Single payer health care questions

[Toni]

In a sensible universal healthcare model individual costs aren't that important. They matter at a higher level of budgeting for what is and isn't cost-effective, and hence what's readily available, but day in and day out costs aren't a big consideration.

I don't disagree however it is not all that simple. What is cost effective for one patient might not serve another patient well, even if it is perfect for many or most patients. There are patients who respond differently to treatment and may require the less 'cost effective' treatment in order to resolve their need. Providers and patients need sufficient freedom to make these decisions.

 

[seanie]

Doctors do have the freedom to try different treatments, tailored to individual patients, within the NHS. For any given condition there might be a range of treatment options, with various pros and cons or side effects, and doctors will recommend a treatment based on likely clinical effectiveness. They don't need to know either the cost or the cost effectiveness as that's evaluated at a higher level.

 

[Toni]

Doctors do have the freedom to try different treatments, tailored to individual patients, within the NHS. For any given condition there might be a range of treatment options, with various pros and cons or side effects, and doctors will recommend a treatment based on likely clinical effectiveness. They don't need to know either the cost or the cost effectiveness as that's evaluated at a higher level.

Which is as it should be

 

[Alcoholic Actuary]

Do you know the costs of procedures under UHC or single payer systems? Because I think that would be a tremendous advantage. It seems like the costs in the US go something like this:

You "How much for an MRI?"
Doctor "Why don't you tell me how much you/your insurer can afford and then we'll send the bill"

https://www.forbes.com/sites/kateashford/2014/10/31/how-much-mri-cost/#304b4bf48485

It seems like an MRI shouldn't cost between $800 and $2400 within the same zip code. I'm a property and casualty actuary, not a health actuary. But the fact that it is easier for me to predict the range of outcomes of a liability settlement from a slip and fall accident in a restaurant than it is to predict the range of costs for a knee replacement surgery from the exact same accident is ridiculous.

And before I hear the "medicare doesn't cover the costs" refrain, that is an easier fix than the current attempts at getting the medical community on board with standardizing prices.

aa

In all probability the physician doesn't actually know the cost of an MRI, period and definitely not how much your insurance company will pay (if anything) and what, if anything you will be responsible for paying. That is why you are often sent to a business office to ensure that everyone knows costs and coverage.

Here's the other thing: cost should be immaterial to your physician. Your physician should be free to proscribe whatever diagnostic tests and treatment will best treat your ailment and/or best serve your health.

And even more importantly your doctor should not consider or be put into a position of considering whether you are wealthy or poor: it should not affect how you are treated.

Reality is that doctors gave some knowledge of about how much out of pocket certain patients will be, out of necessity and concern for the patient. A doctor does not want to proscribe a treatment or test that s/he knows the patient cannot afford or cannot afford without difficulty. Most doctors I know do look for the most cost effective treatment plan that will work. Not necessarily the one which will work best.

That's not really what I'm talking about. I get that my physician might outscource a bunch of tests for which she has no idea the cost. The issue is that if I use the MRI at the hospital, or an imaging service associated with a hospital, we're in the $2400 ball park. If I shop around I can probably find an imaging center not affiliated with a hospital right across the street, and now I'm in the $900 range.

My question is a) why? and b) is this also something that happens with a public health system?

My concerns with Medicare/Medicaid not funding cost of treatment is that they don't and their payment schedule is subject to a political process that determines how much money they have to pay costs for all patients. A bunch of cheap bigoted or ignorant politicians can reck havoc.

Am I interpreting this correctly? "We don't/can't/shouldn't need to know the cost of a procedure, but Medicare payments are too low." How would the doctors arrive at that conclusion?

And finally, your argument sounds more appropriate for doctors working in the public sector. Where you agree with Bilby and Seanie, I would note that the doctors in their system are public servants. Similarly police officers don't need to worry about the costs associated with keeping the peace. I fully agree that in a nationalized health service, doctors don't need to worry about the costs associated with the public health.

