Originally posted 2010-04-25 19:42:21. Republished by Blog Post Promoter
by Norbert Sluzewski
Editor – NakedLiberty.com
April 25, 2010
Ouch! That was pretty much the only sound I could make getting out of bed that March morning after having overdone on the previous day’s lawn work. My back didn’t want to cooperate with what I otherwise needed to do, which included attending several business meetings and other private events. So without considering many alternatives, I dragged myself to my car, painfully scrambled into the driver’s seat of my SUV and drove off to see a local specialist.
I’ve not seen this doctor before, but he came highly recommended by my primary care physician. The office was pleasantly quiet and subdued and the chairs meticulously aligned in the waiting room were all properly hard so as to accommodate folks arriving in conditions similar to mine.
The doctor was quick to call my name and we soon found ourselves in an appropriately sterile but functional examining room, which comprised of nothing more than an examining table, wooden chair and a small supply closet. In a few quick and efficient motions, the doctor felt around my lower back, checked my knee and ankle reflexes and showed me an impressively realistic model of the human skeletal structure, exposing the nerves and arteries which criss-cross its length. I was duly impressed with the doctor’s description of my condition (a story which he likely has memorized from repeating dozens of times a day) and I was prescribed an anti-inflammatory, muscle relaxant pill and a dose of physical therapy. From arrival to departure, the entire episode lasted exactly 11 minutes.
I am fortunate to have a reasonably good medical insurance plan, so the bill for the doctor’s services went directly to the insurance company. At no time was I concerned about the amount of the fee, nor did the pleasant medical administrator in the doctor’s office disclose to me what the fee for the doctor’s services would be.
And so several weeks have passed. My back has recovered to its nimble self (at least until my next gardening adventure) and all is again well in the world. Ah, but there is more.
A letter from the doctor arrived a few days ago, which politely explained that the insurance company will be applying the doctor’s fee against my annual deductible (hmm, how conveniently I’ve forgotten about that part of the coverage provisions). As a result, they are requesting payment of the full amount of the doctor’s services which (now take a deep breath) amounted to $575.
Ok, now this got my attention. At no time was this amount disclosed to me. Frankly, at the time, I didn’t really care. I was in serious pain and, after all, I wasn’t really going to be paying for it myself, right? If I had been told, would it have changed my intention and would I have walked out of the office? I don’t know – maybe, maybe not; but perhaps I would have considered alternatives, like a hot compress or an “Icy-Hot” patch.
Now that it looks like I am going to be out of pocket a few hundred bucks, I am beginning to question the value ascribed to the services rendered. Sure, in the end they provided me with medicine to ease the pain, and the physical therapy (for which I haven’t received the bill yet, but am sure it’s en route to my mailbox) did help me get a bit more strength into those achy back muscles, but $575 for 11 minutes of service? That’s a whopping $3,136 an hour. My expensive lawyer would gasp at an opportunity to bill his clients that kind of an hourly rate. Is there any profession that can top this? (No, not even that one – and I know what you’re thinking).
So it’s clear to me that the doctor’s fee is not driven by market forces, but instead by an opportunity to “get away with it” since in most cases there is very little vested interest by any of the parties in the transaction to keep the amount of the fee consistent with the effort expended or value of service provided.
Is there something broken in this type of a fee-for-service system? You bet there is.
The answers to bring sanity back into the doctor-patient relationship (particularly the financial part of it) are so glaringly simple and have been so widely discussed. Among these the most significant and most consequential solution includes removing employer co-sponsorship of medical insurance coverage for its employees and replacing it with tax deductible health savings accumulation accounts (HSA’s, FSA’s or similar). In this case each individual is directly responsible for maintaining their personal financial reserve for medical care. Supplemental insurance could certainly be offered for extraordinary expenses and catastrophic events, including government subsidies for those not able to afford them directly. Employers could easily continue to sponsor employee health maintenance benefits for their employees by offering contributions to the employees Health Savings accounts, similarly to how they incentivize retirement savings through 401k contributions.
One thing is irrefutably true and has been tested time and time again. The best way to keep costs at a reasonable level is to have parties in a transaction directly involved in agreeing on the cost and value of the transaction itself. Whether for medical services, education, housing or groceries at the local farm stand, the market is the optimal arbitrator of the value of any transaction. The more intermediaries are introduced into the transaction, and particularly when it’s the government acting as a proxy for what it determines to be common good, the less optimal (ergo, expensive) each such transaction becomes. At the scale of a society, these incremental costs attributed to involvement of the intermediaries add up pretty quickly and dramatically.
Now that I have a strong incentive, I am†writing to my doctor to request a reduction of the fee charged to an amount that we can both agree is more reasonable for the 11 minutes of time (and yes, his 6 years of medical school and overhead, etc. etc.) he devoted to me on that painful day in March. Instead of being angry at him for the clearly inflated fee, I actually appreciate this opportunity to engage with him in a conversation about cost and value. We’ll see if he feels likewise.
Stay tuned. I’ll post an update to this article once we’ve resolved our billing differences.
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