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Why Healthcare Costs Trillions Less in Canada

Cheryl Clark, for HealthLeaders Media, November 15, 2012

Related to physician supply is the element of planning, she says. You have to have the right number of surgeons and the right number of high acuity, complex programs to preserve the provider volume so they get really good at doing those procedures.

"I think that in many parts of the U.S., we have too many, and each hospital that has a particular program performs too few surgeries to get good at it," she says.

The second major reason for lower costs in Canada, she says, has to do with administrative costs. I experienced this myself a year ago when it took five phone calls with a physician's office manager, three calls to my health plan, and two to a lab, and three detailed letters to correct two billing code errors.

"Administrative costs are sky high in the U.S.," Woolhandler says, "Thirty-one percent of all healthcare spending goes to billing and administration. But in Canada, you're talking about 16.7% going for paperwork and administration. In the U.S., everybody is fighting over who pays the bill; the doctors fight to get paid and the insurance companies fight to avoid payment by demanding documentation before they pay. That's just tremendously expensive."

In Canada, hospitals have global budgets, and while physicians are still paid on a fee-for-service basis, there is a binding fee schedule and very little amount of time and resources devoted to paperwork, she says.

"Many Canadian physicians don't employ any billing personnel, and some will have a receptionist put in a couple of hours a week—a world of difference that anyone who's ever practiced in the United States knows."

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12 comments on "Why Healthcare Costs Trillions Less in Canada"


Dan Ross (11/26/2012 at 4:31 PM)
On a population basis this study appears right on. Notice the study makes no comparison of the survival time for Canadian citizens afflicted with serious disease? A better question may be, if one diagnosed with advanced ?? and covered by Medicare would he/she chose the medical expertise of Canada or the US? In Florida our hospitals enjoy a booming business of Canadians traveling for advanced medical treatments. How long does a patient in the Canadian national system have to wait for a MRI when their GP suspects possible brain cancer? In the UK it's 3 months. In the US 3-4 days? Other countries are cheaper for the reasons highlighted in the study but additionally due to the R word, rationing!

Sue (11/21/2012 at 10:47 AM)
this artical is false, misleading and a joke

emil cici (11/19/2012 at 7:40 PM)
When was the last time the Canadian System developed a major surgical or device break thru? Why do Canadians cross over the border into the US for surgical procedures.Including the Canadian Prime Minister? When was the last time a Canadian Company developed a major drug that significantly impacted a disease entity?