But in our system, many doctors and physicians work in private practice. Assuming they have an additional goal generating money to pay themselves and their staff and keep the lights on, it seems both unprofessional and irresponsible to not know the costs of providing their service. In this case it is literally their business to know.

aa

 

[Tom Sawyer]

Isn't it the case in the US that hospitals routinely overchange on their services because they have the paying customer fund all the usage of their equipment by the uninsured who need the services but can't pay for it? A private service wouldn't have that issue because it's pay-per-use, so they're not lumping in the cost for others when billing an individual patient.

 

[Toni]

Isn't it the case in the US that hospitals routinely overchange on their services because they have the paying customer fund all the usage of their equipment by the uninsured who need the services but can't pay for it? A private service wouldn't have that issue because it's pay-per-use, so they're not lumping in the cost for others when billing an individual patient.

At one point, I worked to determine the cost of actually performing certain tests on a per patient basis. Many factors go into the costs from a laboratory's perspective, including the costs of repeat testing where needed ( initial test results are inconclusive or fall within a range where the test is repeated in duplicate for a total of testing the same sample for the same test 3 times, for example). The patient is charged once, not 3 times because after all they only get one result. Those costs as well as the costs of all testing including when equipment or reagents fail and tests need to be repeated are all averaged together along with performing tech's time/labor and other costs.

Of course providers include costs for patients who cannot or will not pay for treatment when they set prices. Just as any retail establishment will do, just as restaurants account for spoilage, etc in their pricing.

Where it gets very difficult is that providers have individual contracts with insurance companies over how much and under what circumstances a charge will be paid.

 

[Toni]

In all probability the physician doesn't actually know the cost of an MRI, period and definitely not how much your insurance company will pay (if anything) and what, if anything you will be responsible for paying. That is why you are often sent to a business office to ensure that everyone knows costs and coverage.

Here's the other thing: cost should be immaterial to your physician. Your physician should be free to proscribe whatever diagnostic tests and treatment will best treat your ailment and/or best serve your health.

And even more importantly your doctor should not consider or be put into a position of considering whether you are wealthy or poor: it should not affect how you are treated.

Reality is that doctors gave some knowledge of about how much out of pocket certain patients will be, out of necessity and concern for the patient. A doctor does not want to proscribe a treatment or test that s/he knows the patient cannot afford or cannot afford without difficulty. Most doctors I know do look for the most cost effective treatment plan that will work. Not necessarily the one which will work best.

That's not really what I'm talking about. I get that my physician might outscource a bunch of tests for which she has no idea the cost. The issue is that if I use the MRI at the hospital, or an imaging service associated with a hospital, we're in the $2400 ball park. If I shop around I can probably find an imaging center not affiliated with a hospital right across the street, and now I'm in the $900 range.

My question is a) why? and b) is this also something that happens with a public health system?

My concerns with Medicare/Medicaid not funding cost of treatment is that they don't and their payment schedule is subject to a political process that determines how much money they have to pay costs for all patients. A bunch of cheap bigoted or ignorant politicians can reck havoc.

Am I interpreting this correctly? "We don't/can't/shouldn't need to know the cost of a procedure, but Medicare payments are too low." How would the doctors arrive at that conclusion?

And finally, your argument sounds more appropriate for doctors working in the public sector. Where you agree with Bilby and Seanie, I would note that the doctors in their system are public servants. Similarly police officers don't need to worry about the costs associated with keeping the peace. I fully agree that in a nationalized health service, doctors don't need to worry about the costs associated with the public health.

But in our system, many doctors and physicians work in private practice. Assuming they have an additional goal generating money to pay themselves and their staff and keep the lights on, it seems both unprofessional and irresponsible to not know the costs of providing their service. In this case it is literally their business to know.

aa

Part of the variability of the cost of an MRI includes the expertise of the person performing the MRI, the quality of the equipment and the qualifications and expertise of the person interpreting the MRI.

Not MRI, but some years ago, a medical provider found something suspicious while performing a routine exam on my my husband. Provider told him he needed to see a specialist who would perform a biopsy. My husband rather stubbornly refused to even consider going out of town even though within an hour's drive is a provider of quite some renown where our insurance would pick up the costs as well (or perhaps better) than the local doc. Nope. That was 'too much trouble.' The local doc took a sample in his office and insisted that it be sent to a university lab, and insisted the other provider (again: extremely renowned) lacked the expertise. Made us wait 10 days for results of biopsy to coincide when the wound would be ready to be looked at for proper healing, etc. Turns out that the provider had the biopsy for over a week and did not call us. He did not get clean margins, and was not happy when I said I wanted to read the biopsy report (which I have a very small --very small--amount of expertise in reading such reports). It was apparent that I knew and understood as much or more about what the biopsy report indicated than this particular doctor (who was working outside his area of expertise) and it was then that I noticed just how long he had had the biopsy report. And told my husband who was upset enough that he finally agreed to be seen at the big fancy place which confirmed no clean margins and re-sampled using very expensive equipment, a surgeon who specialized in just this sort of thing and: THREE pathologists who were waiting to receive slides while the procedure was being done, ensuring that all suspicious cells were removed but no more healthy tissue than absolutely necessary. Luckily, they were able to confirm that the cells were pre-cancerous, rather than cancer. More in depth examination was performed on frozen slides which confirmed what was seen during surgery. And luckily my husband came to value the expertise of a well equipped medical provider who is backed up by the best in training, equipment and on site pathologists. Was it more expensive than the local doctor? I think it was (truly, it's been long enough I don't actually remember dollar amounts). But the local doctor planned to just re-sample, send off sample to university, make us wait 10 days for results, rinse/repeat as long as it took to get clean margins. Waiting at least 6 weeks between each procedure to allow the site to heal. And of course, to allow the pre=cancerous cells to transform to actual cancer cells.

Not every person, not every facility has equal expertise in whatever they are doing. That big fancy place is sometimes dinged for being expensive. But surely it would have ultimately been much more expensive and much less effective to follow the plan of the local provider who lacked the expertise of Big Fancy Place. It is highly likely that my husband's suspicious cells would have had time to transform into malignant cells and not just pre-cancerous cells, requiring much more extensive treatment which may or may not have been effective. My husband could easily be dead now, or seriously ill, his career cut short.

Sometimes you get what you pay for.

 

[bilby]

Cost is a bit of a mystery, even to well managed businesses which undertake simple activities.

A laboratory test has some cost elements that can easily be assigned - for example, the test might use 5ml of a reagent that costs $1/litre, so that reagent adds 0.5c to the cost of the test.

But then there are costs that are harder to assign - the test takes a technician 30 minutes to perform, so the labour cost is 0.5 hours; but 0.5 hours of labour isn't something with a known dollar value - perhaps a junior technician does the test one day, and he is paid $40/hr; the wages component of the test is then $20/hr. But tomorrow, the senior technician does the test, and he gets $50/hr; and the next day, the senior technician shows the new hire how to do the test, so there is $50/hr for the senior tech, plus another $30/hr for the trainee to assign.

Perhaps you can make some attempt to average the cost per annum for all wages. But what about gas and electricity? You pay a quarterly or monthly utility bill, so you know what these things cost over your entire operation per month; But a given test might be done at room temperature, while another requires refrigeration, and a third requires heating - obviously the cost of electricity for test two, and of gas for test three, is more than it is for test one - but how much more? How many secretarial staff hours are spent on each test - does it vary depending on what test is done, or is it roughly the same for each test?

At the end of the day, cost is at best an educated guess - and in many cases, not a very educated one. Price needs to be set at cost plus profit; so the guess has an arbitrary factor added, and that's the price charged by the lab, which is the cost to the doctor (or hospital, or insurer) of doing the test. Or in the case of a big customer - a Health Service or major hospital - the buyer tells the suppliers what price they are prepared to pay, and the supplier decides whether or not to do the work, based on their guesstimate of costs. If a laboratory manager guesses that the test costs $150 a pop, and the NHS offers $200, then he will try to win as much business as he can, and if his guess is that it costs his lab $210 to do the test, he will try to avoid getting that business.

And of course, the cost of doing 1,000 identical tests may be dramatically lower than 1,000 times the cost of doing one test - so some laboratories will set prices that are wildly different to others, based on the number of tests they expect to do, and on the degree to which they can leverage economies of scale when running multiple instances of a given test.

