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Why genetics takes time and why insurance sucks.

Posted Oct 22 2008 8:07am

With all of this hubub about SNP testing, DTC ordering, the role of the physician and why healthcare is in a crisis....... I wanted to point the most serious issue. The lack of reimbursement from insurance companies.

You see, the big reason any venture capital firm would want to invest in a big DTC testing company is that they can sell something which is automatable and scalable. It is the perfect product......you see, they can collect cash day and night, 24/7, online and not have any human interaction, except when the specimen gets to the lab. Heck, they can even automate that too these days. So in essence you could spend little and collect a lot....in the biz that is what's termed a "Home Run". Not exactly socially responsible, but you can have PR firm spin that for you anyways.....


You see, that's why do it yourself genetics is great. You never have to pay for expensive doctors or counseling...why? With these social networks, people will "Google it" to figure out what the heck is going on.....in essence people will become genetic hackers.....

The most scary part of that, is the "hacker" will pass along legend and lore, medical misinformation, hence becoming dangerous to others. This is precisely what alot of medicinal quackery was prior to evidence based medicine.

This was merely observation and not subjected to rigorous scientific analysis. Even worse, these days, bad science or preliminary findings published in a "Big" journal can also get passed along "As If" it is now valid medical care. "Hackers" love that sort of thing, because it "sounds" true...


Why am I bringing this up? Because, investors don't care about evidence base or if the patient will be better because of a test. They care about getting alot for a little and making money on their investment.

So where can you have the opposite? Where you make a little for a lot?

Medicine, I mean real medicine with doctors and nurses and hard work....not exactly Do it yourself......

Why am I so down on insurance? Let me give you an example.......If I was an attorney charging per hour at 350 USD per hour versus a doctor charging insurance for a 99245 which as I told you before pays on average $256 NOT per hour, per visit...

Here is a typical medical bill, marked like an attorney's bill:


  • Reviewed/Returned email from patient 15 minutes

  • Phone call to Radiologist X who read film and reviewed with me 30 minutes

  • Reviewed chart sent by PMDs office 60 minutes

  • Literature review regarding disease X 20 minutes

  • Phone conference with PMD re: differential diagnosis and plan 20 minutes

  • Confirmed appointment with patient and discussed concerns 15 minutes

  • Appointment with patient 80 minutes

  • Total Hours 4 hours

  • At 325$ per hour and 10% Professional Discount 1170 USD

What does insurance pay? 256 USD dollars, I hope you can see why the system is failing.........

Why in the world would any VC want to fund such a labor intensive service......Insurance sure as hell tries not to. Why do I say this? Because every single other professional in the US bills and gets paid this way but not the doctors.......in fact, for every person who pays for these services we could serve probably another 1 or 2 patients pro-bono.

So what happens when a patient wants a DTC test with a doctor interpretation?

Good question....I am not certain how one would bill for interpretation of a 1 million SNP scan. I guess you would have to take a family history and look for a diagnosis....Heck, if the patient walked in the door, you couldn't even bill for a 99245, you would have to bill for an in office evaluation which pays even less than the 256$.....


But here is the problem...... most patients don't want to be hackers.....most patients want to speak with a doctor......preferably a doctor who knows what the test they just took means......

So I ask you.....Is it really greedy to ask for 1000 USD for an intake? Especially when billing insurance means you can't spend the time you would like on the case, or even worse, if you do spend that time today......will you be in business tomorrow???? A classic example..... DNA Direct charges 3456 for BRCA full sequencing, yet Myriad only charges 3120 dollars. Because they don't mark up their test, the 2 mandatory genetic ocunseling sessions at DNA Direct cost 356 USD.....if insurance paid for that it would be 120 USD.....No business can afford to use insurance to reimburse for Genetic Services........period! Interestingly Myriad cuts the cost for NIH research to 2500 USD..... So one really wonders what the test costs.....I know for sure what the manpower cost for evaluation is!

The Sherpa Says: To really get personalized healthcare we need to radically change how healthcare is funded. The paper pushing...the coding....the lack of pay......they all need to go away......or heck, maybe someone could just automate all of that crap and let us get back to caring for people, NOT ICD9's.......


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