In Japan, MRIs Cost Less

November 18, 2009

Prices for MRIs are much cheaper in Japan than in the U.S. The difference in prices provides some insight into why health care costs are so high in the U.S. There's something else at work, too. MRIs are very popular in Japan: Some people get them every year even if they aren't sick.

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TRANSCRIPT

MELISSA BLOCK, host:

One of the strange facts about our health care system is there are no clear prices. NPR's Planet Money team recently explored that conundrum in a story from Pensacola, Florida. One hospital there charges $900 for a shoulder MRI. You can get the same MRI down the street for half that, 450 bucks.

Today, NPR's Chana Joffe-Walt takes the MRI pricing search abroad.

CHANA JOFFE-WALT: You've heard this story before. A guy goes into the hospital with a problem - weeks later, sits with a shocking bill, shaking his head.

Professor HOWARD FORMAN (Diagnostic Radiology, Yale University): That's the MRI of a lumbar spine - with total charges submitted by the hospital: $2,352.96 cents. Aetna had a negotiated rate of $1,731 just for an MRI of the lumbar spine, which is a fairly routine study. It's a lot of money.

JOFFE-WALT: Typical story, right? But listen to who this guy is.

Prof. FORMAN: Howard Forman. I am a professor of diagnostic radiology and also of management, also of public health, and also of economics at Yale University.

JOFFE-WALT: A radiologist, a public health specialist and health care economist, who was shocked, decades into his career, to find out how much an MRI costs. Okay, test, test. If you just tell me your name and your title?

Professor NOA YEKAGAMI(ph) (Health Care Management, University of Tokyo School of Medicine): Noa Yekagami, professor of health (unintelligible) management at (unintelligible) University School of Medicine.

JOFFE-WALT: A comparison: Professor Yekagami, also a health care economist, although he is in Japan. And he has had many, many MRIs. And do you know how much a MRI cost in Japan?

Prof. YEKAGAMI: Hundred and sixty dollars.

JOFFE-WALT: You know exactly the number?

Prof. YEKAGAMI: Right.

JOFFE-WALT: Hear that number: $160. And just in case you forgot, Dr. Forman's MRI: $1,700. So, how does Japan work this incredible magic? By law. The government sets the prices. But how does that work? I mean, costs are costs, right. We have to buy MRI machines. So does Japan. We have to pay the electricity bill. So does Japan. There are staff and supplies. You can't just force cost to be low. If you could, you'd make it a dollar for an MRI. I mean, how is it possible that you're doing that procedure for so much less than what do it for?

Prof. YEKAGAMI: Two thousand dollars, I would think, is a state-of-the-art MRI, most expensive type.

JOFFE-WALT: So, we have better machines? They are different machines.

Prof. YEKAGAMI: Well, in general you have some more expensive types.

JOFFE-WALT: In the U.S., we tend to demand the best, state-of-the-art machines available. But they are not that much fancier. It doesn't explain the more than tenfold difference in price. So, another possible explanation can be found by typing MRI into a Japanese search engine. This is something I asked Dr. Michi Kokinora Bruno(ph) to do. She is a Japanese trained neurologist. And she gets all these ad results, including one that offers to satisfy your MRI needs in a spa-like environment.

In Japan, we can buy a less fancy MRI machine and then you can make up the cost fast because MRIs are incredibly popular. Now, it's unclear if MRIs are popular because they are cheap or if they are cheap in part because they are popular. So, I have two more quick theories for you. We here in the U.S. pay our radiologists much more than Japan does. So that's the cost. And then there is this from Professor Gerard Anderson at Johns Hopkins.

Professor GERARD ANDERSON (Health Policy and Management, Johns Hopkins University): I'm talking about the MRI machine. When you go and you buy it from Siemens or General Electric or any of the manufacturers, you will be paying about twice as much in the United States for the exact same machine.

JOFFE-WALT: Japan sets the price they pay for MRIs super low. And so to get into the Japanese market, the manufacturers lower their prices. They charge more here in the U.S. because we will pay more. How come? Well, I called a number of American hospitals and doctors and I got basically two reactions. The first and most popular: a shrug. We could never get those prices. That's just how it is. And the second: some were surprised. Just like that radiologist getting his first MRI. Health care prices even to them are something of a mystery.

Chana Joffe-Walt, NPR News.

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