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Physician visits in the US are much more costly than in other countries. Take this statistic into consideration: the average physician visit costs $89 in US, $30 in Canada and $16 in India. Corrected for price parity, the average cost of a physician visit is five times as expensive in the US compared to Canada and twice as expensive compared to India.
Why? Let’s look at a breakdown of the overhead expenses doctors have to consider in pricing a patient visit:
- Medical licensing fees
- Medical malpractice fees
- Compensation for the uninsured
- Medical equipment/supply costs
- High tech advancements in the office
- Compensation for the work of receptionists, office managers, nurses and others
- Rent, utility and janitorial expenses
Which factors listed above pose significant differences for the US compared to other countries?
Medical malpractice fees. Generally speaking, the practice of defensive medicine in the US is widespread, which exists in other countries but only to a limited degree. In many other countries, lawyers do not render services on a contingency basis and instead are exclusively paid for their services in malpractice cases by the hour. This can make the cost of hiring a lawyer extremely expensive and dissuade wronged patients from initiating lawsuits. Some hospitals in other countries even create their own medical malpractice policies to set compensation rates, which are meager in comparison with US malpractice settlement rates. If there is less of a chance of being sued for malpractice in other countries (because of higher expenses and lesser rewards for those suing), the demand and cost for malpractice insurance in those countries will decrease.
The uninsured. The price of a patient visit may increase according to the amount of uninsured patients a doctor treats free of charge or at a reduced rate. Dr. Manoj Jain, a writer for the Washington Post, inflates the cost of a visit for all patients in his practice to make up for the cost of treating uninsured patients, which comprise about 10% of his patient base. This practice may differ from countries that have universalized healthcare systems in place to provide a base level of care for all citizens.
Medical equipment costs. According to the New York Times, the use of high tech medical equipment is more widespread in the United States compared to other countries. These devices are expensive to purchase and maintain, which results in increased patient fees to compensate for the cost. This may derive from the increased amount of specialist referrals in the US, which nearly doubled from 2001 to 2011 and is higher than the referral rate of any other country. Since specialists order the tests that involve the use of these machines, more specialist referrals means more machine-related costs.
Other high tech advancements. Other forms of high tech advancements that the United States dominates in terms of market share are electronic billing services and medical records, both of which bill users monthly. According to Accenture, the US EMR market share in 2010 was $7.4 billion, compared with Asia Pacific’s 2.3 billion, and Europe, Africa and Latin America’s collective $5.8 billion.
Services provided by other staff in medical practices. Medical transcriptionists, receptionists and office managers are an integral part of medical offices around the globe. What set US practices apart are the responsibilities these positions take on with respect to insurance companies: patient coverage checks to determine co-pays, calls to get approval for future referrals and tests, and paperwork resubmission in instances where insurance won’t pay a bill, among others. Countries with single payer systems spend significantly less time and money performing similar functions, which is reflected in lower patient visit costs.
Though many other considerations exist that are presumed to affect the going rate for patient visits (such as med school costs), overhead expenses are a major reason why patient visits are more costly in the US. It’s an uphill battle to practice cost containment and maintain patient satisfaction, and the argument as to whether increased cost means increased quality continues. What do you think?