A new article published in the New York Times discusses the cost of medical testing and why the prices of routine diagnostic tests vary so significantly from hospital to hospital. One very interesting omission from the article is the widely debunked claim that medical malpractice lawsuits increase the price of healthcare, including “defensive medicine.” Instead, the article accurately describes the problem as follows:
“Testing has become to the United States’ medical system what liquor is to the hospitality industry: a profit center with large and often arbitrary markups. From a medical perspective, blood work, tests, and scans are tools to help physicians diagnose and monitor disease. But from a business perspective, they are opportunities to bring in revenue—especially because the equipment to perform them has generally become far cheaper, smaller and more highly mechanized in the past two decades.”
So what, exactly, is the price discrepancy? The author received the same echocardiogram test at two different hospitals. An echocardiogram scans the valves of the heart to see if there is any disease process occurring. The community hospital that performed one of the studies charged $5,500. The Harvard teaching hospital, which performed the second study, charged $1,400. That is quite the mark-up. But there’s more. In Belgium, the allowable charge for the same echocardiogram study is $80. In Germany, it is $115. In Japan the price ranges from $50 to $88.
Rather than provide an actual reason for these vast price discrepancies, the rhetoric from the medical community is the same tried and true response as always: “The vast majority of customers” paid much less than the listed prices. It added that its pricing reflected the need to offset losses because many programs, including Medicare, reimburse less than the cost of delivering services.”
When hospitals shift their focus from patient care centers to profit centers, they lose focus about what actually matters. Is generating a profit important? Possibly. But allowing people access to affordable healthcare (and not causing them to go bankrupt in the interim) should be the true goal.