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The Cost of Doing Business

By Eric Van De Graaff, MD December 12, 2011 Posted in: Heart Health

How much is it going to cost you to purchase the Xbox 360 your kids want for Christmas?  For those of you who don’t keep up on the latest in consumer gadgets, the Xbox is a high-end video game console that allows you to fling angry birds, impale zombies, and wage war, all in the comfort of your living room.  One of the hot games this season is Call of Duty: Modern Warfare 3, which, I’ve read, is “utterly engrossing and immensely satisfying” (for those of you who find silly stuff like a good novel or, say, world peace “immensely satisfying” just wait until you get a chance to dust off your assault rifle and grenade launcher to rid Manhattan of Russian ultranationalists).  To purchase the Xbox and the video game you’ll need to pony up exactly $399.96.

How do I know this?  Easy.  I simply go to the Walmart web site and locate the Xbox 360 Limited Edition Modern Warfare 3 Console Bundle.  I learn that it is both in stock in my local Omaha store and available for purchase over the internet with guaranteed delivery by Christmas.  Once I add in local sales tax and/or shipping fees I can come up with an exact dollar value for my purchase.  (Obviously, I could have lined up at midnight on Black Friday to storm the local store, but since I couldn’t find my pepper spray or Kevlar vest, the Fed Ex approach will have to do.)

Most of you will never end up purchasing an Xbox console and will thus miss out on all the action and gore that is, I’m sure, utterly engrossing and immensely satisfying.  Being a video game Luddite myself, I haven’t laid hands on a game controller since 1980, when, for about 18 minutes, I held the high score on Space Invaders at the local roller skating rink.

Most of us, however, will be purchasing a commodity of considerably higher value within the next year: medical technology.  Whether you want to or not, many of you will have some sort of testing done—blood assays, X-rays, CT scans, mammograms, colonoscopies, Pap smears—and will be paying for at least part of the expense.  For those of you fortunate enough to have health insurance the full burden of expense never makes its way to your checking account.

Still, even with help from your health insurance, modern medical tests ain’t cheap.  Given the fact that you’ll be expected to pay a percentage of the bill, don’t you think it would be useful to be able to determine ahead of time exactly how much that next scan of yours will cost?

Now, before we go any further, I want to clarify that this blog is not about the confusing state of medical costs.  Or how the unrelenting rise in health care costs will bankrupt the country long before you can apply for AARP status.  Or how there seems to exist a stratospheric difference in testing fees depending on a patient’s insurance status.  Or the relative merits of the AK-47 versus the HK MP5 in fending off the zombie apocalypse.

No, this blog is about ignorance—specifically, my ignorance: I have no idea how much the testing that I’m personally responsible for actually costs.  Not only do I order these complex, tech-heavy studies, but I also administer and interpret them.  Nuclear stress tests, echocardiograms, EKGs, cardiac catheterization—all top-dollar procedures.  And yet, I don’t have a clue what any of these costs.

Sure, I know that a Lexiscan Cardiolite (a stress testing using a nuclear isotope to determine cardiac blood flow) is more expensive than an echocardiogram (a cardiac ultrasound), but by how much?  A hundred dollars?  A thousand dollars?  Heck, I don’t even know how much I earn with each of these studies.  I don’t have the slightest clue how much money I make when I surgically implant a pacemaker or perform a transesophageal echocardiogram.

Why am I so in the dark?  Some may argue that it’s simply because I’m not very bright.  On the surface this seems like a pretty solid argument and if I were smarter I’d be able to counter it with something insightful and clever.  Another possibility is that such information is very hard to come by.  Take the routine echocardiogram as an example.  If I were a patient scheduled for an echocardiogram and wanted to find out how much it would cost me, all I’d have to do is access a helpful program called My Cost.  I enter all the applicable information (insurance policy number, deductible, etc.), the name of the medical test, and—voila—the program tells me that the echocardiogram will cost me exactly . . . exactly . . . well . . . an ill-defined sum of money within the range of $1,901 to $3,600.

But, since I’m the doctor who is actually tasked with interpreting the study, it’s reasonable to believe that I have some inside knowledge about the cost of said procedure.  Well, I don’t.  With a little digging, however, I found that my office manager and our billing specialist have assorted spreadsheets that provide detailed information on this complex subject.  For each procedure I can determine the amount that gets billed by the hospital (the use of the equipment and staffing) and by my office (professional fee—the amount it costs for me to interpret the study).

End of story?  Not quite.  The amount we bill is a bit like Monopoly money—it looks good but isn’t worth much.  The real number to pay attention to is how much Medicare and insurance companies are willing to pay, and it’s those values that are relatively hard to pin down.  This is why services like MyCost can’t provide exact numbers like Walmart can.  As a doctor, it would be nearly impossible to know how much my practice earns for every service I provide.

Nearly impossible but not completely.  I knew a cardiologist a while back who had committed to memory how much money he could make with every single thing he did.  This vast body of knowledge allowed him to tailor his practice to maximize the amount he was able to earn from every patient.  Each person who came to him with even a whiff of cardiac symptoms underwent a battery of testing that would be the envy of NASA, and, when complete, would be repeated on a yearly basis just to make sure things haven’t changed.

While I don’t think his encyclopedic knowledge of medical reimbursement led my erstwhile colleague to become the Bernie Madoff of cardiology, I do think that there is a danger in being too close to the reimbursement process—when faced with two testing strategies of equal quality, a doctor with intimate knowledge of the dollar figure of each approach can’t help but be influenced to at least a small degree.

Yes, I am claiming that my ignorance of procedural billing is a virtue rather than a deficit.  I maintain that patients get the best care when doctors weigh treatment strategies on merits that don’t include how much their practice stands to gain financially.  The real key to cost containment is to focus on quality care and simply avoid any unnecessary testing.

So, as you contemplate your next test or surgery, and as you pull out your hair trying to estimate exactly how much it’ll cost you to purchase this service, just remember that your doctor is probably as much in the dark as you are—and that may not be such a bad thing.

And if your anxiety builds to the point where you’re afraid you’re going to blow your top, try taking out your aggression on zombies or invading Russians.  I hear it’s immensely satisfying.

Eric Van De Graaff, MD
Eric Van De Graaff, MD

Eric Van De Graaff, MD is a Heart & Vascular Specialist at CHI Health Clinic.

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