MRIs in Japan and the U.S.

here is an interesting excerpt on the price differences for MRI scans from T.R. Reid’s book, The Healing of America.  

I find it interesting because it is an example of positive benefits from price pressures.  Here in the U.S., practitioners and patients are almost totally disconnected from the actual costs of medical care and much of the time that just encourages overtreatment and waste.

Another aspect which is not included in the quote below is that when practitioners do not heavily benefit financially from device use and treatments, they tend to use those treatments appropriate to their patients’ conditions.

…In the United States, a standard MRI scan of the head costs about $1000 to $1400.  In Japan, the health ministry thinks that price is far too high.  The fixed price for an MRI of the head in Japan is around $105.  That’s why Japan with the highest per capita rate of MRI scans in the world, still spends less than most developed countries on health care;  you can buy a lot of scans if the price is dirt-cheap.  I once asked Professor Ikegami why doctors put up with this; why don’t they just refuse to take MRI scans if the fee is so low?  “The answer to that is the Fee Schedule,” the economist replied, “There is only on payment scale in Japan.  If a doctor won’t accept the price in the schedule, he won’t get any business.  And he won’t have the scans he needs to diagnose his patients.  So the doctors accept the price.”

As it turns out, the heavy-handed price control from above has had a salutary effect on the cost of medical care.  Because the permitted fee for an MRI scan is so low, for example, Japanese doctors went to the MRI manufacturers–Hitachi, Toshiba, etc.– and demanded a new line of compact, inexpensive MRI machines.  The industry responded.  Today, Japanese doctors and clinics can buy MRI scanners for around $150,000– about one-tenth the price of the bigger machines used in the United States.  That helps keep prices down for the Japanese health care system.  And the new line of cheap, simple MRI machines has been an export boon for the Japanese manufacturers, giving them a lock on the MRI market in poorer countries.  These cut-price models perform the basic scanning job but don’t  have all the advanced features of the top-of-the-line models generally used in the United States.  So cost control not only keeps prices down; it also encourages innovation…


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