Recent studies exploring the economics behind the high price of US healthcare independently point to the price of labor, goods, services, administrative costs, and pharmaceuticals as primary reason why the US spends almost twice as much as peer countries on healthcare
It is regularly reported that the cost of healthcare in the United States is notably more expensive that in most developed nations. Overutilization of medical services in this country is often given as a reason why this is true. But the findings of a new research study suggest that the reason healthcare in the US is expensive is not due to overutilization. Rather, it is because of the much higher prices American patients pay for services, including clinical laboratory testing.
This recent study contradicts the claims of some experts who say overutilization is to blame for the high cost of healthcare in the United States. The research was conducted by researchers at the Institute for Health Metrics and Evaluation (IHME) in Seattle and the UCLA David Geffen School of Medicine. They attribute the overarching factor in high healthcare costs not to high utilization of services—such as clinical laboratory and anatomic pathology testing—or increased rates of illness.
Instead, the researchers found that it’s simply a matter of higher prices for healthcare delivered in this nation, compared to other healthcare systems around the globe. This is what makes America’s healthcare system so expensive. And, lacking financial incentives for stakeholders to lower prices, these researchers suggest that continued high costs could negatively impact providers’ quality of care.
High Cost of Diagnostic Services, including Medical Laboratory Testing
The IHME/UCLA researchers published their findings in the Journal of the American Medical Association (JAMA), in which they argued that increases in US healthcare cost are independent of increases in:
- Disease prevalence;
- US population age;
- Use of healthcare services; or,
- Overall population size.
Joseph L. Dieleman, PhD, Assistant Professor at IHME and lead researcher on the investigation, stated, “After adjustments for price inflation, annual healthcare spending on inpatient, ambulatory, retail pharmaceutical, nursing facility, emergency department, and dental care increased by $933.5 billion between 1996 and 2013—from $1.2 trillion to $2.1 trillion.”
Data produced by the study identified one overlying factor in increased spending—increased prices. According to Dieleman, health spending in 2015 “reached $3.2 trillion and constituted 17.8% of the US economy.”
In an editorial response to Dieleman’s investigation, also published in JAMA, Patrick H. Conway, MD, MSc (above), President and CEO of Blue Cross Blue Shield of North Carolina in Durham, stated that “the United States is on an unsustainable growth path in terms of healthcare costs and must get costs under control.” He added that data from Dieleman’s study has important implications for quality of healthcare, which may include medical laboratory diagnostics. (Photo copyright: Duke University.)
Price Spirals and Artificial Price Hikes: No Real Incentive for Regulation
Pricing for medical care is notoriously opaque. Patients are often unaware of the cost of services until the bill arrives. This lack of transparency prevents patients from comparing prices between healthcare providers and medical laboratories.
To try and create some cost transparency for consumers, Conway noted that some states, such as Maryland and Vermont, have adopted multi-payer payment models or all-payer rate settings. However, there could be resistance to such reforms, according to some experts.
Health economist Austin Frakt, PhD; and Aaron E. Carroll, MD, MS, Vice Chair for Health Policy and Outcomes Research, and Director of the Center for Health Policy and Professionalism Research at Indiana University School of Medicine, co-authored a New York Times article that agrees with Conway’s assertion. In it, they state that attempts to create regulation for healthcare prices “would be met with resistance from all those who directly benefit from high prices, including physicians, hospitals, pharmaceutical companies—and pretty much every other provider of healthcare in the United States.”
No Incentive to Lower the Prices of Medical Services
An opinion piece in the Wall Street Journal, Keith Lemer, CEO, WellNet Healthcare Group, shared a similar view. He stating that insurers and preferred provider organizations (PPOs) have no “natural incentive to keep provider prices down.” Lemer looks at the Affordable Care Act and its establishment of a medical loss ratio rule, which “requires insurers covering individuals and small businesses to spend at least 80 cents of every premium dollar on medical expenses.”
Lemer uses the cost of a routine blood test as an example, stating that when providers raise costs of such tests, “insurers can charge higher premiums, while also boosting the value of their 20% share,” which goes “towards administrative costs and profits.”
Lemer argues that the deck is stacked against consumers, and that the medical loss ratio “encourages insurers to ignore providers” artificial price hikes,” while attracting customers “with the promise of steep discounts through their PPO plans.” The resulting affect is what Lemer calls a “price spiral” that’s difficult to escape.
