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Often Americans pay more for the same health treatments as people from other countries. For example: hip replacement surgery in the US costs about $40,000, compared with about $16,000 in the UK. Americans are paying about 2.5x more.

Some people see this and believe it’s a good idea to adopt a model like Canada or the UK.

But what if there was a model that made the same procedures (at the same quality) even less expensive? Sometimes people cite places like India or Thailand, but their health outcomes and other factors like costs of living are lower. Can we look at an alternative model that keeps things in the United States or a peer country?

Let’s consider what it costs for dogs to get the same treatment as people in the US:

 Sources: costhelper.com
Sources: costhelper.com

What is your initial reaction to seeing this? Curiosity? Skepticism? Frustration?

What do you think contributes to the differences between what American people and dogs are paying for healthcare? Can we learn from this “Dog Model” of healthcare?

An exercise with your friends:

Get together and list what you think might be the most important drivers of cost that are different for dogs and people. Come up with 3-5 and rank them.

In the comments section, let us know what your list looks like. We’ll take the most common drivers people thought of and do some research for another post!

45 Comments

  • Benjamin Long, March 2, 2015 @ 9:59 pm Reply

    One of the first things that comes to mind looking at that list is liability in the case of anything significant going wrong. How do the liability costs compare between a vet screwup and a doctor screwup? The doctor’s liability insurance is going to play a factor in the procedure cost.

    This doesn’t really excuse the price difference on some of the lower end multipliers, such as medication and MRI, those essentially don’t face the same liability factors.

    • Erik Fogg, March 4, 2015 @ 2:12 am Reply

      So I decided to do a quick Googling, and found…

      This doctor says he only pays $5,000/yr for malpractice insurance (though

      Chron says your doctor bill includes about 10% malpractice insurance premiums (http://work.chron.com/much-doctors-pay-insurance-7304.html)

      And this doc cites some research that total malpractice claims in the US are only about $4B/year and dropping (http://www.truecostofhealthcare.org/malpractice)

      I’m assuming a lot of our costs come from somewhere else. Though I suspect I’m missing something as I look at this, too.

  • nathan lachenmyer, March 3, 2015 @ 2:36 am Reply

    Liability is a big factor. I think ability / willingness to pay is another one. People are willing to pay pretty much anything to save their own life, or that of a loved one. When their dog gets sick, they’re willing to pay, but not nearly as much.

    Along a similar line of thought — with the majority of pets, the owner is paying out of pocket. A brief look at the data shows that even the countries with the highest percentage of pet insurance is around 23%, meaning that 76% of the population is paying out of pocket for their pets illnesses / injuries.

    For humans, about 86% of the population in insured, meaning that the insurance companies are footing the bill for these surgeries, not the patient — and those companies can afford to pay much more than an individual could (which is, after all, the point of insurance).

    • Erik Fogg, March 4, 2015 @ 2:07 am Reply

      My biggest thought about the "can pay more so will" for insurers is that they also seem to have more bargaining power than individual consumers. I think that’s a major argument for the single payer system–governments have huge bargaining power as the only payer in town. Obviously insurers want to make as much money as possible, so I wonder what makes them unable to push prices down for providers more than humans can push prices down at vets? Any thoughts? (I have no idea.)

      • nathan lachenmyer, March 5, 2015 @ 3:50 pm Reply

        That’s a really good point. I’ll have to do some reading and get back to you if I come up with anything.

      • Christopher Grouard, March 5, 2015 @ 7:04 pm Reply

        The thing to remember is the insurance companies don’t make people better. Who has more power then the group that literally has the power over life, and death. I’m also not convinced it’s always intentional either. Take this next part with a grain of salt, as yes it’s based on stories related to me. Not ones I’m personally experienced. Still there’s a real ring of truth to it. I once meet a medical tech, who told me about how the hospital her worked at was paying $200 for a standard formatted floppy just, because it was for a medical device. The idea that medical technology could also be cheap seems to most doctors seems like dangerous corner cutting. So apparently it’s hard to bring down the cost of some of this equipment even if you wanted to.

        Here’s another example: Sovaldi. It cures Hep C. It’s a 12 week pill regiment that costs $82,000. Gilead Sciences Inc is only supplier to a demand that can literally go no where else. This will save you from a liver transplant you might never get. So yeah they get to charge what ever they want. You tell me if you had Hep C would you take no as an answer from your provider. Would you accept them telling you their trying to renegotiate the cost to save your life. That’s why in my personal opinion nothings going to happen until we address the profit motives of even ‘non-profit’ hospitals.

        • Erik Fogg, March 5, 2015 @ 7:58 pm Reply

          Oh I totally agree that insurance companies don’t exist to make people better. They exist to make money.

          I just keep thinking intuitively that, "if insurance companies want to make money, they’ll negotiate down the cost of procedures." They sometimes try to cut costs by not covering procedures, but I’m just surprised that there isn’t a negotiating mechanism to drive down the price of the procedure.

