Aug 22, 2018

Even hospitals don’t know what surgeries cost

A doctor operating on a patient's knee. Photo: Sven Hoppe/picture alliance via Getty Images

We spend a lot of time talking about how hard it is for patients to find out how much any particular health care service is going to cost them.

A bigger problem: The Wall Street Journal uses the example of knee replacements to illustrate that difficulty, but also raises a bigger, even more frustrating point: It’s hard for hospitals to figure out how much their own work costs.

The details: Gundersen Health System in Wisconsin “had no real idea what it cost to perform the surgery” and wanted to find out why it was charging a list price north of $50,000, WSJ reports.

  • That process entailed “an 18-month review” in which “an efficiency expert trailed doctors and nurses to record every minute of activity.”
  • They ultimately determined that the procedure cost $10,550 — a fifth of the price the hospital had set.
  • The review uncovered other quality and efficiency issues. Some days, there weren’t enough beds for patients after surgery, and doctors performed the procedure differently “for reasons that weren’t always clear.”
  • “Gundersen’s analysis found that the hospital had been exclusively using brand-name cement, premixed with antibiotics. The hospital slashed its cement costs by 57% by switching to a generic,” per WSJ. “It isn’t clear how the orthopedics department came to use the brand-name cement … [one doctor] said he was perplexed when the analysis uncovered it.”

My thought bubble: Good on Gundersen for trying to figure all this out, but Gundersen isn’t an isolated example. This is the system we have.

  • And even though most of us don’t pay the full sticker price for health care, our premiums and out-of-pocket costs all still flow from that top-line number — which, WSJ notes, is set “using a combination of educated guesswork and a canny assessment of market opportunity.”

Go deeper

Coronavirus kills 2 Diamond Princess passengers and South Korea sees first death

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. U.S. numbers include Americans extracted from Princess Cruise ship.

Two elderly Diamond Princess passengers have been killed by the novel coronavirus — the first deaths confirmed among the more than 600 infected aboard the cruise ship. South Korea also announced its first death Thursday.

The big picture: COVID-19 has now killed more than 2,200 people and infected over 75,465 others, mostly in mainland China, where the National Health Commission announced 118 new deaths since Thursday.

Go deeperArrowUpdated 6 hours ago - Health

SoftBank to cut its stake to get T-Mobile's Sprint deal done

Illustration: Rebecca Zisser/Axios

T-Mobile and Sprint announced a revised merger agreement that will see SoftBank getting a smaller share of the combined company, while most shareholders will receive the previously agreed upon exchange rate. The companies said they hope to get the deal as early as April 1.

Why it matters: The amended deal reflects the decline in Sprint's business, while leaving most shareholders' stake intact and removing another hurdle to the deal's closure.