Does the U.S. Pay More and Get Less?

If you were to experience a hospital stay, would you want a private room? Cable TV? Gourmet choices on your dinner menu? A couch or second bed for a loved one? And would you insist on a doctor as your primary caregiver, rather than a nurse?

Or would you be willing to give up these amenities in return for a less costly experience?

What brings this to mind are some charts at Austin Frakt’s blog — showing international comparisons of the costs of common procedures. For example, the chart below suggests that we spend a lot more than other countries for normal baby delivery. In fact, we’re paying about two to three times the developed country average.
About the Author
John C. Goodman is president and CEO and Kellye Wright Fellow at the National Center for Policy Analysis. He is widely known as the “Father of Health Savings Accounts.”

Austin then delivers the coup des gras: In addition to all this extra spending, we also have higher infant and maternal mortality rates than everybody else.
But if you are willing to forgo what I am calling the “amenities” of care, you can have a baby delivered in the U.S. for less than the OECD average. And if you stick with the prenatal regime, your expected infant mortality will be below the OECD average. Details below the fold.

As readers of this blog know, we have been critical of international cost comparisons that show we spend more and get less. The reasons are: (1) normal market forces have been so completely suppressed in health care all over the developed world, that spending data in no way reflects the true costs of resources used; (2) making the data even more suspect, other countries do more than we do to shift costs and disguise costs; (3) if you count up real inputs — doctors, nurses, hospital beds, etc., per capita — we arguably spend less than the OECD average; and (4) such outcome measures as life expectancy and mortality compare our heterogeneous population with the homogenous populations of Europe, instead of comparing Europeans with Americans of European descent.
There are two other points we have previously made that are also worth reiteration: (1) with respect to real resource use, there is nothing other countries are doing that we Americans cannot do on our own; and (2) far from needing government help, if we want to copy methods of other countries, we mainly need government to get out of the way.
All that said, one of the things I (and others) generally ignore is the role, importance and cost of amenities. This is a mistake. In a system in which the money price of care is basically zero and there is excess capacity, there is nothing left for providers to do but compete on amenities!
Okay, time to fulfill my previous promise. Here is something from our book, Handbook on State Health Care Reform:
Parkland Memorial Hospital in Dallas…delivers 16,000 babies a year — more than any other hospital in the nation. Almost all the mothers are uninsured. The vast majority are Hispanic (82 percent) and illegal (70 percent). By almost any definition, these mothers are “at risk.” But among those who take advantage of Parkland’s prenatal program (more than 90 percent), the infant mortality rate is only half the national average. How does Parkland do it? By being very good at what they do. Despite being a publicly funded health delivery system, Parkland operates what Regina Herzlinger, of Harvard University, has described in other contexts as a “focused factory.” They are so good at delivering babies, they produce an annually updated, internationally praised textbook on how to deliver babies, and their methods are being copied in Britain and other countries.
However, Parkland’s methods will not satisfy everybody. Prenatal care is delivered in clinics staffed by nurses, not doctors. Hospital deliveries are usually executed by midwives rather than OBGYNs. And like public hospitals in Toronto and London, Parkland is perpetually overcrowded. In fact it is not unusual to find patients on beds in hallways.
Although Parkland is quite good at some things, it is not as good at others. As is the case with many other inner-city public hospitals, patients who do not face life-or-death emergencies can wait hours for care in Parkland’s emergency room. A migraine headache patient might wait all day. In fact, almost any nonemergency service involves inordinate waiting. Getting a refill on a phoned-in prescription, for example, can typically take three days. By contrast, Dallas-area Walgreens stores refill prescriptions in less than an hour and some Walgreens outlets will do it in the middle of the night.
So why not replicate Parkland’s baby delivery system all over the country? One thing standing in the way is government. If all of Parkland’s 16,000 expectant mothers were enrolled in Medicaid or had private insurance, for example, much of what Parkland does might not be possible:
Prenatal care delivered by nurses rather than doctors might not be allowed under many states’ Medicaid rules. Ditto for deliveries performed by midwives. And under typical state insurance regulations, patients with private coverage would be encouraged to see OBGYNs (because of zero patient cost sharing), where the cost would be higher and the overall quality of the pregnancy/delivery episode might not be as good (because of fragmented care).