          Though I have heard that "hospitals don’t make much profit" which means that they’re probably paying out huge costs to suppliers (to your point about Sovaldi, where you have a monopoly). So maybe insurers aren’t the place to look, and looking into a joint buying mechanism for hospitals/doctors is the place–some union/guild that has huge buying power? It’s not like hospitals are viciously competing against each other, I think.

          • Christopher Grouard, March 6, 2015 @ 2:29 am

            Right, but what I’m saying is your intuition is wrong. Negotiating only works when you have options.That’s why it works for say soda. If the industry is ‘maximize’ it’s profits to develop new drinks. You stop drinking soda, and start drink apple juice. Negotiating only works when the two parties are on roughly equal ground. We aren’t on even ground with the drug companies. There is frequently very little competition. If you doubt that, again look at Sovaldi. Gilead gets to decide what the market price for curing hep c is. You can try negotiating with them, but you would basically just be begging. There is no free market mechanism there to control the price. At least not the way the system is constructed now.

            As for the hospitals, and profit bit you should read this series from the NYT: http://www.nytimes.com/interactive/2014/health/paying-till-it-hurts.html I’m still working my way through some of the articles, but it’s good work. There’s an article specifically about hospitals. Anyway the point is profits ultimately determine how we build our health care system. It’s built to extract profit at every turn. Even if they turn around, and reinvest that back into the system their only encouraging the system to extract more profit.

            I think we have to ask our selves more considerate questions about healthcare. How much do we spend to make treatments a little bit better? How do we reform the patent system, and drug development. Short term profit is not a good way to get us to those questions. Especially not when people are willing to pay any price to keep a limb, or stay alive. It is a toxic combination.

  • Joe Essenburg, March 3, 2015 @ 6:45 am Reply

    My thoughts on different costs for doctor vs vet are:
    1) Liability insurance cost for the healthcare provider
    2) Purchase power of the primary customer (generally insurance provider for human and often personal expense for dog)
    3) Primary decision maker’s degree of separation from personal cost (with human patient the decision maker(s) are often not covering the cost; with dog they often are)
    4) Market value of the healthcare provider (scarcity, purchasers more concerned with quality assurance for human, higher education barrier for human, etc.)
    5) Costs of operating, infrastructure, pre-consulting and record keeping for the healthcare provider (greater costs for human patient aimed at lowering likelihood of an event resulting in lawsuit)

    • Erik Fogg, March 4, 2015 @ 2:05 am Reply

      Yeah I think these are really powerful. I have no idea how much each one accounts for the difference (and whether together they account for all/most of the cost or not).

      If you end up taking 15 minutes to grab some data let me know what you find and I will make another post about it with a "thanks Joe!" shout out 🙂

  • Alan Cruickshank, March 3, 2015 @ 9:23 am Reply

    I think the big stickler here is the price vs. cost argument. Take the Amoxicillin example above – the cost is exactly the same (because it’s the same thing) – the price is different.

    I can understand why in many cases the price would be higher – because humans have more ability to pay.

    What I think would be interesting to compare are the costs like for like. The drugs should cost the same, to some extent the time of the people involved should be comparable (doctors and vets have a similar standard of living and a similar level of education). I suspect that there are some things that veterinary medicine can take from human medicine and visa-versa.

    • Erik Fogg, March 4, 2015 @ 2:02 am Reply

      Totally. Amoxicillin is a great example because since it’s so commoditized, one would figure that the market should balance the price (the supply would meet the demand in both cases). The free-marketeer might assume that the vet is "freer" and consumers can be more choosy. A pro-regulation person might think that the healthcare system for humans is more inelastic than for dogs (if medicine for a dog is too expensive, too bad!) so consumers can’t afford to be cost-conscious. Whatcha think?

  • Chris McAdam, March 10, 2015 @ 4:11 pm Reply

    I’ve seen the meme and I have to ask how they calculated the drug costs.

    Amox (500 mg, 30 pills) is available as a $4 script at Walmart. (That’s the full price) which works out to about 14 cents a pill.
    http://www.cleveland.com/healthfit/index.ssf/2009/06/costofgenericamoxicillinra.html
    Note there are more expensive places, too.
    Dr’s foster and smith (a pet supply company I am very familiar with) is selling the 500c for 30 cents a pill. Much cheaper than the other two stores, but well above Walmart.
    http://www.drsfostersmith.com/product/prod_display.cfm?pcatid=9563&cmpid=05cseYY&ref=XXXX&subref=AA&catargetid=530005150000154263&cadevice=c

    I think part of the problem with the chart is that it looked at the "typical" cost for humans, vs the fully commoditized price for pets. I also agree with Ben that the safety conditions for a human have to be higher, for liability concerns. The cost of surgery, and the training required to do it, is much more extensive for human doctors than vets.

    • Erik Fogg, March 10, 2015 @ 6:19 pm Reply

      Props for finding all the data in this–I think it’s a great example to set for everyone.

      The thing I want to go after when I have the time: what’s the surgery mortality/sickness rate for pets vs. humans for similar surgeries? It would test the hypothesis that "safer" is one of the benefits of higher spending on these things for humans.

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