At the end of the day, in medicine like in almost all businesses, costs are something of a mystery even to the people whose job it is to try to understand costs. and prices are set at cost plus an arbitrary and mysterious margin, which (more in hope than expectation) is assumed to represent profit. And a supplier's prices are an element of their customer's costs - so the longer the supply chain, the more mysterious the 'actual cost' of everything becomes.

In this environment, it's hardly surprising that even simple retail purchases of commodity items can be difficult to accurately price; typically prices are set with only lip-service to cost estimates, and are instead mainly based on what the market will bear - managers set a price that gets them a sales volume that their bosses are not horrified by. When demand is totally uncoupled from price - as is the case with health care (nobody says "Oh, I can't afford to pay the hospital bills, so I shall wait until I have saved another $10,000 before I fall off this ladder") - the prices are, unsurprisingly, wildly capricious and vary not only between providers, but even with the same provider, when dealing with different customers, for the same goods or services.

Money is a convenient way to ration scarce resources in may situations - but not in all, and health care is one of those areas where price signals are of little use. Best just to minimize the number of payers to keep the system vaguely stable, and to give the single payer enough power to set prices almost by fiat, while making them responsible to the population at large for keeping things running efficiently - in other words, get the government to do it, because the government doesn't need to worry too much about costs.

Of course, since the 1980s, there is this bizarre dogma that governments DO need to worry about costs, which kinda fucks things up - that's why the NHS is so run down, and why the May government are so keen to privatize it.

After all, when costs are a big mystery, and demand is unrelated to prices, the opportunity for unaccountable businessmen to make a killing is huge. That's why it is vital that control should be wielded by a democratically responsible government, whereby the people can vote the bastards out if they try to line their pockets. People are greedy bastards, and any system other than one that has a democratically accountable single payer in charge is open to massive abuse.

 

[Loren Pechtel]

Isn't it the case in the US that hospitals routinely overchange on their services because they have the paying customer fund all the usage of their equipment by the uninsured who need the services but can't pay for it? A private service wouldn't have that issue because it's pay-per-use, so they're not lumping in the cost for others when billing an individual patient.

This certainly is part of it at least.

 

[Toni]

Isn't it the case in the US that hospitals routinely overchange on their services because they have the paying customer fund all the usage of their equipment by the uninsured who need the services but can't pay for it? A private service wouldn't have that issue because it's pay-per-use, so they're not lumping in the cost for others when billing an individual patient.

This certainly is part of it at least.

Tom's actually wrong here.

1. Hospitals and all medical providers charge a)according to whatever they've agreed to in a contract with whichever payer (insurance, private or Medicare/Medicaid)

2. Those costs are determined not only by contract but also by averaging costs over all patients for a particular procedure, including patients who will not pay for whatever reason, plus the costs of collecting (or failing to collect payment).

3. This is the same in every business, except the insurance part. But really, it is the same. Even say, a medical lab which performs 10,000 tests/week will be charged a different amount for equipment, disposables, reagents than a medical lab that performs 50,000 tests/week. Or 500/week. Same thing for Walmart, Sam's Club, Target, your grocery store, your hardware store, etc.

 

[Tom Sawyer]

Wait, how am I wrong if your point #2 is repeating the exact thing that I said?

 

[Horatio Parker]

Wait, how am I wrong if your point #2 is repeating the exact thing that I said?

I don't think it is, but you're not wrong. I've been billed for procedures for which the hospital has already been paid for by the insurance co., and I've seen a few news stories about billing abuses.

 

[Toni]

Wait, how am I wrong if your point #2 is repeating the exact thing that I said?

I don't think it is, but you're not wrong. I've been billed for procedures for which the hospital has already been paid for by the insurance co., and I've seen a few news stories about billing abuses.

And I've been reimbursed by a provider for my over-payment when a secondary insurance kicked in more. Billing is different than cost of service which is different than coverage by insurance, deductibles, maximum out of pocket per person and per family.

Then there are billing cycles, reimbursements and credits and lags in crediting all of this plus honest mistakes. Was grossly over billed for one particular supply when my first kid was born. Husband caught error immmediately and it was fixed on the spot.

 

[Loren Pechtel]

This certainly is part of it at least.

Tom's actually wrong here.

