Hypocrisy - Part 2

[Originally posted on October 7, 2007]


This note will not be as long as the other note on hypocrisy. There will be more, but this one will be shorter because I don't have a huge amount of source material on this. I am Canadian, after all. The first note can be found here.

(Full disclosure: I have not seen Michael Moore's Sicko yet. I've read a few articles about it, both positive and negative, but the movie itself is not a source.)

How many of you have seen Boston Legal? It's hilarious. There's one thing about it that really impresses me though: their research is great. They take on a lot of social issues, and they research them well. One of the cases they showed had a lawyer suing an HMO because they had sent a woman to India to have her heart surgery. The HMO's defense was that it costs $90,000 to have heart surgery in the US, and $10,000 in India. The woman died on the operating table, but not because of unsanitary conditions or malpractice--she just didn't make it. And yet, there's a huge boost to patients' recoveries to be made from having family around.


The practice of sending patients to foreign countries is called by the wonderful euphemism "Medical Outsourcing".

The average time for robotic mitral valve repair (heart surgery) is 19 minutes (Source: Cleveland Clinic. http://www.clevelandclinic.org/heartcenter/pub/guide/webchat/mihaljevic100207.htm). The average time for the surgery to fix a herniated lumbar disk (back surgery) is approximately 109 minutes--just under 2 hours (Source: researchers at the University of Chicago. http://heart.health.ivillage.com/newsstories/newtechniqueeasesherniateddisk_hd.cfm).

Let's be fair about this: the average med student graduates with $200,000 in debt. Doctors are a very important part of our society, and deserve to be compensated for their work, and compensated well. Granted, teachers should probably be compensated as well for their contributions, but that's not our focus right now (though I'm sure it will be coming soon).

Let's be fair on this. We'll deal with something rational and realistic. Math, for example. Let's say that a surgeon trained to use robotics during heart surgery makes $250,000 a year. A quarter of a million dollars. That seems fair, doesn't it? Enough that they can pay off any bills, residual debt, buy a nice house, and have lots left over for whatever they might like to do outside of the hospital. Let's be nice and give that doctor 4 weeks of vacation, too. I'm a lowly programmer, and I get 3. That's 48 weeks of work for our doctor. Surgeons work long hours. Let's say that our surgeon works 60 hours a week.

$250,000 divided by 48 weeks equals $5,208.33 dollars per week. Our HMO is already looking bad. Dividing that by 60 hours a week comes to $86.81 per hour. That's pretty bad, too. That works out to $1.45 for one minute's work. That means that for those 19 minutes of work, the surgeon got paid $27.49.

Let's be extra fair, and assume that surgeons have to do some pre-op work. The patient would have a medical doctor at the hospital, but the surgeon usually meets them first. Let's be generous and say that takes an hour. Then there's the scrub-in: that'll be half an hour. We'll add on another half an hour for scrub-out. That's two extra hours, which brings our total for the surgeon to $201.09.

Remember that this is cost to the hospital though, not cost to the HMO. We'll add in two nurses to assist, and though I can't even imagine how underpaid nurses are, I'm going to go with 1/5 of what the surgeon's making. $50,000. I'm lazy, so let's include those two nurses in our patient interview and pre- and post-op scrubs. That way I can just look for 2/5 of the surgeon's cost. The hospital would have to pay another $80.47.

But what if that surgeon had an intern! Interns don't get paid much though. In the States it's about as much as what a waiter makes in a year--say, $30,000. Let's be nice to our poor li'l intern though and pay him the same as the nurses. That adds on another $40.24.

Our hospital is now out $321.80, but that's just salaries. On top of that there are the overhead costs of property taxes, malpractice insurance, equipment usage, disposable items used during surgery, janitorial cleanup afterwards, and I'm sure much, much more, I'm sure. Look at the number for the salaries. Let's really go nuts. Let's say that the overhead costs for the surgery are $5,000 for the 19 minutes. That's 15 and a half times what the salaries are. It's not based on any real data: I'm just using a nice round number. But it's a high one. Oh, and that back surgery? If it were that, instead of heart surgery, the hospital's cost would be $28,684.21. Not that big a difference, huh? About 5.5 times the cost of the heart surgery. Of course, that's assuming the unlikely scenario that the janitor needs more time to clean up after one surgery than another; that the equipment cost is on an hourly basis (I'm guessing that most hospitals own their own equipment instead of rent); and that disposable items used in surgery have an hourly cost (they don't).

We're at $5,321.80 right now. If both sides of this, the salary and the overhead, were doubled, we'd be close to the Indian cost for the heart surgery. That's assuming, of course, that costs and salaries are the same in India as in the US. That means that the hospital is making a 100% markup. That's pretty respectable. Then again, when I worked at Home Depot, there were some nails that we'd sell for $0.30 a piece. Here's a story for you (mmm...tangent-y...):

I've checked around, and there are (guessing high, since I want to be "fair" to the parties in question) 500 of those nails per pound (Source: Stainless Fasteners. http://www.stainless-fasteners.com/siding.htm). That works out to $150 per pound. We sold 50-pound boxes for about $50. If that's right, based on the charge for nails, Home Depot is charging well over 300% markup. Way over. A lot of smaller hardware stores will charge you less than $10 a pound.

Let's go ahead and boost our $5,321.80 by a 300% markup. That's $15,965.40. That's between 4 and 6 times less than the price of the surgery in the US. That means that the HMO's markup is between 400 and 600%. If we take our numbers as being certain (they're not, but I'm sure we can take them as fair), that means that the HMO is making a 564% markup. Those Indian doctors? They're out by $5965.40. But if I understand how US-India outsourcing works, it's because salaries there are a lot cheaper. $6,000 cheaper over 19 minutes? That's pretty cheap.

So I lied about this one being short. I figured it would be, but who would have thought that applying reason to HMOs would take so much damn math! Remember, we even doubled  the salaries of everyone involved in the surgery. With our high estimate of the overhead costs of the hospital doubled, we've already reached the price of the Indian surgery. That was a high estimate, but let's be fair here: hospitals have a lot of costs.

In the US (probably in Canada, too, but like I said, I'm being lazy in my sourcing for this article), there is a law which states that any publicly traded company must base its corporate decisions in the best interests of its shareholders. Keep costs down and profits up. Watch The Corporation sometime. It's brilliant, and it will tell you much more than I can about the legal ramifications of that statement.

That means that legally, HMOs have no choice but to offer as incentives to their clients, cheaper surgeries abroad than they can get at home. If you're on a fixed income, does that present a choice? In the Boston Legal  episode, the woman was offered the choice of paying $90,000 or getting the surgery in India for free. What would you choose? (By the way, I know that that pushes our initial idea of costs far above what they might have been, but that just makes my own numbers more fair.)

So at what point do you see a doctor's hippocratic oath becoming a hypocritical doctrine? Is it when the doctor performs the surgery? When the hospital charges the HMO? Or is it when the HMO charges a ridiculous sum to the client?

Hypocrites are everywhere. The first part of this series was on politicians. This one's on the medical industry (not medical professionals. Be careful about that difference). What do you think the next one should be on? Who do you see as a hypocrite? I'm leaning towards the music industry, but I imagine that may be because it's a horrible place that draws new artists in by selling cool (also in an upcoming article), but it also produces some of the most unlistenable crap I've ever heard.

Who are the biggest hypocrites in your life?