Higher Costs Do Not Equate to Better Care
A special JAMA communication from Irene Papanicolas, PhD, and other members of the Department of Health Policy and Management, Harvard T. H. Chan School of Public Health, Harvard Global Health Institute, and Department of Health Policy at the London School of Economics and Political Science, reports that higher US costs do not coincide with better care.
In comparison to 10 other high-income countries the US spends “approximately twice as much,” Papanicolas noted. She added that despite the higher spending in the US, the nation “performs poorly in areas such as healthcare coverage and health outcomes.”
To illustrate the difference in average costs, Papanicolas and colleagues listed “comparison prices” on a series of healthcare services between countries in 2013. For example, the price of a single computed tomography (CT) scan varies widely:
- $896 (US);
- $97 (Canada);
- $279 (Netherlands); and,
- $500 (Australia).
The high prices of clinical laboratory (AKA, pathology laboratory in Australia) diagnostics have already caused a sharp decline in the use of important imaging utilization and are at risk of affecting other aspects of clinical pathology, such as anatomic pathology (histopathology in AU) services.
PricewaterhouseCoopers (PwC) Health Research Institute’s annual medical cost report predicts 2018 medical costs will rise by 6.5% and that “price continues to be a major driver of healthcare costs” that are outpacing the economy. PwC recommends “increasing collaboration across the industry” to address the growing issue of rising medical costs and shift the burden of cost away from patients.
Clinical Laboratories Contribute to High Costs
Although US healthcare cost is a topic of intense conversation, little change may come if there is no incentive to change. Each of the recent JAMA published articles ends on the same repeated note: a plea for active debate among policy makers, healthcare providers, patients, insurers, and politicians, with the goal of decreasing healthcare costs, without sacrificing patient care.
This is also true for clinical laboratory and anatomic pathology stakeholders, which are critical aspects of the healthcare continuum, and therefore, contribute to the overall financial burden on healthcare consumers.
— Amanda Warren
Why the US Spends So Much More Than Other Nations on Healthcare
Healthcare Spending in the United States and Other High-Income Countries
Factors Associated with Increases in US Healthcare Spending, 1996-2013
Factors Associated with Increased US Healthcare Spending: Implications for Controlling Healthcare Costs (Editorial Response)
The Best Healthcare System in the World: Which One Would You Pick?
The Deception Behind Those In-Network Health ‘Discounts’
Medical Cost Trend: Behind the Numbers 2018
Mobile point-of-care (POC) smartphone-based nucleic acid assay allows for quick turn arounds and accurate information in any healthcare setting, including resource limited and remote environments
DNA detection might soon be accomplished with the use of a smartphone. That’s the goal of a research effort at the University of California Los Angeles (UCLA). If this effort succeeds, it would give medical laboratories a new tool to use in genetic testing.
Clinical laboratory equipment is becoming more effective even as it shrinks in size and cost. One such device has been developed by Ozcan Laboratory Group, headed by UCLA professor Aydogan Ozcan, PhD. It is a portable, smartphone-based mobile lab with sensitivity and reliability on par with large-scale medical laboratory-based equipment.
Ozcan Lab’s portable DNA detection system, according to a UCLA press release, “leverages the sensors and optics of cellphones” and adapts them to read and report the presence of DNA molecules. The sensor uses a new detector dye mixture and reportedly produces a signal that is 10 to 20 times brighter than previous detector dye outputs.
This new system improves upon the optical detection abilities of current point-of-care nucleic acid tests (POCTs) and, according to a study published in the American Chemical Society’s ACS Nano, the device is able to “retain the same robust standards of benchtop lab-based tests.”
Go Anywhere Technology Improves POC Testing
Nucleic acid detecting assays are crucial tools anatomic pathologists use to identify pathogens, detect residual disease markers, and identify treatable mutations of diseases. Due to the need for amplification of nucleic acids for detection with benchtop equipment, there are challenges associated with providing rapid diagnostics outside the clinical laboratory.
Using the new mobile POC nucleic acid testing system developed by Ozcan et al, pathologists can effectively step away from the lab to perform rapid POC testing and accelerated diagnostics onsite, rather than needing to transport materials to and from a central laboratory. The mobile testing assay enables pathologists to carry a medical laboratory with them into the field, or into limited-resource or decentralized testing environments, without sacrificing quality or sensitivity. And according to the ACS Nano article, at a relatively low-cost compared to benchtop nucleic acid testing equipment.
