Daunting Economics

“I have great doctors but the economics are daunting,” is the key quote at the end of last Sunday’s New York Time article on the cost of colonoscopies.  The article is the first of a series that will run throughout the coming months that will look at why the US spends $2.7 trillion on healthcare, which is 18% of its gross domestic product.  Even though the massive increases in healthcare spending seem to have been slowing down over the last three years, it is still way too high.  Keep in mind we spend double what most other developed countries spend and have outcomes that are only in the middle of the pack.

A close look at the costs of colonoscopies will start to unravel some of the issues we face in our country.  First, the article points out that in our country the procedure seems to cost somewhere between $5,000 and $10,000 whereas in most developed countries it costs only a few hundred dollars and well under $1,000.  Keep in mind that this procedure takes less than an hour and is done on more than 10 million people a year.  In other words, it is pretty routine.

Read through the article and see how this situation has grown.  First there has been, and rightfully so, a huge consumer push around the value of this procedure to prevent colon cancer so that everyone realizes it must be done once you reach a certain age.   Then the profiteers seem to really take over.  The procedure once done in a doctors office now moves into an outpatient surgery center.  New drugs are added that must be administered by anesthesiologists.  Insurance companies pay the entire bill and for the patient the procedure is free.  Massive lobbying and pressure on insurance companies takes place to make sure costs stay high.  The situation is complex but the outcomes are predictable.  Yes, we end up with a quality test that is potentially life-saving but it costs us ten times more than anywhere else in the world.  I don’t think anyone feels a colonoscopy in the US is better than one done in Canada, France or the UK.  It just costs so much more.

A couple weeks ago I talked about the media going after the cost of healthcare and not letting go.  This is one of those early warning signs we all look for when doing strategic planning.  The NYT author promises to look at area after area to show why the costs in healthcare are out of control in our country.  Everywhere you look there are articles on this issue.  All of this seems to be making an impact.  Physicians are fighting back against the cost of cancer drugs.  Generics are used to fill 85% of all drug prescriptions.  How many new drugs can you name launched in the last five years that are used on more than 1 million patients?  The contentious debates around the Affordable Care Act have made the issue of healthcare cost much more transparent.  It no longer seems as though this problem is inevitable.

These costs will be controlled as the public is no longer excited about the value they are getting for the expense. They are afraid of the deficits politicians keep warning us about and clearly see healthcare as the issue.  Some think a type of single payer coverage will happen that may start with an expansion of Medicare.  A more likely outcome is some opportunistic capitalist will see the huge opportunity of providing products and services at a lower, more realistic, cost and will reap tremendous profits at the expense of those who refuse to change.

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