I’ve posted the transcript of my recent podcast interview with Curt Schroeder at MedTripInfo.com. Despite some serious jet lag, Curt provided significant insight during the discussion. It’s definitely worth a read if you have the time. Here’s the start:
David: Curt, can you tell me what are the basic cost differences between hospitals in Thailand and the U.S.? And, what are the drivers of those differences?
Curt: I think, typically, the price differential has been about 80 percent of the overall U.S. cost, so quite a bit less; a factor of four or five times. Obviously, the primary drivers of that are things like lower cost of personnel, which are quite noticeable, but I think beyond that is the actual model to deliver the care. It is substantially different in Thailand.
We have a very large, essentially multispecialty group practice made up of 700 or 800 physicians all operating as independent practitioners, but under one roof. What you get with that, is a very large clinic taking care of 1.2 million people a year, backed by a 550 bed hospital.
With that, you also get all the advantages: the economies of scale and the efficiency of the practice, so there is very little duplication; the doctors have access, as appropriate, to the medical records of the patients if they are being treated by other team members.
Altogether, it is not only a very inexpensive, but also a very efficient way of treating patients. Together with the obvious lower cost environment and less litigious environment, in terms of medical malpractice, this makes it a very cost effective comparison.
David: How much of the difference is attributable to just the model of care versus the labor side, if you are able to break it down? Also, on the malpractice side, I know there is a direct cost difference, in terms of the actual malpractice premium that you might pay, or pay outs that might have to be made. Does it also affect the style of care? Does it enable a different sort of a model, if you are operating in a different kind of litigation environment than you would be in the U.S.?
Curt:: Certainly. A lot of it has been talked about in the U.S. with the litigious environment of defensive medicine. I think I have been able to see both; I have been a CEO of hospitals in the U.S., as well as other countries in addition to Thailand.
I have seen the actual effect, when physicians are nervous about litigation. They order more than, perhaps, they need to to protect themselves. Frankly, there is also a lot of overordering related to poor coordination of care, when doctors do not know what other doctors are doing in real time. Taking advantage of, for instance, a common electronic medical record that we use, you reduce a lot of that duplication.
In addition, when you are not so worried about lawyers coming after you, you tend to practice more what you got taught in medical school, which is what you actually need to do to diagnose and treat a patient. I think all those are pretty powerful, in terms of the overall cost reduction.
How much is related to the local cost, for example: our salaries? When you look at salaries as a percentage of the cost in the United States, it is upwards of 50 to 60 percent. In Asia, it is closer to the mid-teens at Bumrungrad, it is about 16 percent. Of course, that is on the back of costs that are 80 percent less, so you can do the math and figure out how much less it costs.
These are all baccalaureate trained nurses giving excellent service. Our physicians are, of course, all board certified in their specialties. 250 of our physicians at Bumrungrad are U.S. board certified, fully certified by boards in the U.S. Therefore I think that the value which can be delivered in that environment is incredible.
If you look at the physician fees, the physician fees are equally good value. The average doctor fee, to see as an outpatient at a place like Bumrungrad, is about $14. To see a board certified cardiologist or a gastroenterologist –this is pretty good value internationally.
You may ask, “Why is that?” I attribute it to a couple of things, not the least of which is the fact that, I think, the physicians’ expectations of income in Asia are less than they are in the U.S. and developed world. They do live well. They send their kids to good schools, but they are not considered the multimillionaires that they might be in other areas.
In addition to that, they have the advantage of working in these large multispecialty clinics, where they have very little overhead. The overhead offered to a physician in the U.S. is probably 50 to 60 percent. In Thailand, it is probably five or six percent, because they are working in a very large, multispecialty type of clinic, where there are thousands of patients going through a day. They get the advantage of that economy of scale.
They do not have to buy their own space; they do not have to rent; they do not have to buy their own computers; they do not have to worry about all of these complicated insurance forms. That is all taken care of by the hospital. Therefore they can afford to get much better pricing, where their overhead throughput is much, much higher.
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