All Commentary
Saturday, July 1, 1995

Cholecystectomy: How Is It Made?

A Free Market Can Best Handle the Complexity of Medicine and Surgery

Leonard Metildi, M.D., F.A.C.S., is a clinical assistant professor of surgery in solo practice in upstate New York.

In the spirit of Leonard Read’s essay on the pencil—how no one knows how pencils are made—it is interesting to investigate a surgical operation (a cholecystectomy—removal of the gall bladder) to show that no one knows how it is made. As the pencil is a relatively simple item, yet its manufacture and distribution are so hopelessly complex that a centralized economy could not begin to duplicate the market’s efficient performance of these functions, medical surgery is likewise so complex that no central-planning authority could ever ensure that it is readily available at reasonable prices.

A few simplifying assumptions are useful:

1. The clinical case is straightforward and simple—the patient is otherwise healthy with single organ system involvement.

2. The diagnostic workup is done efficiently.

3. The operation and the post-operative course are uneventful.

4. The standard surgical instruments (forceps, scissors, knife handles, needle holders, etc.) are made by the same manufacturer.

A 50-year-old male with symptoms of gallbladder disease is the patient. His medical history is fine and he is on no medications. To confirm the diagnosis, the surgeon obtains an ultrasound of the gallbladder (done on a Accuson 128 with a Matrix video imager using conduction medium by Parker). Surgery is scheduled. For the preoperative laboratory work, the patient has an EKG (Hewlett-Packard), chest x-ray (GE and Kodak), complete blood count (Coulter T890), chemistry profile 18 (Kodak Ektachem), and a urine analysis (Ames Multistix).

The patient is admitted to the hospital on the morning of surgery. An Imed pump is used to start an intravenous of Ringer’s lactate (solution, polyvinyl bag, and tubing from Abbott, catheter from B-D Corporation, alcohol pads from Kendall). The patient is given a shot of subcutaneous heparin from Elkins-Sinn, a dose of Kefzol from E. I. Lilly, syringe and needle from B-D, and anti-embolic stockings from Kendall are put on. In the operating room, the patient is placed on a Skytron Elite 6001 table and given several medicines (sodium pentothal–Abbott, fentanyl–Janssen, succinyl choline–Abbott, pavulon–Gensia) as well as oxygen by mask from a Narkomed 2 anesthesia machine manufactured by North American Drager. (The mask is from Bay State Anesthesia.) He is then endotracheally intubated using a Welch Allyn laryngoscope, a Mallenckrodt Critical Care endotracheal tube, a tongue blade from General Medical Corporation, and an oral airway from Sun Medical Inc. The patient is then given oxygen and nitrous oxide from MGIndustries, and isoflurane from Anaquest.

An open cholecystectomy with an intra-operative cystic duct cholangiogram is performed using the following items:

1. Bard Parker scalpel blade
2. Surgical instruments from V. Meuller
3. Silk suture from Ethicon
4. Vicryl suture from Ethicon
5. Skin staples from Richard Allen
6. Ray-tec sponges from Kendall
7. Laparotomy pads from Medical Action
8. Saline irrigation from Abbott
9. Syringes from B-D
10. Valley Labs Electrocautery unit
11. Contrast material from Winthrop
12. Kodak x-ray film
13. General Electric portable x-ray machine
14. Cholangiocatheter from Duvall
15. Dressing sponges from General Medical Corporation
16. Tape from 3M Corporation
17. Operating lights from Angieneaux
18. Betadine surgical scrub from Purdue Frederick
19. Hebiclens from Stuart
20. Scrub brushes from Becton-Dickensen
21. Surgical gowns, caps, laparotomy sheets from Kimberly Clark
22. Face masks from General Medical Corporation

An anesthesiologist monitors the patient using the following equipment:

1. EKG monitor by Datascope
2. Oxygen saturation monitor by Datascope
3. Carbon dioxide monitor by BOC Health Care
4. Blood pressure monitor by Datascope

During the two-day hospital stay following surgery, no other lab work or blood drawing is needed. The patient’s pain is relieved with shots of demerol from Elkins-Sinn and vistaril from Lyophomed. Later, he gets oral pain medication (percocet from Roxanne). The patient’s skin staples are removed. (The staple remover is from Superior Healthcare Group, Inc.) Steri-strips from 3M are applied to the wound using tincture of benzoin from Humco on the day of discharge.

Were the operation done laparoscopically, as most are today, the complexity of the equipment used would have been much greater: C02 insufflator, 10-mm straight laparoscope, video camera, televisions, light cables, operating trocars, suction irrigation system, sequential compression stockings, grasping instruments, dissecting instruments, cholangiocatheter, Foley catheter, nasogastric tube, and electrocautery instruments. The patient would then be discharged within 24 hours.

