[aaavl2821]

This is a good article, but it only shows a few parts of a much more complex whole, and extrapolating from these anecdotes to a broader system is not really accurate

Many hospitals lose money on every Medicare and Medicaid patient. The only reason they survive is because they can charge private insurance companies more. So hospitals and health systems have been consolidating to strengthen their negotiating position against insurers

This article paints Medicare as the good guy, private insurance as evil, and hospitals as mixed. The reality is more complicated, and more regional, but overall healthcare is a zero sum game today between payers and providers fighting for dollars, and power comes largely from scale. In geographies where payers are bigger and stronger, they push hospitals and force many to consolidate or die. In areas where hospitals are stronger, they basically dictate price and rates can skyrocket

There's a lot of bad stuff happening on all sides, and it isn't clear that private insurance is always evil. If we become a single payer society, small providers that are struggling to survive will probably be the first to die, and providers will probably consolidate much more aggressively into massive national chains, like the Walmart of healthcare

The cause of a lot of healthcare issues is not one particular party (insurance, Medicare, hospitals) but a system that encourages monopoly seeking behavior without any good mechanism for regulating this

[maxerickson]

I think it'd be a good sport to make hospitals eat denied claims. If two giant institutions want to argue about whether something is covered, the patient should not be the loser.

We should also better fund Medicare and Medicaid. Taxes should be apparent.

[Spooky23]

It’s more complex. Medicare is outcome-based. Providers who do a shitty job don’t get paid, which is why hospitals complain about reimbursement.

Medicaid is like an ATM machine for providers in many states. There is usually little or no correlation between outcome and payment, and poor fraud controls. That’s why you always hear about providers in NYC and Miami who “visit” 900 patients a day. Additionally, you have the institutional racism aspect of Medicaid where services are unavailable in some red states.

IMO, the biggest issues in healthcare are for profit institutions and insurers and the trade guild practices associated with Doctors.

Single payer or regional systems supported by taxes are the way to go. Medicaid should be an institution that is replaced by something better.

[ianai]

The market would work better if everyone was paying the same prices without "denial-based" inflation.

I think the solution would be to give citizens disease/disorder "endowments." i.e. a yearly health stipend account - it's money they can spend at doctors, but they can't spend on unrelated goods/services (i.e. food). On top of that, additional "stipends" for major life ailments. The trick would be in finding budgets for those stipends. Once individuals have money, though, they have the ability to do the relative value assessment for various treatments.

[snaily]

You may want to read up on Singapore's Central Provident Fund system, as a real-life implementation of something similar: https://en.wikipedia.org/wiki/Central_Provident_Fund

[aaavl2821]

actually, most medicare is not outcome based today, although that is the vision.

"value based care" has many meanings. simply using patient satisfaction surveys can be considered value based care, while participating in a double sided risk sharing ACO also qualifies. as of 2016, only 36% of physiicans participated in ACOs, under 30% in patient centered medical homes, 31% in bundled payments (which only impact a subset of diseases). howver, 75% used patients satisfaction surveys, 55% used PQRS, and 64% achieved meaningful use [0]

so the reality is that outcomes based care is still the minority, and real risk-bearing (two-sided risk sharing, full capitation) arrangements are even less common. most care is still reimbursed as FFS. and even as value based care is becoming more common, cost of healthcare is still not decreasing

and yes, medicaid can be fraudulent in some cases, but not always

[0] https://physiciansfoundation.org/wp-content/uploads/2017/12/...

