Home > Business of Medicine, General, Gynecology, Uncategorized > Why Healthcare in America is So Expensive Part 2 – Surgical Equipment

Why Healthcare in America is So Expensive Part 2 – Surgical Equipment

With this essay we embark on a journey through the world of medical cost.   In my last essay, I argued that while our government struggles to create a system that pays for the healthcare system we have, the true problem is the outrageou
s cost of that system, not how we pay for it.

Today, we will examine the surgical equipment industry, and how expensive i
nnovation and technology is valued over actual contribution to patient outcomes, and how every incentive exists to make medical equipment as expensive as possible.

******

A few years ago, I was involved in a project with a number of students from Georgia Tech’s biomedical engineering department.   I had an idea to solve a basic problem in laparoscopic surgery, and these students were charged with cSurgical-Instruments-11.jpg
reating a prototype solution to the idea.  We came up with an elegant solution to an issue that occurred in every laparoscopic surgery in this country, and eventually the students presented this idea as their senior project for their degrees.

Subsequently, I approached my University’s Technology Transfer department (the group that helps faculty to commercialize their ideas.)  We went through a process of idea disclosure with the hope that the University would help me to bring this idea to market.  In the end, though, it fizzled.    They said they weren’t interested in developing the idea.  So I approached several industry groups.   Again, no interest.  Over time I talked with three different groups that develops ideas, and no one was interested.

The kicker of all of this is that the lack if industry interest had nothing to do with the utility of my invention.  In fact, all parties agreed that the idea was great and the solution was elegant.  They also agreed that they could imagine the device in practice.   The problem wasn’t that the device wasn’t a good one, it was that the device was too simple, and too inexpensive to manufacture.  I had imagined a device that would probably cost about 5 dollars in every surgical pack.  In the end, the development market had little interest in such a device, given what it costs to develop bring a device to market and the likely payout at the end.  This thing actually saved money in time and in replacement of more expensive equipment already in use in the OR.   But what I found out was that there wasn’t much interest in devices that causes industry to make less money.

This was my first insight in an ongoing problem with the equipment industry – that in the American healthcare system, there is almost no financial incentive for equipment companies to make something that is substantially less expensive than something else already on the market, and there is huge incentive to create something that penetrates the market with a more expensive solution.

I saw this first hand with the advent of the hysteroscopic morcellator.

In background, women at times develop polyps and fibroids within the cavity of their uteruses, and in many cases it is advantageous to remove these polyps and fibroids via a hysteroscopic procedure.  Prior to the advent of the hysteroscopic morcellator, this procedure was performed either with a completely reusable forcep (in the case of polyps), or in the case of submucous fibroids, with a relatively inexpensive to use electrosurgery unit which costs a few hundred dollars per case.  But using this electrosurgery wasn’t super easy.   As a surgical educator, I can say that it took 5 or 6 cases with supervision and teaching before a trainee became independently competent at doing the electrosurgery procedure, and some people never really got the hang of it.  There were also a few safety issues that needed to be addressed during the case.

The old (and cheap) way to do it:

Now, enter the hysteroscopic morcellator – the new (and expensive) way to do it.

The hysteroscopic morcellator is a device that can be pushed up through a hysteroscope (a camera into the uterus) that makes removing fibroids and polyps dead simple.   Its extremely easy to use, and requires much less training than the previous procedure.  Where in the past I needed to work with a resident over many cases before they were competent using the electrosurgery device, they were competent on the morcellator in about two minutes.   We had turned a senior resident case into something I could let a medical student do.

At the time, I thought it was a tremendous advance for the removal of fibroids.  The old way was somewhat challenging, and the new way was simple.  For fibroids it made some sense. But for polyps it seemed wasteful in the extreme, using a thousand dollar disposable device to do something I have never seen anyone struggle to do with free reusable equipment.  But I remember how much fun it was to suck up the polyps with this little chomping device and though “uh-oh, people are going to start using this thing for polyps not because they need it but because it is easy and fun to do”.

Fast forward a decade.  The hysteroscopic morcellator is in heavy use.  There are actually three different units on the market, all variants of the same thing by different manufacturers.  Across the board, each unit costs ten to twenty thousand for the generator and about 1000 dollars per case in disposable costs.   And sadly, 85% of deployments for the device are for uterine polyp cases, the cases that were extremely easy to do before the device existed.

Across this country, hundreds of thousands of these hysteroscopic cases are performed a year, and a large number of them use this morcellator.  Conservatively, a hundred million dollars are spent a year on these devices (probably far more.)    And I can’t argue that it isn’t a technology advance.  It is.  Fibroid procedures are definitely easier with it.

