Uwe Reinhardt, the eminent health care economist who died last week, spent his career diagnosing the ills of the U.S. medical system and suggesting remedies. One of his most famous articles, written with colleagues Gerard F. Anderson, Peter S. Hussey, and Varduhi Petrosyan, bore the trenchant title, “It’s the Prices, Stupid.” In it, Renhardt and his co-authors concluded,
In 2000 the United States spent considerably more on health care than any other country, whether measured per capita or as a percentage of GDP. At the same time, most measures of aggregate utilization such as physician visits per capita and hospital days per capita were below the OECD median. Since spending is a product of both the goods and services used and their prices, this implies that much higher prices are paid in the United States than in other countries. But U.S. policymakers need to reflect on what Americans are getting for their greater health spending. They could conclude: It’s the prices, stupid.
Our health care is still plagued by high prices, with the cost of some new cancer treatments approaching a million dollars. However, as an article by Katie Hafner and Griffin Palmer in Tuesday’s New York Times details, it is not always just the prices.
Hafner and Palmer explore the rapid increase in the treatment of older Americans for skin cancer. To some extent, the increase can be explained by demographics—the aging of a generation that grew up with no clue that exposure to the sun’s rays could be anything but beneficial. However, demographics alone cannot explain why the number of biopsies for skin cancer that were billed to traditional Medicare Part B has risen 55 percent over the past decade, despite a small drop in that program’s enrollment.
The article zeros in on the role of private dermatology clinics, the largest of which is Advanced Dermatology and Cosmetic Surgery. The growth of ADCS has been fueled, in part, by an investment of $600 million by Harvest Partners, a private equity firm. ADCS makes heavy use of physician assistants to perform thousands of biopsies and treatments. The authors question the adequacy of supervision of the assistants by qualified MDs (as required by law). They report the opinion of independent specialists who characterize ADCS treatments as far too aggressive, especially for cancers that are unlikely to be fatal, and for patients who are near the end of their lives from other causes.
This examination of a single specialty raises the obvious question: Is it still just the prices, stupid, or is overtreatment becoming more of a problem?