[aaavl2821]

a lot of hospitals do eat denied claims. look at this [0], the annual financial report for HCA, the biggest publicly traded hospital company. ctrl-f for "provision for doubtful accounts". this represents denied claims / treatments for uninsured patients. this is ~7-10% of revenue.

now look at EBITDA, a common metric representing cash flow. look at EBITDA / revenue, ie cash profit margin. this is around 20%, which is massive. this profitability is around the level of big tech and big pharma. however, most hospitals in the US have almost no profit. the profitability of large hospital companies is mostly due to their bargaining power. in fact, a decade ago, big hospital systems were some of the best private equity / LBO investments, bc they were massively profitabel, stable businesses that could take on a lot of debt. and this is before the ACA

before the ACA, this was even worse, especially for smaller hospitals. see [1], financial statements for Community Health Systems, a massive (but smaller than HCA) public hospital company, from 2009. for some hospitals this figure was 30% or higher

the problem is that not all hospitals are equal. the companies i mentioned are some of the biggest, most powerful hospital companies. however, many hospitals are completely different (often independent urban hospitals), and just bleed money. sometimes its because they have more under/uninsured pts, sometimes its because their contracted rates are lower, sometiems its bc they dont have enough commercial pts (instead having more medicare / medicaid). so a blanket law making hospitals eat more costs would just help the rich get richer and kill the little guys

i worked in investment banking and these big hospital systems were some of our best clients. a business that can write of 10-30% of its revenue as bad debt and still generate 20-25% profit margins is an incredible borrower, and we'd underwrite multi billion dollar bond issuances for these companies, so they could issue dividends to shareholders, and because they were so profitable they could afford tons of high yield debt without breaking a sweat

[0] https://www.sec.gov/Archives/edgar/data/860730/0001193125180...

[1] https://www.sec.gov/Archives/edgar/data/1108109/000095012310...

[Spooky23]

Did you get any sense of how they ran their businesses?

My doctor was part of a medium sized practice that was swallowed up by a big regional system. Since that acquisition, they make the .gov that I work for look efficient and streamlined. They literally added 5-6 non-billable staff to an office that was staffed by 2. Per my doctor, that’s typical in most offices!

[aaavl2821]

Most of them focused on two metrics: 1) increasing inpatient admissions (ie volume) and 2) increasing surgical volumes (biggest profit driver in HC services). To increase inpatient volume and surgeries they often buy outpatient clinics so they can control that patient flow. So they often view primary care as a loss leader that is directing patients to the profit center of surgeries. If those nonbillable staff are optimizing billing, or generating / managing patient flow, they are accruing profits to the health system even if they are losing money for the individual clinic

Negotiating good rates with payers is a top priority and a lot of strategy derives from that (which is another reason why they bought your doc: if they control all patient flow in and out of hospital, they have more leverage with payers)

how does your doc like working for a big health system?

[Spooky23]

It seems like they can direct book specialist referrals, so I guess that’s where the money is.

My doc hates it — they built a good practice and did a lot of innovative stuff. Now it sounds like 10/10 on the awful bureaucracy scale.

The only happy doctor I know is an eye doctor who pays the fine to Medicare instead of putting in an EMR. He keeps the staff minimal and avoids overhead like IT. According to him, all of his colleagues with the big systems are miserable, working 80 hour weeks and probably 50% have alcohol or other substance problems.

[aaavl2821]

Is the doc you're speaking of a primary care doc or specialist? I've been working with some PCPs to try to find new models that allow them to remain independent without sacrificing too much financially. It's a tough needle to thread but I think happier, more independent primary care physicians are a good way to start righting the healthcare ship

[Spooky23]

As with all things healthcare, yes and no.

Private, for profit insurance is almost certainly always evil. Their margins are dictated by how much they can delay or avoid coverage. That pretty much defines evil.

Medicare is why hospitals exist, period. Private insurers make it as difficult as possible to stay in a hospital, because they are more expensive and usually result in worse outcomes.

Reimbursement rates are being squeezed because there is a glut of hospital beds. As a result, hospitals, designed to operate with higher overheads, are losing money.

There’s a whole web of bullshit where the lack of universal coverage and rational allocation of resources results in strange behaviors.