Of course, the engineering behind the design and manufacture of each of these instruments is impossible to document and this account ignores the multitudinous equipment and chemicals used to sterilize and package the instruments. Questions about the origin of all of the raw materials used to make the equipment and components of the instruments, as well as the machinery needed to mine and manufacture these materials, are even more complex.

In addition, consider the companies that have sold the supplies to the hospital. Think of all the engineers, assembly-line personnel, salesmen, marketing representatives, and distributors employed by these companies. Think of the men and women who invent, design, manufacture, and also create software for the CT scanners and MR machines that are used daily to improve the diagnosis and treatment of disorders, frequently rendering unnecessary costly open surgery with its attendant morbidity and mortality.

Americans spend what they do on health care because they have the wealth to satisfy the public’s demand for high-quality medical and surgical specialty care. Third-world countries may have the demand for health care as well as for food, clothing, housing, and consumer goods, but they do not have the supply. Americans could spend on a per capita basis no more on health care than is spent by citizens of poor countries; that is, Americans could choose to purchase only first aid and comfort care. But is this really what the public wants? To think that one is going to get high quality general and specialized medical care whenever one needs it without having well-paid doctors, nurses, technicians, paramedics, scrub techs, is delusional.

The only way to control costs and reduce waste from costly and medically unnecessary or low-yield tests and treatments, is not to regulate from above, but to put the patient in charge. Have the patient spend his own money and the physician/patient relationship will be instantly restored. The patient will demand to know the relative risks, costs, and benefits for any proposed test or treatment. The patient will then decide to proceed or not. Physicians will moderate their fees to attract patients.

Patients today aren’t very sensitive to costs because the typical patient pays only 15 cents of every dollar spent on his health care. However, millions of patients footing their own medical bills would more efficiently determine which medical goods and services are available and in what qualities and locations. Whatever one’s economic philosophy, recent history shows that the rationing achieved by market forces is far more benign than that achieved by government or bureaucrats, no matter how noble the intentions.

What does a cholecystectomy cost today? I break it down into physicians’ fees and hospital costs. I will not discuss hospital reimbursement and Diagnosis Related Groups, nor Medicare or Medicaid prices. First, the physicians’ fees: surgeon open—$1,500; laparoscopic—$2,000; assistant open—$375; laparoscopic—$500; anesthesiologist—$800 for 1.5 hours. Hospital charges: operating and post-anesthesia recovery room charges—$1,550; room charges open—$975; laparoscopic—$375; medicines used—$10; gowns, masks, etc.—$42; disposable equipment for laparoscopic surgery—$473; lab costs—$480; dressings and syringe costs—$5. Thus, the cost for open cholecystectomy with a six-week recovery time is $5,737; the cost for laparoscopic cholecystectomy with a two-week recovery time is $6,235.

Which is the preferred procedure and for whom? If government pays for it, then the government will ultimately decide whether or not the patient has this surgery and, if so, which kind he will have. Minimizing costs, government will likely choose open cholecystectomy. However, if the patient pays for his own surgery, then the markedly less invasive but marginally more expensive laparoscopic cholecystectomy will most likely be chosen. The operative word here is choice, i.e., the patient’s. Is the extra cost worth it to this 50-year-old to get back to work and all normal activity with minimal post-operative discomfort? Only he can answer the question.

The reader should ask: how are bureaucrats and administrators to decide who makes the supplies and equipment, and how much of each item, used for this operation? Expand the query to include all areas of medicine and surgery today and one can see that it can’t be done in any way other than through the market. Only through the pricing mechanism of free markets can the necessary information be speedily transmitted everywhere so that proper decisions can be made by the manufacturers, suppliers, and users of the goods and services used in modern medicine and surgery, just as only through the pricing mechanism can pencils be manufactured and distributed in the proper quantity and at the proper price.

Market forces could best be employed in the health-care field by doing the following: (1) enacting medical savings accounts combined with catastrophic insurance coverage; (2) allowing tax deductions for individual insurance premiums in order to separate medical insurance from employment, thus making it personal and portable; (3) allowing choice so that individuals could choose among HMOs, employer-based insurance, medical savings accounts, and fee-for-service with and without managed care. In short, the best reform is to free market forces so that the pricing mechanism can work.

There seems to be no shortage of arrogance from those who think that they can direct everyone’s actions, that they know what is best for the population as a whole, that they can single-handedly solve “health care problems” by deciding what will and will not be available, and that simply by forcing 50 percent of all medical students into primary care, quality and access will be improved.

Such simplistic solutions are, of course, woefully misguided. I sincerely hope that the reader pauses to reflect on the complexity of medicine and surgery, and on how these services are best handled by the interplay of voluntary choices of affected individuals within a free market.