1. Hospitals and all medical providers charge a)according to whatever they've agreed to in a contract with whichever payer (insurance, private or Medicare/Medicaid)

2. Those costs are determined not only by contract but also by averaging costs over all patients for a particular procedure, including patients who will not pay for whatever reason, plus the costs of collecting (or failing to collect payment).

3. This is the same in every business, except the insurance part. But really, it is the same. Even say, a medical lab which performs 10,000 tests/week will be charged a different amount for equipment, disposables, reagents than a medical lab that performs 50,000 tests/week. Or 500/week. Same thing for Walmart, Sam's Club, Target, your grocery store, your hardware store, etc.

You're talking about the negotiated rate, not the rate they would quote if asked what the charge was.

 

[Toni]

Tom's actually wrong here.

1. Hospitals and all medical providers charge a)according to whatever they've agreed to in a contract with whichever payer (insurance, private or Medicare/Medicaid)

2. Those costs are determined not only by contract but also by averaging costs over all patients for a particular procedure, including patients who will not pay for whatever reason, plus the costs of collecting (or failing to collect payment).

3. This is the same in every business, except the insurance part. But really, it is the same. Even say, a medical lab which performs 10,000 tests/week will be charged a different amount for equipment, disposables, reagents than a medical lab that performs 50,000 tests/week. Or 500/week. Same thing for Walmart, Sam's Club, Target, your grocery store, your hardware store, etc.

You're talking about the negotiated rate, not the rate they would quote if asked what the charge was.

Not really.

 

[Alcoholic Actuary]

[YOUTUBE]https://www.youtube.com/watch?v=CeDOQpfaUc8[/YOUTUBE]

"No it isn't. American healthcare is not the best in the world. But despite that, we spend more per person annually on healthcare than any other developed nation. And a big part of the reason for that is that American hospitals overcharge patients massively."

Mostly this is what I'm talking about. Many more excellent points made (please watch the entire thing).

aa

 

[ZiprHead]

Cost is a bit of a mystery, even to well managed businesses which undertake simple activities.

A laboratory test has some cost elements that can easily be assigned - for example, the test might use 5ml of a reagent that costs $1/litre, so that reagent adds 0.5c to the cost of the test.

But then there are costs that are harder to assign - the test takes a technician 30 minutes to perform, so the labour cost is 0.5 hours; but 0.5 hours of labour isn't something with a known dollar value - perhaps a junior technician does the test one day, and he is paid $40/hr; the wages component of the test is then $20/hr. But tomorrow, the senior technician does the test, and he gets $50/hr; and the next day, the senior technician shows the new hire how to do the test, so there is $50/hr for the senior tech, plus another $30/hr for the trainee to assign.

Perhaps you can make some attempt to average the cost per annum for all wages. But what about gas and electricity? You pay a quarterly or monthly utility bill, so you know what these things cost over your entire operation per month; But a given test might be done at room temperature, while another requires refrigeration, and a third requires heating - obviously the cost of electricity for test two, and of gas for test three, is more than it is for test one - but how much more? How many secretarial staff hours are spent on each test - does it vary depending on what test is done, or is it roughly the same for each test?

Many mumble-mumble years ago, I worked at our local hospital lab as a lab assistant. The hospital itself has well over 500 beds, a Trauma 1 level emergency department, and the regional neonatal intensive care unit. The lab was the largest, most modern and best equipped hospital lab in the state. I worked the night shift and minimum staff was usually six or seven people, numerous more on the day and evening shift when outpatient services were utilized and the microbiology lab and pathology labs were staffed.

Since then, they've modernized further. The chemistry, hematology, urology, and coagulation departments were all unified into a robotic system. I got to visit again about two years ago in the afternoon. There were two Medical Technologists (plus another in the blood bank) and an assistant to prepare samples. Less than half the staff we had when I worked there.

The technology has gotten much more expensive but the labor has been reduced significantly.

 

[bilby]

Cost is a bit of a mystery, even to well managed businesses which undertake simple activities.

A laboratory test has some cost elements that can easily be assigned - for example, the test might use 5ml of a reagent that costs $1/litre, so that reagent adds 0.5c to the cost of the test.