[aaavl2821]

> Medicare is why hospitals exist, period. Private insurers make it as difficult as possible to stay in a hospital, because they are more expensive and usually result in worse outcomes

this is not true. check out the annual financial reports for the UC hospital system as an example [0]. the majority of revenue comes from commercial payers. looking at data from HCA (largest public hospital company in US) tells similar story [1]. this is despite the fact that medicare patients are more costly overall

the bigger issue, however, are the margins. in 2010, UCSF, UC Davis and UCI had 3.5% profit margin for medicare, -27% margin for medicaid, and 21.8% margin for commercial. for UCLA they had -30% profit for medicare, -36% for medicaid, and 34% margin for commercial. private insurance literally subsidizes public insurance here. without private insurance, those hospitals die [2]

looking at other hospitals id imagine it is similar, though dont have data offhand

as to the reimbursement rates being squeezed bc of glut of beds, i dont think that is true and have seen data in the past to refute it, though i dont have the sources offhand.

[0] http://regents.universityofcalifornia.edu/regmeet/nov13/a4at...

[1] https://www.sec.gov/Archives/edgar/data/860730/0001193125180...

[2] https://www.oshpd.ca.gov/HID/

[hippich]

Note that you never mentioned person who actually receives service. IMHO problem is exactly that - none of players you mentioned truly interested in long term cost control. Some might just care about short term budgets, but otherwise all of them will pass it down to the consumer. And consumer being on their own, with little to no competition and information asymmetry has very little leverage..

[aaavl2821]

I agree. The current players in the healthcare system view people as numbers, and that is terrible. Doctors are the most natural patient advocates, but unfortunately physicians' ability to influence healthcare, on a system or patient level, has decreased significantly in recent years.

I would love to see (and am hoping to build) solutions that give more power back to doctors and patients, and focus on patient experience and outcomes.

I know that a lot of consumers want to take their health decisions into their own hands, and I support that, but i think most people want help from an informed professional who is on their side (ie not controlled by a hospital or insurance company with competing interests)

[lotsofpulp]

Allocating healthcare resources is numbers, and there is nothing wrong with that. If you want to decrease costs, then increase the supply of healthcare. Healthcare = doctors + medicines + equipment, so all you need to do is increase that supply. However, you’ll find that the doctors don’t want to increase their supply and they’re very effective. Drug manufacturers also don’t want to increase supply, and they’re also very effective.

[aaavl2821]

I'm an Econ major so am totally on board with being analytical about allocating resources, but it's not quite as simple as just increasing supply

Healthcare services (doctor salaries + facility overhead) is 80%+ of US healthcare spend. At first glance increasing supply of doctors seems reasonable. But how do you do that? Number of doctors (esp primary care and mental health) has been declining because of decreasing reimbursement / payment and increasing burnout. Being a doctor requires a decade or more of making no money, working long and unpredictable hours, and tremendous stress -- literally making life and death decisions. Can't just spin up supply overnight. To really increase supply you'd need to increase doctor salaries or decrease the cost of becoming a doctor. The former would not reduce costs, and the latter also is not ideal

One perhaps better way to increase supply is by rolling back consolidation. So same # of docs, but more independent practices. Another way is letting nurses / others practice at the top of their licenses, although I'll grant your point that physician societies sometimes make this hard. Also, one could argue that having more work done by low cost providers would encourage more volume and potentially unnecessary care

The main overarching issue though, even if it was as simple as increasing supply, the healthcare system in the US is not designed to optimize cost efficient care. It is designed to maximize profit and regulations arent optimized around this. So when hospitals view patients as numbers, the implication is that they will milk every last dollar out of a patient (30% of healthcare spend is unnecessary care). Insurance companies are incentivized to deny as much care as possible. No organization with any power in the system is incentivized to view and manage healthcare costs in an optimally cost efficient way

[csa]

Many (most?) of these “losses” for Medicare and Medicare claims is due to administrative bloat at hospitals. If the fixed that, then the amount of money they receive from these types of claims would be less of an issue, imho.

US healthcare (and education as well) are massively bloated with an abundance of low value-add administrators. These bubbles need to burst.