us, my guest is Elisabeth Rosenthal, author of the new book "An American Sickness: How Healthcare Became Big Business And How You Can Take It Back." One of the things I've been noticing is the consolidation of hospitals, where one entity will buy up a bunch of hospitals in the region. And the hospitals maintain their name, but they're all under a larger entity. What's that about? Why is that happening?
ROSENTHAL: Well, that's a complicated question. It started happening because in many cases it's not very efficient to have a huge number of hospitals scattered in every little town. You know, if you're - if you need open-heart surgery, maybe you should go to a center that does lots of open-heart surgery. And in the beginning - and this is - so much of this book starts in the beginning because we've seen these things evolve over time. And in the beginning, this was a good idea.
Hospitals came together to share efficiencies. You didn't need every hospital ordering bed sheets. You didn't need every hospital doing every procedure. You could share records of patients. So the patient could go to the medical center that was most appropriate. Now that consolidation trend has kind of snowballed and skyrocketed so to a point now in many parts of the country, major cities only have one, maybe two hospital systems.
And what you see with that level of consolidation is, you know, it's kind of a mini-monopoly. And what happens, of course, when you have a mini-monopoly is you have an enormous sway over price. And so what we see in research over and over again is that the cities that have the most hospital consolidation tend to have the highest prices for health care without any benefit for patient results.
GROSS: There are so many shopping plazas now that have a dialysis center and an imaging center. You'd never see that in a shopping center in the past. What's going on there? Why are there so many kind of standalone medical centers like that - medical specialty centers?
ROSENTHAL: Yeah. Again, what we see over and over in health care is something that started maybe 20, 30 years ago as a good idea and a positive thing, has kind of morphed into something that's far more ambiguous in its utility. I mean, the idea was in the '80s and '90s that a lot of things that used to be done in hospitals, could be done as outpatients.
You know, that's far more convenient for patients. If you need dialysis, you don't have to go into a hospital. If you need minor surgery, you don't have to go into the hospital. So there was a movement of a lot of things to outpatient status. Also anesthesia got better. We could do much more under local. It was a good idea in the beginning. And it still is for a number of things.
But what's happened is it became a revenue source. So a lot of these outpatient clinics became owned by doctors who were doing the surgeries. So there was a kind of mixed motivation in do you need the surgery? And I'm making money from this surgery. So when your doctor says, OK, you need a colonoscopy. We can do it on either Tuesday - I'm doing it at my surgicenter - or Thursday, where I do them in the hospital.
For patients, that can mean the difference between an outpatient procedure, which may cost you $5,000 and a hospital outpatient procedure, which will be billed perhaps at twice as much because you're paying for hospital O.R. time. So, you know, there's a huge price implication for patients. And often, patients aren't told that. So you may just say, oh, I'll have it done on Thursday. That's my day off and - not knowing that it's going to cost you twice as much. But...
GROSS: So the hospitals are likely to cost more than the outpatient procedure in a surgical center?
ROSENTHAL: Yeah. Yeah. It almost always will because you're paying a hospital fee. On the other hand, I think, you know, there's an upside and a downside. If you're having a serious medical procedure in a surgicenter, maybe it can't handle emergencies that a hospital could handle. So, you know, there are things that need to be done in the hospital. And there are things that can be done in surgicenters.
And that decision, I think, sadly, now is often made as the result of a trade war between those two entities, rather than really what's best for a patient. There's a big push to do more and more as an outpatient. And there's a big debate in the medical community about whether we're trying to do too much in the outpatient setting now. But more...
GROSS: Why is there a push to do more in the outpatient settings? The push coming from the people who run the outpatient centers or from the hospitals or from the health insurance companies?
ROSENTHAL: (Laughter) There's a new twist in this. But let me - the push is partly from the health insurance companies because it's lower cost. It's driven largely, though, by the people who own the outpatient surgery centers, of course - the ones you see advertising on TV and in shopping malls because they want the revenue.
So the hospitals as a whole don't like it. But in the latest twist of this ongoing consolidation of financial power, many of the hospitals have decided to end this trade war with the outpatient surgery centers and are just buying them up. So the thing in your shopping mall that looks like an outpatient surgery center that may be owned by some investors or some physicians, is now actually rebranded as being the hospital.
