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Insurance, Self-Pay and Medical Tourism

How Much Does the Sleeve Cost

Eliana Al Haddad
The popularity of Sleeve gastrectomy’s is on a continues rise, with the sums per­formed outnumbering those of other bariatric procedures in many countries around the world [1]. In the USA alone, the percentage of sleeve’s went up from 38 to 63% from the years 2012 to 2015, corresponding to a decrease in the number of Roux-en-Y gastric bypass from 44 to 30%, while the laparoscopic adjustable gas­tric band has shown a significant decrease from 13 to 2% in that time period. This brings into question the importance of analyzing the cost-effectiveness of these procedures in order to provide each individual patient with the most appropri­ate plan of action according to their needs. This information, however, has been sparse, with only the By-Band-Sleeve (BBS) trial currently being conducted to fill these gaps [2]. In comparison to other bariatric surgery trials, the BBS study will assess both clinical and economic outcomes for the three most common approaches to bariatric surgery, in the largest sample size studied in a compara­tive trial to date (expected to randomize 447 patients per group), over a substan­tial follow-up period (36 months). However, an important first step in estimating the economic outcomes in the BBS study will be to obtain detailed and ‘accurate’ costs of the three types of bariatric surgery.
E. Al Haddad (*) Columbia University Medical Center, New York, NY, USA e-mail: Eliana.h91@gmail.com
E. Al Haddad Amiri Hospital, Kuwait City, Kuwait
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Al-Sabah et al. (eds.), Laparoscopic Sleeve Gastrectomy,
https://doi.org/10.1007/978-3-030-57373-7_20
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E. Al Haddad192
1 A Cost Evaluation Methodology for Surgical
Technologies
Until recently, the cost of new surgical procedures in developed countries was a sec­ondary consideration to all parties involved: patients who were well covered by state or private insurance, hospitals, with healthy profit margins and surgeons, who were concerned with improving patient care (or marketing their services) no matter the cost. However, with recent global financial constraints, a shift in thinking of payers and regulatory services, as well as hospitals had to be adopted, especially for proce­dures that are considered elective and non-emergency such as bariatric surgery. With no consistent metrics to measure costs, comparative analysis becomes impossible.
To be fair, the economics of surgical interventions are extremely complex and not straightforward. Hospitals are complex economic environments that deal with a multitude of vendors, different levels of staff, administration and policy, and so on. In most systems, there is no simple way to determine the “cost” of something.
More socialized systems have global budget funding, and granular details of expenditures are often poorly documented. Other systems, based on billing for ser­vices, have a multitude of customers and use complex cost-shifting strategies to maintain an operating profit. Ismail et al. [3] was able to create an effective clas­sification for surgical procedures which includes the following.

1.1 Economic Methodologies

An important first step is to create definitions for the different elements. The cost is the price paid by the producer (hospital) for resources consumed during the production process (surgery). Charge is the price paid by the consumer (patient) needed for the institution to break even and to be solvent.
Furthermore, a distinction must be made between fixed versus variable and direct versus indirect costs. A cost is considered fixed if it does not vary accord­ing to the level of activity, and variable if it does. A direct cost reflects the price of resources that are directly attributable to the project, whereas indirect costs are not directly attributable to the completion of the studied activity and have to be esti­mated using an allocation formula].
They chose to follow a micro-costing approach for direct costs separated into two categories: fixed and variable. This choice is meant to provide hospitals with detailed information on when, where, how and if they can optimize surgery cost.
The elements taken into account in each category include medical devices and personnel as fixed costs, whereas the variable costs encompass re-usable instru­ments and disposables. Note that if the personnel’s salaries were based on hourly remunerations, the personnel cost would then be considered as variable.
How Much Does the Sleeve Cost
193

1.2 Fixed Costs: Medical Devices

In today’s technology leveraged surgical practice, the initial purchase price of surgical equipment needed to perform the procedure is only part of the financial investment required. Most advanced technologies need some type of routine main­tenance or upkeep which is usually covered by “maintenance/service contracts” with the company or third-party vendors.
For mechanical and software based technologies, accounting principles dictate a “life expectancy” for the device. This is based on the average replacement cycle for the technology based on mechanical failure and obsolescence. It is an indica­tion that allows projected amortization of the purchase price and maintenance cost.

1.3 Fixed Costs: Personnel

Even though most bariatric surgeries are now performed laparoscopically, the number of personnel involved is still as high as open surgeries, with similar oper­ating times. These surgical operations translate into an increase in surgery cost with respect to the personnel cost.

1.4 Variable Costs: Reusable Instruments

Hospitals today are faced with many management choices that affect operating costs. The choice of reusable versus disposable operating room supplies used to be clear-cut: reusable supplies were less expensive but disposable supplies were more convenient. Today, with patient safety concerns, increasing regulations, labor costs and increasing disposable costs, this simplified view no longer holds. Both repro­cessing expenses and disposable costs must be taken into account when evaluating the cost of a procedure.

