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."