But then there are costs that are harder to assign - the test takes a technician 30 minutes to perform, so the labour cost is 0.5 hours; but 0.5 hours of labour isn't something with a known dollar value - perhaps a junior technician does the test one day, and he is paid $40/hr; the wages component of the test is then $20/hr. But tomorrow, the senior technician does the test, and he gets $50/hr; and the next day, the senior technician shows the new hire how to do the test, so there is $50/hr for the senior tech, plus another $30/hr for the trainee to assign.

Perhaps you can make some attempt to average the cost per annum for all wages. But what about gas and electricity? You pay a quarterly or monthly utility bill, so you know what these things cost over your entire operation per month; But a given test might be done at room temperature, while another requires refrigeration, and a third requires heating - obviously the cost of electricity for test two, and of gas for test three, is more than it is for test one - but how much more? How many secretarial staff hours are spent on each test - does it vary depending on what test is done, or is it roughly the same for each test?

Many mumble-mumble years ago, I worked at our local hospital lab as a lab assistant. The hospital itself has well over 500 beds, a Trauma 1 level emergency department, and the regional neonatal intensive care unit. The lab was the largest, most modern and best equipped hospital lab in the state. I worked the night shift and minimum staff was usually six or seven people, numerous more on the day and evening shift when outpatient services were utilized and the microbiology lab and pathology labs were staffed.

Since then, they've modernized further. The chemistry, hematology, urology, and coagulation departments were all unified into a robotic system. I got to visit again about two years ago in the afternoon. There were two Medical Technologists (plus another in the blood bank) and an assistant to prepare samples. Less than half the staff we had when I worked there.

The technology has gotten much more expensive but the labor has been reduced significantly.

Sure - so we know the costs have changed; and we can guess that they are now lower. But it's still very hard (and, perhaps ironically, too expensive) to work out exactly what the costs actually are.

Like all businesses, they will be 'calculated' based on educated guesswork and simplifying assumptions, some of which are inevitably wrong; and, like in all businesses, once a number is decided upon, it will be treated as gospel when used as an input into decision making and other calculations, with no estimate of error or hint that it might not be a hard fact.

All commerce is like this - lots of accountants doing highly accurate sums that are based on highly inaccurate initial data, and pretending that their results are meaningful.

It's astonishing that economies work at all. It's certainly amusing when economists are surprised by unexpected events - such events are (predictably) the norm in complex systems where the data about the system is fundamentally corrupt from the outset.

And of course the entire thing is even less accurate when demand is uncoupled from price, as is the case with health care. If you sell widgets, you know that widget prices are too high, because people stop buying widgets. But if you sell malaria tests, people don't stop getting malaria because your test kits are too expensive.

So prices tend to inflate, and in the absence of a signal from the market in the form of reduced demand, or any good understanding of the costs on which a reasonable price could potentially be based, they can inflate rapidly - and the more payers there are, the faster this can occur.

 

[Toni]

Many mumble-mumble years ago, I worked at our local hospital lab as a lab assistant. The hospital itself has well over 500 beds, a Trauma 1 level emergency department, and the regional neonatal intensive care unit. The lab was the largest, most modern and best equipped hospital lab in the state. I worked the night shift and minimum staff was usually six or seven people, numerous more on the day and evening shift when outpatient services were utilized and the microbiology lab and pathology labs were staffed.

Since then, they've modernized further. The chemistry, hematology, urology, and coagulation departments were all unified into a robotic system. I got to visit again about two years ago in the afternoon. There were two Medical Technologists (plus another in the blood bank) and an assistant to prepare samples. Less than half the staff we had when I worked there.

The technology has gotten much more expensive but the labor has been reduced significantly.

Sure - so we know the costs have changed; and we can guess that they are now lower. But it's still very hard (and, perhaps ironically, too expensive) to work out exactly what the costs actually are.

Like all businesses, they will be 'calculated' based on educated guesswork and simplifying assumptions, some of which are inevitably wrong; and, like in all businesses, once a number is decided upon, it will be treated as gospel when used as an input into decision making and other calculations, with no estimate of error or hint that it might not be a hard fact.

All commerce is like this - lots of accountants doing highly accurate sums that are based on highly inaccurate initial data, and pretending that their results are meaningful.

It's astonishing that economies work at all. It's certainly amusing when economists are surprised by unexpected events - such events are (predictably) the norm in complex systems where the data about the system is fundamentally corrupt from the outset.

And of course the entire thing is even less accurate when demand is uncoupled from price, as is the case with health care. If you sell widgets, you know that widget prices are too high, because people stop buying widgets. But if you sell malaria tests, people don't stop getting malaria because your test kits are too expensive.

So prices tend to inflate, and in the absence of a signal from the market in the form of reduced demand, or any good understanding of the costs on which a reasonable price could potentially be based, they can inflate rapidly - and the more payers there are, the faster this can occur.

I've worked in clinical labs, including ones which have undergone the types of staff reduction and automation as described by ZiprHead.

Reducing staff does reduce cost, but every one of those analyzers is extremely expensive to purchase, must be maintained by trained staff, and uses very expensive reagents in order to carry out the tests. In a hospital that size, anything other than the tests outlined in ZiprHead are almost certainly sent out to another, larger lab where economies to scale can be found because guess what? Larger labs purchase reagents at cheaper prices and sign contracts to lease or purchase those analyzers for much less than a 500 bed hospital can. More esoteric, specialty tests are often sent to reference labs and labs which specialize in such tests, again, because of economies to scale. I'm not certain what robotic system ZiprHead means but of all the various analyzers I've seen and worked with, including very up to the minute technology currently in use, none are 'robotic,' or not what I would call robotic, anyway.

What I'm getting at is that the testing is not really less expensive because of reduced staffing. Staffing that remains is likely more highly trained and more expensive. The instruments, reagents, analyzers almost certainly are.

 

[bilby]

Sure - so we know the costs have changed; and we can guess that they are now lower. But it's still very hard (and, perhaps ironically, too expensive) to work out exactly what the costs actually are.

Like all businesses, they will be 'calculated' based on educated guesswork and simplifying assumptions, some of which are inevitably wrong; and, like in all businesses, once a number is decided upon, it will be treated as gospel when used as an input into decision making and other calculations, with no estimate of error or hint that it might not be a hard fact.

All commerce is like this - lots of accountants doing highly accurate sums that are based on highly inaccurate initial data, and pretending that their results are meaningful.

It's astonishing that economies work at all. It's certainly amusing when economists are surprised by unexpected events - such events are (predictably) the norm in complex systems where the data about the system is fundamentally corrupt from the outset.

And of course the entire thing is even less accurate when demand is uncoupled from price, as is the case with health care. If you sell widgets, you know that widget prices are too high, because people stop buying widgets. But if you sell malaria tests, people don't stop getting malaria because your test kits are too expensive.

So prices tend to inflate, and in the absence of a signal from the market in the form of reduced demand, or any good understanding of the costs on which a reasonable price could potentially be based, they can inflate rapidly - and the more payers there are, the faster this can occur.

I've worked in clinical labs, including ones which have undergone the types of staff reduction and automation as described by ZiprHead.

Reducing staff does reduce cost, but every one of those analyzers is extremely expensive to purchase, must be maintained by trained staff, and uses very expensive reagents in order to carry out the tests. In a hospital that size, anything other than the tests outlined in ZiprHead are almost certainly sent out to another, larger lab where economies to scale can be found because guess what? Larger labs purchase reagents at cheaper prices and sign contracts to lease or purchase those analyzers for much less than a 500 bed hospital can. More esoteric, specialty tests are often sent to reference labs and labs which specialize in such tests, again, because of economies to scale. I'm not certain what robotic system ZiprHead means but of all the various analyzers I've seen and worked with, including very up to the minute technology currently in use, none are 'robotic,' or not what I would call robotic, anyway.

What I'm getting at is that the testing is not really less expensive because of reduced staffing. Staffing that remains is likely more highly trained and more expensive. The instruments, reagents, analyzers almost certainly are.

My point is that nobody really knows what the costs actually are.

Not the technicians, not the lab management, and certainly not the doctors who order the tests.

Because it's impossible.

And I speak as someone whose job was to determine the costs of pharmaceutical manufacturing, in a simple environment with routine lab testing. Medical tests are necessarily more difficult to cost, as there are even more permutations to consider.