Everyone knows that the costs associated with healthcare are more shocking than firing up an AED during a lightning storm. But what about imaging in particular — CT scans, MRIs, ultrasounds, X-rays, etc. If the hospital has already bought the machine, surely it’s paid off after the first couple hundred uses? Why does it continue to cost thousands of dollars for a grainy, black and white image of your spleen or testicle? Are hospitals making tons of money on this, or what? Let’s take a close look at the internal workings and find out.
What are these machines, anyway?
This is a good place to start. Let’s think about a CT scanner, which basically takes X-rays of soft tissue. It’s big and heavy as hell, and uses two X-rays to send radiation beams from all different angles in a circle by spinning really fast. They’re designed by engineers, physicists and computer scientists, who all have PhDs and are presumably remunerated accordingly. They also tend to be assembled by hand. They are, in short, a crazy expensive piece of equipment.
New ones, depending on how many images they’re capable of taking, can run $300,000 to a million bucks. Refurbished ones can be less than $100,000 and up to $650,000.
Yowzer. But what about —
Hang on! There’s also the necessary software: That can be $15,000… or $100,000.
Ouch. And —
Wait! They also cost a lot to maintain: Generally, 10 to 14 percent of the purchase price.
Guessing they come with a hefty electricity bill too, then?
Oh, they use lots — 31 kilowatt hours a day, which is about as much as an average American household. The hardware gets hot and needs a significant cooling system to avoid a meltdown (at which time it wouldn’t be fun to be in the middle of that giant spinning donut of magnets and radioactivity). That’s another cost that’s passed on to the consumer.
Dang. What else?
Well, they’re expensive to buy, expensive to maintain, expensive to run, and even the buildout is expensive. Because they need to be in special suites for the health and safety of the technicians (there’s a lot of magnetic power that the techs need to be shielded from) the cost to install a CT scanner in these suites can run several million dollars.
And there’s more! Some of that stuff — equipment, repairs — are the technical fees. Then there’s the professional fees: It takes one or more technicians (who have a couple years of specialized training) and a radiologist (who, you know, went to medical school) to administer the scan and read the results. This kind of labor isn’t cheap.
Next, there’s the overhead of a hospital or imaging center: the rent, the electricity, the wages of the administrative workers like the receptionists and janitorial crew, and all that other stuff that goes into keeping the lights on, the doors unlocked, the elevators running, the doctor coats mostly clean and the copious amounts of old, grubby magazines in the waiting room.
How big of a factor is all that overhead?
It varies widely, which has a huge impact on why imaging costs can also vary so widely between, say, a fancy hospital in that there big city, and a small clinic out in the sticks — just as rent and wages vary widely depending on geography.
What about ultrasounds, MRIs and X-rays?
MRIs, or magnetic resonance imaging, also provide images of soft tissues and organs. The machines can run a few hundred thousand dollars to $3 million or more — add in all those installation costs and it can total up to $5 million. Their prices for a patient are in the same ballpark as CT scans (more on that later): an abdominal MRI might run a bit less than $800, while a brain scan could be $1,200. Or they could be $2,600 or more!
Ultrasounds and X-rays are a lot cheaper. Think of an ultrasound as a bit like one of these soft-tissue imaging technologies, but in real time, as it can examine organs, blood flow or an unborn baby. Ultrasound machines run in the low tens of thousands of dollars — $30,000, but often run in the low tens and teens of thousands. Ultrasound procedures commonly run $500 or less. X-ray machines, used to find broken bones and tumors, are similarly cheap compared to CT or MRI machines. They’re $20,000 to $30,000 max, and often a lot less. There are also many different kinds, depending on which body part is being X-rayed. The images can cost less than $100.
So are hospitals making a ton of money on CT scans and MRIs, or what?
Apparently! According to a healthcare educator, “For years, the radiology service line has been the primary profit engine for hospitals. … Imaging services account for $24.1 billion, or 37 percent of a hospital’s profit. That is about three times greater than cardiology, the next closest service line.”
Let’s look at how much scans cost (although again, they vary wildly): From less than $500 to $10,000 or more (angiographies, or images of blood vessels and circulation, tends to be very pricey). Now imagine a single machine takes 15 scans a day at a hospital. At the high end, that’s potentially up to $150,000 a day, or — assuming it ran every day — just shy of $55 million per year.
Now, these machines do admittedly have a relatively short working life — eight years or less — so it’s not like these imaging machines are an immortal, golden-egg-laying goose. They’ll need to be replaced every couple presidential administrations, for another million bucks or so. This means that a hospital that uses the machine a bit less often than an outpatient imaging center (which only does scans) will charge more for each scan — like what happened to one poor man who received the same type of scan in two different settings (an imaging center, then an ER), and was charged 33 times more at the ER.
How are they allowed to get away with this?
Because so much about our health systems and our health insurance is fucked up. For one thing, there’s very little price transparency in healthcare. When was the last time you saw the price of a CT scan advertised? This prevents customers from easily shopping around. Then, of course, if you’re paying with insurance and have an HMO, you can be locked into using your network’s imaging services, rather than venturing forth and looking for the cheapest option.
Why can’t they just make things transparent?
Believe it or not, help is on the way from… the Trump Administration? Yes, really. A rule was just finalized in November, set to go into effect in January 2021, that will require hospitals to share lots of pricing information they’ve long withheld. It’s likely to be challenged in court, though, so don’t get your hopes up. An insurance company CEO responded in the most Orwellian way possible by stating that “the rules … will not help customers better understand what health services will cost them.” Sure, buddy.
So what’s a good way to pay less for one of these things?
Shop around if you can. Specialty imaging centers can be cheaper than hospitals — especially big, brand-name hospitals or university hospitals. Hospitals absorb the costs of scans and other medical treatment for the poor, the uninsured and people unable to pay their bills — those costs get passed onto everyone else. Also, you can often pay less if you pay cash upfront rather than using insurance to pay for it (this goes for many types of healthcare, from routine scans to chemotherapy).
What if my doctor likes to prescribe a lot of scans?
Doctors want to be sure to cover their bases — both for your own health, and because it’s a good preventive measure against malpractice lawsuits, which are a reality that any medical doctor today lives in constant fear of. This is called “defensive medicine.” It’s estimated that up to a third of scans are unnecessary, according to an Ivy League doctor quoted by Reuters. Our healthcare system incentivizes doctors to order tests in other ways, too: Because of the common fee-for-service arrangement (in which each doctor activity is billed separately) doctors get paid more when they order more services.
So is this insane price gouge ever going to change?
Probably not by much. As long as there’s very little price transparency, fee-for-service payment structures and the byzantine administrative complexities created by insurance, things will remain the same. If you need scans, first verify that you really need one, then try to shop around, and pay with cash when you can. It’s hard to beat such a massive, dysfunctional system — but you can at least play it somewhat. Oh, and like, maybe live, and stuff.