Luxury goods: a hospital stay in the U.S., a Big Mac in Switzerland

‘Tis the season for luxury goods spending, if you’re lucky: under the tree, you might find a Swiss watch from Baume & Mercier or Piaget; , chocolates boxed from Lindt & Sprüngli; or a Bally-branded handbag. If you have to stay in a hospital in Switzerland, the average cost of one inpatient night would be $617.

That same overnight stay in a U.S. hospital would be $3,612 — a luxury good by any standard. The U.S. inpatient stay average cost ranges from a low of $1,595 (about 2.5 times greater than the Swiss rate) and a high of $14,306 (at the 95th percentile).

These costs come from the International Federation of Health Plans’ (IFHP) study, 2010 Comparative Price Report – Medical and Hospital Fees by Country.

IFHP is an association of health plans from 12 countries who share best practices and data on health care in their home countries. U.S. members include Aetna, AHIP, Blue Cross & Blue Shield Association, HIP Health Plan of New York, Kaiser Foundation Health Plan, and The Trizetto Group.

IFHP’s analysis covered many surgical procedures, imaging studies, and prescription drug costs. The largest difference between prices was found in surgery: the range for cataract surgery went from Spain’s $1,667 to $14,764 in the U.S.

Cost data for the study come from a variety of sources: for Spain, data is based on the fee schedule as of October 2010 reflecting competitive fees charged by private providers; for Switzerland, data is based on private charges billed by hospitals for medical services with physician component not separated.

Health Populi’s Hot Points:   We’ve known since 2003 that, “It’s the prices, stupid,” when comparing U.S. health costs to peer nations; in a landmark article in Health Affairs co-written by Uwe Reinhardt, Gerald Anderson, et. al., the U.S. spends more on health care per capita than any other developed country, but actually uses less services per health citizen. Thus, it’s “the prices.”

I pulled the Swiss data out of the study because it’s probably the most expensive country to live in among those analyzed by IFHP. The Economist’s Big Mac Index compares the price of a Big Mac around the world. In the latest Index dated October 2010, shown at left, Switzerland has the most expensive burger on the planet (among those countries measured by The Economist) at $6.78 compared with the U.S. burger, indexed at $3.71. 

While I could use this opportunity to score a pun about burgers, obesity and health costs, I’m feeling quite sober about this study. Even if you argue with methodology and data sources, the fact remains that a hospital stay is many times greater than that of Switzerland – land of luxury goods and high-priced fast food.

At the low-end of $1,595 per day in the U.S., that 2.5 times marginal difference between the U.S. and Switzerland would be tough to close in the short run without major dislocations in both hospital and physician fees, in addition to the costs of medical supplies and prescription drugs. If it’s the prices that drive the huge differences between U.S. health costs vs. the developed world’s prices, it’s the revenues of hospitals, doctors, drug and medical suppliers that are at risk. This is a basic lesson to keep in mind when talking about “prices:” reducing “prices” in the U.S. health system means reducing some stakeholders’ revenues.

4 Responses to Luxury goods: a hospital stay in the U.S., a Big Mac in Switzerland

  1. Mark Spohr November 23, 2010 at 5:23 pm #

    Having lived in Switzerland for the past three years I can attest to the fact that the cost of living is indeed, expensive and also that the health care is first rate and priced reasonably. How do they do it? The government carefully controls prices and the supply of care. There is no shortage or waiting for services and everyone makes a good profit but they do not have the excessively high level of profits of the US health care industry.
    You point out the central problem that everyone needs to address… prices are too high in the US. In order to cut costs everyone in the US health care industry will have to make less money. This will be difficult. It will be hard to convince doctors who are used to having incomes of $700,000 per year to scrape by on half of that. Similarly, pharma, hospitals, device makers, etc. will all need to make less. There is no “market” solution to this problem. The current “free market” in health care has created this situation and the only solution is to have the government set prices as is done for Medicare.
    Unfortunately, as long as we have a free market for buying political favors, our politicians will go to the highest bidder which, as the recent ACA act shows, is the medical-industrial complex. There is no “political will” to stop the fleecing of the American public for the benefit of the health industry.

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