1.5 Variable Costs: Disposables

Depending on the procedure, number of complications and other factors, vari­ous consumables (anaesthetic agent, implants, units of blood, etc.) will add to the operation cost. Integrating this element into our equation is an easy task. The challenge, however, lies in the time-consuming process of collecting such detailed data.
E. Al Haddad194

2 Bariatric Surgery Costs

When it comes to looking at the costs associated with bariatric surgery, they can be classified into either resources consumed, and the unit costs associated with those resources. To identify these parameters, a number of different approaches can be utilized.

2.1 Methods for Identifying Cost Components

Gross-costing: Involve identifying cost components at a highly aggregated level (e.g. costing an intervention based only on the associated inpatient days) [4].
Micro-costing: A precise method, where an attempt is made to identify every input consumed in the treatment of a particular patient [4].

2.2 Methods for Valuing Cost Components

Top-down costing: An approach where relative value units such as hospital days or some other metric are used to separate out relevant costs from comprehensive sources (e.g. the finance department’s annual accounts) and apportion them to individual services or procedures [5]. For example, the sum of the annual budget of an intensive care unit and hospital overhead may be divided by the number of patient days to estimate an average cost per patient per day [6].
Bottom-up costing: An approach where cost components are valued by identifying resource use directly employed for a patient, resulting in patient-specific unit costs [7].
The seven ‘important’ cost components included:
Cost, not charge data used in the analysis;
Operating room costs reported separate from hospital admission costs;
Medical device costs reported (e.g. endoscopy column, laparoscopic tower);
Personnel costs reported (e.g. surgeon, nurse, anaesthesiologist time);
Re-usable instrument costs reported (e.g. bowel graspers, surgical scissors);
Disposable instrument/consumables costs reported (e.g. needles, disposable sta-
plers); and
Overhead costs reported.

3 The Cost of the Sleeve Around the World

We conducted a survey that was sent to bariatric surgeons around the world to attempt to obtain an average cost of bariatric procedures from the countries they represent. Table 1 summarizes these findings. The prices have all been converted into united states dollars for comparison purposes.
How Much Does the Sleeve Cost
Table 1 Cost of bariatric procedures from around the world
Procedure cost in USD
Balloon LSG Bypass Argentina 1322 3439 3439 2116 Australia 3612 14,446 15,891 5778 Colombia 2200 8000 6000 NA Egypt 1116 1116 2512 2233 France 4753 17,147 18,290 4000 Iraq 1380 4350 4950 2500 Jordan 1990 4615 5742 2713 Kuwait 3365 6858 7641 5490 Lebanon 1962 5143 5619 2833 Libya 5358 11,073 14,288 1071 Oman 3117 6495 7793 KSA 2665 6444 9098 3650 Syria 1,029 2,330 3,106 1,747 United Arab Emirates 3,412 11,000 9,348 3,921 United Kingdom 6,231 16,202 18,694 8,724 United States of America 15,000 21,000 20,000 9,000 Yemen 2000 3000 5000 2500
Band
195
The cost of Gastric Sleeve surgery in Turkey varies from one clinic to the other. The amount you are expected to pay will cover things like the surgeon’s fee, anesthesia used during the surgery, the meds you will use after the surgery, etc. All-in-all, you can expect to pay something like $7,700 on average. India is one of the countries that perform Gastric Sleeve surgery at a low cost. In India, you can five times less to what you are expected to pay in the US. Similarly, the cost of Gastric Sleeve in the UK is three times the cost in India, with an average of $5,500. Just like Turkey, Poland is now regarded as a medical tourism destina­tion. Over the years, this European country has made notable strides in improving its medical infrastructure. Although there are a handful of reputable hospitals in Warsaw, the cost of the Gastric Sleeve procedure is relatively cheap as compared to what it costs in the UK, coming in at around $7,700. Based on the data gath­ered by the National Statistics Institute, 75% of medical facilities in Romania are privately-owned. Statistics show that the number of private Hospitals in Romania increased from 2 to 161, between 1997 and 2014. So, if you are to have a Gastric Sleeve surgery in Romania, there is a 75% probability that you are going to have the surgery at a private hospital. The cost of the procedure range between $7,500 to $9,000.
However, it is important to note that these methods look specifically at the cost of the procedure, and do not take into account the costs of nutritional and
E. Al Haddad196
psychological evaluations, 6–12 months of medical weight management, re­admissions, postoperative complications, routine vitamin supplements and labora­tory testing for the life of the patient after surgery.

