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A new study in the Archives of Internal Medicine has found that a common surgical procedure costs more in private US hospitals than in public Canadian ones. They conclude that this higher cost can be explained by more expensive and bureaucratic administration, billing and support services.

Researchers compared the cost of conducting a specific medical procedure in private for-profit American hospitals, to the cost of the exact same procedure being performed in Canadian public hospitals.

AAA repair’ refers to open abdominal aortic aneurysm repair, a common and expensive surgical procedure. AAA is the cause of thousands of deaths every year in both countries. AAA repair operations are a major expense on both health systems.

After looking at a variety of direct and indirect (or overhead) costs researchers conclude: “The cost of AAA repair is substantially higher in the United States compared with Canada, despite shorter lengths of stay and similar clinical outcomes.”

Total cost of treatment for American patients undergoing AAA repair was 55 per cent higher than the total costs associated with each Canadian patient undergoing the same procedure. Canadian costs were lower than American ones in all categories, but the difference was most dramatic in the area of what were called indirect or “overhead costs” in the study. “Overhead costs” refer to facility management, administration and support services.

The researchers say Canada’s universal insurance system, which reduces administrative costs, probably explains the huge difference. The American system is more expensive due in part to a multi-payer system, since direct patient billing and other billing procedures contribute to greater overhead costs. This is consistent with findings of earlier studies showing that the US health care system is much more bureaucratic and costly than Canada’s public Medicare system.

The study used a sample of 1057 sets of records from a variety of hospital data sources for patients who had AAA repair surgery done. Five hundred and fifty-two (552) of them were treated in Canada.

Reprinted from the Archives of Internal Medicine, Med/Vol. 163, Nov. 10, 2003.

American Medical Association, 2003.