The device developed by Ozcan Labs (above) is a “field-portable and cost-effective mobile-phone-based nucleic acid amplification and readout platform [that] is broadly applicable to other real-time nucleic acid amplification tests by similarly modulating intercalating dye performance. It is compatible with any fluorescence-based assay that can be run in a 96-well microplate format, making it especially valuable for POC and resource-limited settings.” (Caption and photo copyright: American Chemical Society.)
In an article published in Future Medicine, Ozcan and Hatice Ceylan Koydemir, PhD, a post-doctoral researcher in electrical engineering at UCLA, comment on the growing interest in mobile POC diagnostics, stating that smartphone-based devices and platforms have the potential “to be used for early detection and prevention of a variety of health problems.”
According to the article, smartphone-based sensing and imaging platforms have been developed to:
- Analyze chemicals and biological specimens;
- Perform advanced cytometry and bright-field/fluorescence microscopy;
- Detect bacterial contamination;
- Image nano-sized specimens;
- Detect antimicrobial drug resistance; and
- Analyze enzyme-linked immunosorbent assay (ELISA)-based testing.
Smartphones, according to Ozcan and Koydemir, have been adapted to a range of biomedical measurement tools, “have the potential to transform traditional uses of imaging, sensing, and diagnostic systems, especially for point-of-care applications and field settings,” and can provide speedy results.
A ‘Highly Stable’ and Sensitive System
The proof-of-concept study of Ozcan Lab’s new smartphone-based detection system and new detector dye mixture was led by Janay E. Kong, PhD in bioengineering at UCLA, with the help of Ozcan and fellow professors Dino Di Carlo, PhD, professor of bioengineering and mechanical and aerospace engineering at UCLA, and Omai Garner, PhD, associate professor of clinical microbiology at the David Geffen School of Medicine at UCLA.
According to an article in Bioscience Technologies, the new smartphone DNA detection system addresses issues with detection of light emitted from intercalator dyes, which are normally “too subtle and unstable for regular cellphone camera sensors.” The new system uses loop-mediated isothermal amplification (LAMP) to amplify DNA in connection with a newly developed dye that uses hydroxynaphthol blue (HNB) as an indicator.
The inclusion of HNB into the dye, according to the original research study, “yields 20 times higher fluorescent signal change over background compared to current intercalating dyes,” making the results bright enough for smartphone camera sensors without “interfering with the nucleic acid amplification process.” The original study reports that the digital LAMP system and use of the HNB intercalating dye, in fact, provided “significantly enhanced performance compared to a benchtop reader with standard LAMP conditions.”
Ozcan labs shows no signs of slowing down their development of mobile POC diagnostic devices. The development of these smartphone-based tools may provide unique and much-needed equipment for clinical pathologists given the rising interest in mobile healthcare worldwide.
— Amanda Warren
UCLA Researchers Make DNA Detection Portable, Affordable Using Cellphones
Mobile Phones Create New Opportunities for Microbiology Research and Clinical Applications
Highly Stable and Sensitive Nucleic Acid Amplification and Cell-Phone-Based Readout
Cellphone System Makes DNA Detection Affordable and Portable
UCLA Device Enables Diagnosis of Antimicrobial Resistance in Any Setting; Could Save Lives Lost to Antimicrobial Resistant Bacteria
UCLA Researchers Develop Lens-Free Smartphone Microscope, Pathologists May Be Able to Take the Clinical Pathology Laboratory Just About Anywhere
Smartphone “Dongle” Achieves Capabilities of Big Clinical Laboratory Analyzers: Diagnoses Three Diseases at Once from Single Drop of Blood
New Fast, Inexpensive, Mobile Device Accurately Identifies Healthcare-Acquired Infections and Communicates Findings to Doctors’ Smartphones and Portable Computers
Pathologists and Researchers Predict Development Trajectory for Biomarker-based Molecular Diagnostics in Support of Translational Medicine
Tiny, Simple-to-Use Lensless Microscope Might Soon Find a Place in Pathology
Telemedicine allows U.S. pathologists and other specialists to boost revenue by consulting with international partners.
Pathology laboratories in the United States are among the first adopters of a trend toward international telemedicine.
Pathologists working at a handful of well-known healthcare organizations here in the United States are forming partnerships with other hospitals and health systems worldwide, particularly in China. (more…)