References

1. Kizy S, Jahansouz C, Downey MC, Hevelone N, Ikramuddin S, Leslie D. National trends
in bariatric surgery 2012–2015: demographics, procedure selection, readmissions, and cost.
Obes Surg. 2017;27(11):2933–9.
2. Rogers CA, Welbourn R, Byrne J, Donovan JL, Reeves BC, Wordsworth S, et al. The
By-Band study: gastric bypass or adjustable gastric band surgery to treat morbid obesity:
study protocol for a multi-centre randomised controlled trial with an internal pilot phase.
Trials. 2014;15:53.
3. Ismail I, Wolff S, Gronfier A, Mutter D, Swanstrom LL. A cost evaluation methodology for
surgical technologies. Surg Endosc. 2015;29(8):2423–32.
4. Gold M. Panel on cost-effectiveness in health and medicine. Med Care. 1996;34(12
Suppl):DS197–9.
5. Chapko MK, Liu CF, Perkins M, Li YF, Fortney JC, Maciejewski ML. Equivalence of two
healthcare costing methods: bottom-up and top-down. Health Econ. 2009;18(10):1188–201.
6. Edbrooke D, Hibbert C, Ridley S, Long T, Dickie H. The development of a method for com-
parative costing of individual intensive care units. The Intensive Care Working Group on
Costing. Anaesthesia. 1999;54(2):110–20.
7. Tan SS, Rutten FF, van Ineveld BM, Redekop WK, Hakkaart-van RL. Comparing methodolo-
gies for the cost estimation of hospital services. Eur J Health Econ. 2009;10(1):39–45.

Analysis of LSG Competitors

Jamil S. Dababneh
Here, we are going to take Porter’s five forces model as a tool to identify and ana­lyze the five competitive forces that come into play when considering competitors in the bariatric world and to analyze the weight reduction tools and market.

1 Competition in the Industry

Weight loss surgery, or as it is commonly referred to as the bariatric surgery umbrella includes several procedures:
– Laparoscopic Sleeve Gastrectomy (LSG): The most commonly performed pro-
cedure in the United States as of recent years is the gastric sleeve procedure. – Gastric bypass: the second most commonly performed bariatric surgery – Gastric bypass surgery has been proven to be clinically useful for long-term
weight loss. However, without the proper guidance before and after surgery, it
may still fail. – Lap Band surgery: the third most popular procedure in the United States. – Duodenal Switch is another very effective, although less frequently performed,
procedure. – Newly FDA approved procedures such as gastric balloons.
J. S. Dababneh (*) American Pharmacists Association, American Marketing Association, Chicago, USA e-mail: jamil.dababneh@hotmail.com
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 S. Al-Sabah et al. (eds.), Laparoscopic Sleeve Gastrectomy,
https://doi.org/10.1007/978-3-030-57373-7_21
197
J. S. Dababneh198

2 Potential of New Entrants into the Industry

Until recently, the only options for combating obesity were lifestyle modification, medications and, if those methods proved ineffective, bariatric surgery.
The entry barrier to this domain is relatively medium with new techniques and developments introduced to this market. Also, it is imperative to take into consid­eration the expertise needed to master the surgical procedures once they are intro­duced into the market niche.
The exit barrier is also considered medium because of the average capital investment in hospitals for these procedures.

3 Threat of Substitute Products

There are numerous products that can be considered as substitutes for LSG, unlike the direct competitors, the substitutes are non-surgical. Many patients don’t meet surgical requirements or are unwilling to undergo operations because of anxiety or fear and therefore, these products can come in handy for such patients.
The Substitutes that currently exist are:

3.1 Anti-obesity Medications

These are strong substitutes, (e.g. Orlistat (Alli®, Xenical®), Lorcaserin (Belviq®), Phentermine and topiramate (Qsymia®), Bupropion and naltrexone (Contrave®), Liraglutide (Saxenda®, Victoza®). However, it is important to note that LSG has outperformed them in terms of efficacy and endurance.

3.2 Herbal and Alternative Medicine

These are substances or procedures that are usually marketed with the goal of sup­pressing hunger or increasing metabolism and lean body mass.
Many products such as botanical weight loss supplements actually contain unapproved stimulants including analogues of amphetamine, methamphetamine and ephedra.
Some botanical supplements include high dosages of compounds found in plants with stimulant effects including Yohimbine and Higenamine.
Still, LSG has proven to outrank them in terms of outcomes and immediate response.
Analysis of LSG Competitors
199

3.3 Diet Program

Dietitians have numerous roles to fill, one of which is to treat overweight patients, however, their results, when taken individually, are considered inferior compared to LSG in terms of results and time needed to achieve them.

3.4 Exercise

As with anything to demonstrate effective results, a lot of time, effort and dedica­tion are needed in order for exercise to reduce the weight effectively. Therefore, LSG has become an easier tool to achieve better result in a shorter period of time.

3.5 Acupuncture and Acupressure for Weight Loss

Acupuncture is the traditional Chinese medical practice of stimulating specific points on the body, primarily with the insertion of very thin needles through the skin.
Advocates of acupuncture for weight loss believe that acupuncture can stimu­late the body’s energy flow (chi) to impact factors that can reverse obesity, such as increasing metabolism, reducing appetite, lowering stress, as well as affecting the part of the brain that feels hunger.
Weight gain, according to traditional Chinese medicine, is caused by internal body imbalance.
There have been studies suggesting that acupuncture is likely effective for weight loss. Those studies suggested that these results weren’t completely con­vincing because of problems with the way the studies had been carried out.
Therefore, these traditional techniques do not form any significant threat to LSG.

4 Power of Customers

Customers could be considered as the insurance companies or third-party payers, or even the patients themselves.
The strongest bargaining power comes from the insurance companies.
While most of the major insurance carriers offer coverage for bariatric surgery, not all policies include coverage.