BUT – If I personally had to pay 1000 dollars to use this device, instead of using the old technology which was far less expensive (even free in many cases), would I use this new device?   Absolutely not, at least not on the vast majority of cases.   But since surgeons don’t feel any effects from the dollars they spend, and its hard to argue that the device doesn’t make surgery easier, surgeons choose this device overwhelmingly over the older technology.

This sort of advancement is a pyrrhic victory for healthcare.   There’s no doubt that its a great device, but at what cost?   Are women’s healthcare outcomes actually improved because of the development of the device?   I would argue that they are not.   We have just spent a lot of money making a surgery easier for surgeons, allowing surgeons who are not as well trained to complete a procedure that previously had to be done by better trained expert surgeons.   So who does this benefit exactly?   Not patients, in my view.  It benefits lesser trained surgeons to an extent, and it really really benefits the company that makes this very very expensive device.

When a device like this comes on the market, where does cost come into play?  In reality it hardly does.  The surgeons see the device and it looks good.  They ask the hospital to provide the device, and usually the hospital does because: A) it it wants to tell the world that it provides the highest technology procedures and B: its wants to keep the surgeons happy, who could easily take their business to another hospital that is willing to provide the device.  And the hospital doesn’t really care anyway, since the additional cost is eventually rolled into cost figures provided to Medicare, which inform the facility fees they are paid.  And since the hospital is paid based on their cost plus a profit margin, it actually benefits the hospital’s bottom line for things to be more expensive, in the end.  So does the hospital really care about the cost?  Not really.  They pay more in the short term, but make it back in the long term (and usually within a government subsidized tax free haven because they are “non-profit” which is a joke – more on that later).  So they don’t care in the short term.  Its just part of a slow march towards more expensive healthcare.

And the sad thing is that the described device is actually a best possible case situation.  The best case is that this more expensive thing actually benefits patients in some minor way.  But that’s hardly the rule, its more of the exception.   A tremendous number of devices just add cost with no patient benefit whatsoever.

Here’s an example – the Powered LDS Stapler.   This is a device used in cancer surgeries that makes a procedure called an omentectomy very efficient.  The omentum is a fatty covering to the large bowel that often gets infiltrated with cancer in women who have advanced ovarian cancer.  As part of their surgery, the momentum is removed.   The traditional way to do this procedure is using clamps and ties.   The clamps are free to use, as they are already on the table.  The ties are probably two dollars for a pack of more than you need.  The LDS stapler on the other hand costs many hundreds of dollars and is a throw-away device.  On a big fat omentum you might even need two of them.

310821NJ21L.jpg

OR

lds-powered-ligating-and-dividing-stapler-f.jpg

So why do surgeons use it?  In the end it saves them two minutes of time, and it costs them nothing to use it, so they use it.   And one other reason – its fun.   It makes a really cool pneumatic sound when you fire it.  I’ll be honest that when I have used it, I have really enjoyed that sound and it makes me want to use it more.  But if you put clamps, ties, and two one hundred dollar bills on one plate and an LDS stapler on another plate, I’d be choosing the plate with the two hundred dollar bills and the clamps every time.

So with all this technology, you would think that we would do better surgery. But in many cases we don’t.  There are definitely situations where the extreme high tech of the American operating room allows us to provide care that we couldn’t without it (like a CT or MRI guided stereotactic brain surgery), but in the vast majority of cases we use more expensive stuff to do the same procedures we could have done with less expensive tools.  Every year at national meetings I see surgery performed by surgeons in developing nations that is breathtaking in quality and technical expertise, using instruments that are very inexpensive to use.  Those places have less resources so they make do with less expensive stuff, and in the end they do more than make do, they do great.

So hopefully I have convinced you that in some cases America is using medical equipment that is very expensive without providing a commensurate benefit to patients, driving up healthcare costs in this country.  So what can we do about it?

I have several solutions.   The difficult solution is to change the economy of how these devices are made.  Create non-profit development companies that are supported by grant money, that go on to provide solutions that are cost effective and not priced with huge profits in mind.   Once solutions are created, fund the creation of a non-profit company that can build and distribute the device.  But in reality this is a tough solution.  America is capitalist, and unless we have a socialist healthcare payer model, I don’t see medical devices manufacturing being run in a socialist way.

