Posted by: Audrey Erbes | April 16, 2012

The Real Cost of Health Care: What is it? plus Upcoming Events

I received a copy of a NY Times article entitled “Why Medical Bills are a Mystery” by Robert S. Kaplan and Michael E. Porter, (April 14, 2012) which addresses why you can’t improve on care as well as be more efficient and do it at a lower cost. They note how all levels of government are trying to do this and point out the dilemmas for those who succeed but end up earning less as result. They say “solutions are failing because of a fundamental and largely unrecognized problem: We don’t know what it costs to deliver health care to individual patients, much less how those costs compare to the outcomes achieved.”

I spoke with a family who had experienced a whopper of an example of the issues they discuss in their article. This California couple had recently returned to retire in California after living in Tokyo where they pursued most of their adult business life. They were too young to qualify for Medicare yet and hadn’t established an insurance plan when the wife woke up with a terrible pain in her gut. At first she thought it was just a bad stomach ache but it continued all day the next day and she experienced worsening pain so they went to the emergency room of the local hospital in a Central Coast city. The ER staff recommended she enter hospital for testing. After three days of testing, still with no answers and continuing but lessening pain, the social worker asked the husband how he would like to pay the bill. He pulled out his credit card to pay.

He was startled to receive a bill for $77,000 for a semiprivate room for 4 nights. The social worker advised that he could reduce the bill to $52,000 if he arranged to pay the bill over 6 months. Being an entrepreneur, he asked “how much would the bill be if I pay in cash over 10 days?” Suddenly the bill dropped to $22,000. Amazing that $55,000 disappeared in charges. He paid with his credit card and left in shock. The couple decided she must have had bad case of food poisoning from oysters she ate prior to onset of pain. My friend subsequently found this negotiating approach worked for a blood test that was to cost him $880 but only $80 if he paid in cash. They asked me how this could be.

We know that many times more highly skilled doctors deliver care that could be provided by other less costly professionals. Not everyone needs the state of the art ICU room—a less costly room would greatly reduce cost but without reduction in care quality. Doctors and hospitals worry about lawsuits so tend to overuse costly tests which also drive up the bill as in the case of my friend. Codes are inflated to highest possible level so the hospital doesn’t get stuck with larger bill than that reimbursed. When payors and government agencies refuse to pay these high bills, doctors and hospitals pass the cost on to the uninsured private patient who may pay without asking for discount.

So there often isn’t a connection between what care was actually needed, what care worked the best and how to bill accordingly. No matter how the Affordable Care Act is handled by the Supreme Court, this problem of irrational costing of care to health care outcomes isn’t going away soon.

Highlights for Upcoming Events

Highlights for this coming week’s meetings are listed below. Note there’s still time to sign up for many of these programs and my UC Berkeley Extension Life Science Business and Marketing: Their Integral Role for Success course on Thursday and Friday in Belmont. See details in the hyperlinked list entitled Audrey’s Events.

  • BioCentury TV Today, See new program Webcast Starting Sunday, April 15, 2012, Continuously available starting at 9:00 a.m. EDT: Topic: “Fueling the Bull;” Speakers: John Borer, Head of Investment Banking at Rodman & Renshaw and member of the SEC Advisory Committee on Small and Emerging Companies.William Gould, President of Specialty Lending at MidCap Financial.
  • Bio2Device Group, Tuesday Morning, April 17, 2012; Topic: “U.S. Supreme Court’s Prometheus Decision Further Defines the Scope of Patent Eligibility. What is the Impact on Personalized Medicine, Molecular Diagnostics and Human Gene Patents?” Speakers: Teresa Corbin, Partner, Intellectual Property & Litigation Groups and Pauline Farmer-Koppenol, Associate, Fenwick & West
  • Sidley in Silicon Valley, Save the Date, Tuesday, April 17, 2012; Topic: “Life Science Data Privacy Day;” Confirmed speakers include: Judith Beach, Global Chief Privacy Officer, Senior Associate GC for Regulatory & Government Affairs, Quintiles; Laura Berger, Senior Attorney, Division of Privacy & Identity Protection, FTC; Damon Burrows, Vice President, Associate General Counsel, Allergan, Inc.; Ashley Gould, Vice President – Corporate Development, Chief Legal Officer, 23andMe, Inc.; Gail Javitt, Food, Drug & Medical Device Regulatory, Sidley; William Long, EU Privacy, Data & Information Law, Sidley; Deborah Marshall, Emerging Companies and Venture Capital, Sidley; Deven McGraw, Director of the Health Privacy Project at Center for Democracy & Technology; Edward McNicholas, Privacy, Data & Information Law, Sidley; David Ralston, Chief Privacy Officer, Gilead Sciences; Anna Spencer, Privacy, Data & Information Law, Sidley
  • San Jose Biocenter, Wednesday, April 18, 2012; Event: “2012 NCI SBIR Investor Forum”
  • EMBS, Wednesday Evening, April 18, 2012; Topic: “NEW Technologies and Applications of Simulation in Healthcare” Tour of the Goodman Immersive Learning Center in the Li KaShing Center for Learning and Knowledge in the Stanford School of Medicine; Speaker: Sandra J. Feaster, RN, MS, MBA, Stanford University
  • BioScience Forum, Wednesday, April 18th, 2012; Topic: “Attrition and Innovation;” Speaker: James Sabry, M.D., Ph.D., Vice President Partnering, Genentech
  • SCV Engineering in Medicine and Biology (EMBS), Wednesday Evening, April 18, 2012; Topic: “New Technologies and Applications of Simulation in Healthcare;” Speaker: Ms. Feaster, Assistant Dean for Immersive and Simulation-based Learning and Director for the Center for Immersive and Simulation-based Learning at Stanford University School of Medicine in California
  • sfAWIS Mentoring Program in conjunction with UCSF Women in Life Sciences (WILS), Wednesday Evening, April 18, 2012; Topic: “The Evolution of a Reluctant Businesswoman;” Speaker: Mickey Blake, CEO and co-founder of Mt. Baker Bio based in Seattle, WA
  • UC Berkeley Extension Course, Thursday and Friday, April 19-20, 2012; Topic: “Life Science Business and Marketing: Their Integral Role;” Instructor: Audrey S. Erbes, Ph.D.; Guest Speakers: Don Holsten, Pharm. D., Bev Hudson, M.B.A., Julie Tompkins, M.B.A.
  • HBA San Francisco Bay Area, Thursday Evening, April 19, 2012; Topic: “The Importance of Women on Corporate Boards- April 19, 2012;” Speaker, Marilyn Nagel, CEO, Watermark”
  • RAPS, San Francisco Chapter, Friday, April 20, 2012; Topic: “Medical Device Software: Changing Regulations, Changing Technologies;” Featured Speakers: Martin Browning, president and co-founder, EduQuest, Inc.; John Campbell, director of quality, Sterling Smartware Solutions; Glenn E. Emelock, senior partner, The CRO Group Inc.; Connie Hoy, vice president, regulatory affairs/quality assurance, Cutera, Inc.; FDA Pacific Region Representative (Invited)
  • 2012 Stanford Medical Innovation Conference, Saturday, April 21, 2012; Topic: “Developing Technology for the Developing World”



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