Even though it's the same surgicenter in the same shopping mall, they'll just say, oh, it's now part of our hospital network. So now that same surgery center will charge hospital prices. So in some ways, the consumer/patient can't win.
GROSS: If you're just joining us, my guest is Elisabeth Rosenthal, author of the new book "An American Sickness: How Healthcare Became Big Business And How You Can Take It Back." She's editor-in-chief of Kaiser Health News. And before that, she was at The New York Times - there as a reporter for a long time and ended up covering health care there. We're going to take a short break, and then we'll be right back. This is FRESH AIR.
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GROSS: This is FRESH AIR. And if you're just joining us, my guest is Elisabeth Rosenthal, author of the new book "An American sickness: How Health Care Became Big Business And How You Can Take It Back." She's editor-in-chief of Kaiser Health News. Before that, she was a longtime correspondent at The New York Times where she ended up covering health care and wrote a series about health care called Paying Till It Hurts.
So, you know, there's a big conflict now between people who want to save Obamacare and people who want to replace and repeal it. We know what happened the first time around. The repeal and replace attempt failed before it got to the floor. There are still a lot of proponents of single payer.
ROSENTHAL: Yeah.
GROSS: Are you one of them?
ROSENTHAL: Well, I'm still a journalist. So I can't endorse one solution or another. Single payer has certainly worked in many other countries. But I'd like to point out if Americans really want something that's more market-based, other countries have used market-based solutions or more market-based solutions and have gotten really good health care, too.
If you look at Switzerland, they have a largely market-based system. But - and this is a really important but - all the countries that have working marketplace-based systems have some form of control over pricing. It's not kind of the Wild West open market. They'll say this is the ceiling you can charge for that procedure. They'll say this is a bandwidth in which you can charge. And you can compete all you want below that ceiling or within that band.
But you can't just drive up prices to whatever the market will bear because - I think one of the legitimate analogies is if water or electricity was a totally free market, imagine what prices would be like.
GROSS: I want to ask you about coding. And this is, like, the letters and the numbers that are used in the doctor's office to codify, for billing purposes, what procedure you've done, what diagnosis you've been given, what kind of examination you've had. And, you know, it's usually part of your bill that you're handed, like, when you walk out of the doctor's office. You get this, like, big, say, pink sheet with a grid (laughter) of all the things the doctors could possibly bill for with these codes on them. And it's, of course, indecipherable if you're a patient. But I think it's indecipherable for a lot of doctors, too. I mean, it's really complicated. Why does this kind of coding - and that's C-O-D-I-N-G - why does this kind of coding system exist?
ROSENTHAL: Well, again, it evolved from a good idea and got perverted into something that is really kind of toxic if you think of health care as a market, I think. You know, it originally - the coding systems originally evolved during the bubonic plague in order to classify diseases. And, you know, there were a lot of people dying in different countries, and you wanted to be able to track disease epidemiologically.
Now in the U.S. - and I believe only in the U.S. - these coding systems became the bedrock of medical billing. So you were billed according to what the ICD code was for your disease. And at some level, you know, you say - yeah, that makes sense. You know, rather than write out pulmonary hypertension with grade 3 blah, blah, blah, you just put 107.2 - that's not the actual code for that. But - so yeah, at some - first pass you can say, yeah, OK. That made sense.
What happened over time once that coding performed a bedrock financial function - like all the rules on Wall Street for markets, people learned to manipulate it, and other codes developed because, hey, those codes were kind of vague. You know, they just said what disease you have. But if I'm a doctor, I do a lot of different kinds of things for different diseases that I want to bill for. So then you need a coding system for what doctors do, which is called the CPT code. And those CPT codes, by the way, are owned by the American Medical Association. So there's a little bit of a conflict of interest there.
OK. So you have the CPT codes for doctors. Well, you know, what about when you're in the hospital? You need a different kind of code for all the stuff that's done there because, hey, in the U.S., we don't bill by you have this disease, so we're going to bill you X amount. We say - and particularly not now - everything is billed item by item in the hospital for most commercially insured patients. So it will be - and you've seen it if you've looked at these 60-page hospital bills - they'll be oxygen, you know, per 15 minutes, $100; recovery room time per 15 minutes, $500; Tylenol - you know, every little thing that's done to you is barcoded and charged and has a code.
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http://www.npr.org/templates/transcript/transcript.php?storyId=523005353EDITED: 28 Jun 2017 08:35 by RAZZMAN