So a more realistic solution is that doctors can just make less expensive choices, and hospitals can help them to do so.   I’ve had a lot of opportunity to talk to surgeons about making less expensive choices in the operating room, and by and large they are very receptive to the idea.   They generally want to contribute to making healthcare less expensive.   All you have to do is ask them to do it, and educate them on how to do so.   Hospitals should put a price tag sticker on every piece of disposable equipment, not to discourage doctors from using the equipment they need, but so that they can see the costs of their choices, and thus better able to make good decisions about healthcare dollars.  I’d love to even see a system where surgeons could personally be rewarded for making better financial decisions within the hospital.   This only happens now in physician-owned outpatient operating rooms, but systems could be put in place to do this in hospitals as well.  With a concerted effort to use less expensive equipment in the operating room, cost figures provided to Medicare will go down, which in turn will reduce medical premiums.  It won’t fix the problem on its own, but it is a piece of the puzzle.   Its a simple intervention, primarily in the hands of surgeons.

So when an equipment rep comes in to show a surgeon a fancy new piece of equipment, the surgeon should be evaluate these items very critically.   Items should be evaluated not on whether or not they make surgery a little easier or save a little time or are fun to use, but on whether or not they actually improve patient outcomes.  And if they do, items should then be evaluated on cost, with an eye to whether the perhaps slight improvement in outcomes is worth that cost.  Because if we decide that any incremental benefit is worth an unlimited amount of additional money (which we often do), we are doomed to an infinitely expensive healthcare system.

So if you are a surgeon, make less expensive choices when possible.  If you are a patient, encourage your surgeon to do so.  Tell them you care about the costs of health care, and you would like him or her to save money in your surgery if it won’t effect your outcome, even though neither of you will directly feel the cost of the choices.  Tell them to do it because you care not just about your individual case, but because you care about the cost of healthcare.

Preceding post: Healthcare Reform Has it Wrong – Why American Healthcare is So Expensive – Part 1 

  1. March 1, 2017 at 4:21 am

    Once again I totally agree with you (except for the subtle suggestion about socialized medicine). May I point out that a free-market healthcare solution would work here?

    It’s simple: people who can afford expensive cars and don’t care about the cost buy them for various reasons, including level of luxury, the feel of leather, etc. For most people, that added luxury is not worth the cost involved, so pick the cheaper car that is still reliable, but may not have all the bells and whistles. It’s the same reason why cheap fast-food joints can exist side by side with expensive restaurants — people can choose to spend more money or not, and they know at the outset what they’re getting.

    Why cannot health care be the same way?

    You hit the nail on the head that most *patients* wouldn’t choose to spend the $1k on cool but disposable gadgets that don’t improve outcomes, so why are they being used? It’s because they’re not paying for it directly. As you said, hospitals have a vested interest in pumping up costs, and patients don’t have a vested interest in keeping costs low, because for the most part, insurance covers it. Sure, they’ll pay more in total insurance costs *eventually*, but they don’t see how the costs add up. It’s not like a restaurant telling you they’ll charge you $1 for added bacon, and you can choose it or not; you’re presented with the cost, and it’s either “take it or leave it”, and since the only reason the patient is seeking surgery is because of a problem, “leaving it” entails the patient staying in the diseased state.

    But if a patient could choose between two surgeries, one much cheaper than the other, but both with the same outcomes, human nature dictates that they will usually choose the cheaper one (some will choose the “luxury” model, perhaps with the mindset that the more expensive one is *actually* better and/or that the less expensive option is “cheap” and perhaps dangerously so).

    There are two ways of getting this to happen: one is to force socialized medicine and top-down, heavy-handed govt interference and regulation requiring cost-saving measures; and the other is to allow free-market medicine, with its bottom-up, patient-centered care, where patients call the shots (within reason, of course). It is the patients themselves who have the greatest vested interest in good healthcare; and if they pay for it themselves, it is the patients who will push for low-cost but still excellent options, like you were talking about.

    This would probably still apply when health insurance covers most of the cost of something, if patients think about how that choosing a more expensive option will increase their costs down the road. As you suggested in your post, a hospital that attaches a price tag to every piece of equipment will make the surgeon more likely to use the less expensive option even if it doesn’t directly affect the surgeon’s bottom line; in a similar way, patients would do the same thing, even if insurance covers most of the cost.

    Like

  2. March 10, 2017 at 12:10 pm

    Thanks for your comments. What is crazy about healthcare is that pricing is so opaque that almost no one knows what things cost up front, including the people delivering the care. There are so many problems.

    Like

  1. February 28, 2017 at 9:46 am
  2. March 6, 2017 at 10:42 am
  3. March 10, 2017 at 12:09 pm

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: