
What are a hospital's costs? - zabramow
http://nytimes.com/2015/09/08/health/what-are-a-hospitals-costs-utah-system-is-trying-to-learn.html
======
patio11
_The group began with head and neck cancer, treatment of which turned out to
involve 160 processes requiring measurement. To assess outcomes, it asked
patients which they thought were most important. Head and neck cancer patients
wanted to be able to talk and to swallow. (Survival, which many doctors had
thought was a top priority, was not something patients raised; many assumed
they would survive.)_

That parenthetical note is perhaps the clearest illustration I've ever seen in
my life on the communication and expectation gap between experts and non-
experts.

~~~
existencebox
I was looking in the article for a followup to that statement, but there was
none. The reason I raise an eyebrow is simply that even in the absence of a
communication gap, talking+swallowing as top concerns seems like a reasonable
response.

What matters more to you, being alive, or having a tolerable quality of life?
Are we sure that there's a misunderstanding that death is a likely outcome (I
could believe it; but I would also be slightly surprised, since "cancer==death
sooner or later" exists even as a trope in mainstream media) as opposed to
just a prioritization over things that matter so long as you're alive?

Anyway, this was quite a tangent from the original article content, just
something I was mulling over given your comment.

~~~
masklinn
> Are we sure that there's a misunderstanding that death is a likely outcome

There isn't a misunderstanding that death is a likely outcome, there commonly
is a misunderstanding of survival time. Gawande's book covers the subject of
differing expectation between doctors and patients when discussing harsh
treatment, patients think it'll give them months or years, doctors think
weeks.

If that isn't explicitly put on the table — and it usually isn't — you can get
drawn-out "medical fights" where the patient's quality of life is more or less
negative.

See also: [http://www.pbs.org/wgbh/pages/frontline/health-science-
techn...](http://www.pbs.org/wgbh/pages/frontline/health-science-
technology/being-mortal/dr-atul-gawande-hope-is-not-a-plan-when-doctors-
patients-talk-death/)

------
refurb
I work in the healthcare industry and have a good friend who works at a major
hospital. You know what I've learned?

 _Hospitals have no clue what it costs them to serve an individual patient._

The lowest level where they understand costs is at the service level (e.g. ER,
cardiac lab, stroke center). It's one of the reasons why you see all the wonky
prices from hospitals: they just "create" prices for individual procedures
until it covers their aggregate costs. It doesn't really matter to the
hospital if procedure A is $1K and procedure B is $5K. As long as A _rate + B_
rate > costs, they are fine with it.

~~~
rayiner
The idea of pricing out hospital procedures as if they're widgets or oil
changes is ridiculous to begin with.

~~~
msandford
Depends on the procedure doesn't it? You might not price open-heart surgery
that way since you want a great doctor, price be damned.

But what if it's not so serious, and not an emergency? People have rotator
cuff issues that they take years to get fixed regularly. Or a hip replacement?
That's rarely an emergency but rather a solution to long term pain that's not
painkillers.

I think the other thing a lot of people would like to see is some kind of
doctor and hospital report card so that you could compare on price AND
quality. Which would be great as it'd force the terrible surgeons who
regularly do such a bad job (accidentally or on purpose) that their patients
have complications, die, etc out of that line of work.

Obviously there would have to be some kind of risk classification system so
that doctors and hospitals that take on high risk patients wouldn't be
punished for doing so, but I think that some kind of "hot or not" style risk
assessment system could be developed whereby doctors spend 15 minutes a day
reviewing risks anonymously for other doctors and each case gets rated 5 times
and that determines the risk score to hopefully remove all bias.

~~~
rayiner
I think everyone misunderstood my point, which is that apportioning those
costs on a procedure level is a fiction. Almost all of your costs are fixed:
salaries, facilities, equipment. And the amount of procedures you can do with
those fixed resources varies dramatically.

It's definitely worth quantifying the cost of providing medical care, but
doing it in a more fine grained way than at the department level.

~~~
SilasX
If I may give some feedback: I don't know how anyone could have read your post
as being about the appropriate level of economization of medical care due to
the relative importance of fixed vs variable costs. Your comment says nothing
about that, and just comes off like the usual screed about "how dare you apply
accounting to health care, this is too important for that!"

I think you could have been more explicit about (what you now say was) your
core point.

------
merrywhether
After working in healthcare myself for a while, I've always wanted to see it
be a service that was paid for by the customer directly (at least
hypothetically). This concept of not knowing costs would be completely
unacceptable in any other industry, but it seems that people are reluctant to
price things partly out of a fear of being able to do cost-benefit analysis on
care and thus on human life. Direct billing would force hospitals and other
care givers to be able to give cost estimates up front, and then market forces
would help bring costs down as providers would compete and patients could shop
around. I'm aware that this might not be optimal in all situations (eg
emergency care), but runaway costs and opaque cost-benefit relationships are
not helping things.

I remember hearing that 20% of total healthcare costs are spent in the last 2
weeks of people's lives, and perhaps having more transparent costs would help
avoid these costly, frequently unpleasant, and ineffective interventions.

Of course, transitioning to this would be impossible overnight, but it's an
interesting thought experiment. There would still be the option for
catastrophic insurance, but otherwise it would be interesting to see market
forces play a role.

~~~
organsnyder
The problem with asking patients to shop based on price is that the penalty
for making the wrong choice is much more devastating than with just about any
other good or service. I did a ton of research when I bought my car, but even
then the price of making a sub-optimal decision was limited to a substandard
experience or waste of money. When choosing a surgeon, however, the cost of a
wrong decision will be perceived to be much higher—shoddy work there could be
life-altering/ending.

Of course, shoddy workmanship on my car could also have devastating results
(and safety was a big part of my decision process, especially since my father
might not have died in his car accident if he had side curtain airbags), but
it's not considered with the same level of urgency.

Also, I'm extremely wary of pricing schemes that disincentivize preventative
care and early interventions. Many illnesses are much more treatable—at much
lower cost—if they're caught early. While we also need to be careful to avoid
unnecessary expense, we don't want to discourage people from seeking care at
the early signs of trouble.

That being said, I do agree that transparency in healthcare costs is very much
needed. However, we need to be careful in considering how market forces impact
personal healthcare decisions.

~~~
bmelton
There's a balance to be struck, for sure, but cost transparency as an
alternative to complete and total cost opacity is a move in the right
direction.

My daughter fell at lacrosse practice and hurt her wrist. We had an x-ray,
which proved inconclusive with the swelling, another x-ray after the swelling
subsided, which also resulted in an inconclusive result, followed by an MRI
which indicated a bad sprain, for which we ended up getting a very cast-like
splint.

This is basically the same as what we thought from the initial x-ray, as even
then the doctor was advocating for a splint in the absence of an obvious
break.

If costs were more apparent, we probably would have had an x-ray once, and
then gone with the splint, but price opacity and insurance obfuscated the
costs enough that we naively opted for the more diagnostic approach, which
proved to cost a lot more than just having gone with the splint initially. As
a developer, I'm inclined towards the "know what you're fixing before building
patches" approach, so the diagnostic approach was logical to me, but had I
known that the end result was basically the same either way, I could have
saved myself the cost of an x-ray and MRI and just skipped to debugging.

~~~
VLM
If you turned the tables on your "free market" anecdote, what is the market
value of that ER doctor or radiologist as a software developer? I'm not even
sure how to account for emotions, I'm pretty dispassionate about unit testing
frameworks, but if my daughter might be crippled for life I'm fairly certain I
wouldn't be a rational market participant. Its highly likely that your trying
to practice medicine without a license holds the same market value as a doc
trying to be a software dev, that being somewhere between 0 and a modest
negative number.

You could extend the analogy by taking printouts of the pricing plans for
github(tm) and visual source safe(tm) and waving them in front of the er doc
to ensure the er doc makes the wisest possible free market decision when
selecting a source code repository. This is only a fair analogy if the ER doc
knows absolutely nothing about software development other than if he gets the
decision wrong his life will be ruined.

As a somewhat more neutral analogy, waving prices for github vs VSS in front
of my mother quite frankly holds negative value for all participants, its a
Potemkin show that merely wastes labor hours. Pretending to provide a market
where none can possibly exist is wasting labor time putting on a show. My mom
has some skill in real estate law so she should be making decisions in her
area of expertise, and software professionals should be making decisions in
their areas of expertise. My mom does not walk up to random people on the
street and insist they make life changing decisions in minutes about the right
legal strategy to provide clear title to real estate or WTF exactly she did
before she retired, "well in that county a title search costs $X but title
insurance and hoping for the best costs $Y unless we take it to court then it
costs $Z..." etc.

See you can "make a market" in a campy going-thru-the-motions sense by having
a semi-monopoly provider declaring an arbitrary list of prices on a chalkboard
then calling that a free market. But making a functioning efficient market is
a whole nother kettle of fish that requires a calm rational meeting of equal
minds at a similar level of training and education to dispassionately trade
interchangeable identical commodities, with the goal of all participants
minimizing the spread between price and value. That's pretty much the opposite
of good medical care.

~~~
bmelton
I'm not really sure what your point is, so perhaps I missed something?

Conflating a want for price transparency, so that I can spend rationally
_where that rationality can be logically exerted_ doesn't really seem to me a
free market ideal as much as it is just common sense. There are _many_ medical
decisions made that aren't life or death, and in my admittedly anecdotal
experience, that's been most of them. A great many medical demands are
inelastic.

When I lopped the (very) tip of my pinky finger off in an accident, it was
nowhere near a dire enough injury to worry about the cost of repairs, but it
did need stitches. Had there been a repair option, I might have opted for it,
but only if the cost was reasonable.

That said, we already know the market value of an ER doctor, or a radiologist;
that's how we know what to pay them. It's not as though they're members of
some secret cult of faceless men exacting arbitrary payments for their
efforts. We know what it takes to pay them, and presumably, they could come up
with an hourly cost for their labor plus materials if they so chose. It might
take some practice, as estimation is hard, but basically every other service
industry in the world is able to do it, so I can't imagine why the medical
industry would be exempt.

Regardless, sure, there are plenty of ailments that would hard to estimate, or
meaningless to do so, but I don't see why that means nobody should try to do
their jobs in a cost effective manner.

------
rgoddard
One of the difficulties of improving the overall healthcare system is there
are very few ways of making systematic improvements. This article talks about
a single hospital. They demonstrated a method which works, but this only
improves one hospital. For a real change to occur this would need to be
repeated at a large number of hospitals on a hospital by hospital basis. The
US healthcare system is incredibly fractured with large regional variances.
The question is how to improve the system as a whole not on a piece by piece
basis.

~~~
raarts
The journey of a thousand miles begins with one step.

\-- Lao Tzu

