Why treat someone with a $200 medical device when you can get similar results with a $17,500 gadget?
The answer to that question helps explain why Americans pay far more for healthcare on average than anyone else in the world, and why patients' medical woes are viewed as profit centers by the roughly $3-trillion healthcare industry.
I wrote recently about an El Segundo man named Bill Erickson, who said he was slapped with a bill for $15,000 for temporary use of a cooling device intended to ease the pain of knee surgery. His insurer, Anthem Blue Cross, had covered only a few thousand bucks of the total cost.
The column focused on why Erickson, 64, received such a charge for one knee when the device was provided free after his other knee was operated on in 2010. "Same doctor, same hospital, same procedure," he told me.
But dozens of readers who'd experienced similar procedures zeroed in another point: How on earth can anyone charge $15,000 for a knee cooler?
Ron Williams of Culver City said his wife had both her knees replaced during the last nine months. He said he found "knee chillers" online for under $200.
"This is a machine equivalent to a Dust Devil vacuum cleaner that sucks and blows ice water rather than air through a blood pressure cuff," Williams said. "If you add it all up, you can't have more than a couple hundred dollars' worth of equipment."
Roy Kautz of Thousand Oaks said he too had both knees replaced last year. "You can purchase good ice machines for around $200," he said. "I borrowed one from a friend and it worked fine."
Susan Sheldon of Poway had one knee replaced last year. The cooling device recommended by her doctor cost $275, she said.
The device provided to Erickson after both his operations was from a company called Affiliated Home Health Care. In both cases, he said, the toaster-size machine was handed to him as he was leaving St. John's Health Center in Santa Monica.
After the 2010 operation, Affiliated billed Erickson's insurer, Anthem, $17,500 for a few weeks' use of the knee cooler. Darrel Ng, an Anthem spokesman, said the insurer paid the out-of-network Affiliated about $4,000. Erickson said he was never billed for the remaining $13,500.
Anthem said it paid Affiliated about the same amount after Erickson's second knee surgery last year. This time, though, Erickson said, Affiliated wanted $15,000 from him to make up the difference.
I tried to reach someone at Affiliated when I first wrote about this, but no one at the Arizona company returned my calls.
I've since learned that Affiliated is owned by another Arizona company, Maldonado Medical. This week, I reached the head of that company, Brandon Maldonado.
He said the reason his company's patented cooling device is so pricey is because it works better than anything else available. There's just no comparison with other such devices, he said.
"You're dealing with Ferraris and Chevys here," Maldonado said.
I can't speak to the efficacy of different devices or treatments. But there seems to be consensus in the medical community that so-called cooling therapy, or cryotherapy, can help after knee surgery.
"Cryotherapy may reduce pain and increase the range of movement in the first few days after a total knee replacement," says a study on the website of the U.S. National Library of Medicine.
Various knee-cooling treatments can be found on Amazon.com, ranging from relatively inexpensive wraps containing ice packs to portable devices that can pump chilled water to the knee for hours. One such gadget, the Polar Care Cube, can be purchased for $188.99.
A Polar Care machine was cited in a 2012 lawsuit alleging that a user experienced frostbite. That case, which included allegations of malpractice by the patient's doctor, resulted in $12.7 million in damages being awarded.
Maldonado defended his company's TEC Thermoelectric Cooling System as safer than other such devices. He called rival machines "archaic."
Regardless, some top insurers have decided that Maldonado's device offers no appreciable advantages over other forms of cooling therapy.
Anthem's Ng said the insurer checked out Maldonado's system and determined that "there is no evidence this cooling device is any more effective than an ice pack."
The insurance giant Aetna similarly concluded that Maldonado's machine "provides no additional clinical utility or impact on health outcomes than the use of ice."
Maldonado dismissed such findings. He said insurance companies make such decisions based on cost, not medical efficacy.
He also said he has no intention to squeeze Erickson for the outstanding $15,000. Maldonado said his company will pursue the money solely from Anthem.
Maybe the biggest question is why a hospital would provide patients with a medical device that's much more expensive than other available devices and not covered by leading insurers.
A spokeswoman for St. John's said such decisions rest with individual doctors.
Erickson's doctor, Andrew Yun, didn't return calls for comment. But Erickson said Yun told him after my first column ran that he'd no longer be prescribing Maldonado's machine for patients.
If I had to guess, I'd say Yun had no idea how much the device cost. Many doctors have told me they typically don't check on the prices charged to patients.
And this is a key part of the problem. Think about it: A patient was handed a device that can sell for less than $200, but in this case it was one that rented for $17,500. And neither he, his doctor nor even the hospital probably was aware of the whopping price tag.
Our healthcare system won't begin to shed its current dysfunctionality until rational pricing is introduced — and until doctors and hospitals take a more active role in reducing patients' costs.
It's hard not to think that Maldonado sets the price of his company's cooling machine at a crazy-high level because he knows that insurers will still pay thousands of dollars, as was the case with Anthem.
It's also hard not to think that Maldonado loses no sleep over the fact that every such claim paid by insurers nudges people's premiums ever higher.
This is why Americans' healthcare costs run about twice what people in other developed countries pay — countries that ensure everyone is covered and have laws requiring that medical prices are fair.
Reasonable profits, fine. No one thinks that medical-device makers or drug companies are charities.
Gouging the sick? How could that be acceptable to anyone?Copyright © 2015, Los Angeles Times