Administration bloat. I really wish costs were more transparent so we could reason about what drives cost. Doesn't seem sustainable that Hospitals are businesses, but that's the capitalistic way of solving things.
Interesting. I wonder how much of their operating expense is due to administrator salaries. A breakdown of expenses throughout hospitals and the health system would be really fascinating to see, and could probably shed light on potential solutions.
Interesting and rather specific and niche perspective. Would you agree that the biggest problems in our healthcare system are transparency, i.e., no way of telling how much something is going to cost in spite of all the data existing to provide just that, and the crushing administrative costs of a system that seems to incentivize massive administrative burdens?
I don't understand your comment? The question of the post is why does it cost this much? A responder said capitalism, and I am just going further into the various political definitions that describe the current system, which is helpful in inderstanding the original question of the article.
If it's an oligarchical corporate state, then it would make sense that hospitals (companies) abuse of their regulatory capture (oligarchism) are exploiting the majority of people financially and otherwise (neo-fuedalism), largley by making them dependent or subservient to their systems.
Spent a lot of time in Heath tech. Main driver for administration is costs imposed by insurance schemes, even (especially) in public systems.
Insurance causes hyperinflation in drug prices and services. It's just a giant pool of money that nobody owns and everyone wrestles for, except instead of competing on price and service quality, they use lawfare and bureaucracy to impose costs and disincentives on each other.
Administration bloat has a few causes, some as a result of the effect above, and some from political factors.
The solution? Automation. If you want to get rid of the administrative bureaucratic layer, develop technologies, products, and platforms that decimate it.
Hospital beds aren’t inherently that expensive. The physical room + attention from medical professionals + deprecation on equipment doesn’t add up to such an extreme number as to be particularly problematic.
It’s a huge range of negative feedback loops that drive US medical costs into insane territory. For example insurance companies require more documentation which means doctors can treat fewer people and thus need to change each of them more. High costs mean fewer people can afford services which means more time in collections and charging those who can pay more. High medical costs drive up malpractice payouts for medical treatment which drives up malpractice premiums which drive up medical costs. etc etc.
This is absurd. Look at the cost escalations over time. Were ER’s not well equipped ten years ago? No they have just ratcheted up the cost because they can. Consider that, given their bargaining position, wouldn’t it be a surprise if they didn’t take advantage of it? What’s holding them back from shaking everybody down for as much as they can? Morals? Lol.
Just because the hospital has a bunch of equipment and training doesn’t mean it’s efficient to charge everyone that goes in there for all of it. There is such a thing as marginal cost. The marginal cost of this guys visit was next to nothing, but they shook him down for all kinds of other crap, much of which has dubious health value.
I went to the hospital for a slipped disk. From cursory inspection the doctor could tell I had a slipped disk, but they gave me an x Ray. I said “does the x Ray show my slipped disk?” the doctor said “it doesn’t show that. I just gave you the x Ray to be on the safe side.” Then I had to get an MRI and they gave me a ton of opiates that I threw in the trash, after reading about them online. In the end, the physical therapy that got me back to health cost less than the ER visit.
On top of everything, what really gets me is the gall of the medical shake down industry to bring up “costs.” They use the government to make everything as expensive as possible: the absurd licensing and education requirements, the restrictions on foreign practitioners and nurses, the “certificate of need” BS, the lax anti trust treatment as hospitals consolidate into regional monopolies under the laughable excuse of “efficiency,” the use of regulation to restrict suppliers of even generic drugs, the abominable statistical malpractice and pharm rep industry and stupid commercials used to push useless and harmful drugs on everyone—many of them paid for by government in both research and point of sale. At every level the whole system is by design a shamanistic and monopolistic ritual that achieves very little. Look at the failure to replicate of all these stupid studies, the way doctors respond to reimbursements in their use of quack drugs and surgeries, the flatlining of real quality of life stats even as expenditures explode, the power of the various professional associations.
A big element here is that the free market is being choked out. Consumers walk into healthcare facilities without any idea what they will be paying when they walk out, and therefore have no ability to choose one facility over another based on price.
Because that ability doesn't exist, there is no downwards price pressure anywhere at the consumer level for medical services.
I think we'd see a lot more results if we asked 'why aren't these facilities putting more efforts into reducing costs' rather than asking 'what makes this so expensive?'
The problem with healthcare is that inefficiency and lack of transparency is profitable.
The government has deep pockets, and everyone is trying to get as much money as they can from it. Pharmaceutical industries, insurance providers, healthcare facilities, etc.
Pharmaceutical research is important and expensive, but there must be a way for that research to happen without doing stupid shit like making insulin expensive.
Labor costs in healthcare are high, but there must be a way to not make a bag of water with salt not cost $500.
People pay for costs that are completely unrelated for the products and services they are receiving.
The costs are absurd because of insurance. People are too isolated from prices and all the money the government pumps into the system inflates prices.
The whole healthcare cost problem would disappear almost immediately if people paid medical bills directly and were reimbursed for only the truly unforeseen medical expenses. If doctors and hospitals were forced to compete on price like normal businesses, costs would plummet. It's the lack of a real market that's the problem. What other business has no prices out on display or in advertisements? Try calling up a hospital and asking the cash price for a procedure. It typically doesn't even exist; they're only set up to bill insurance companies and the government at different rates.
"Healthcare in the US is socialism without a central plan and capitalism without markets or prices."
I view it as a self-inflating feedback loop. High costs are pushed to Insurance companies, who respond by increasing premiums. The similarly inflated costs of frivolous litigation need to be factored into a medical practitioner's cost of doing business.
Hospitals should not be for-profit institutions. The principles of free-market competition simply doesn't exist. If a person is seriously injured in a car accident, or suffers an emergency, the person is most often taken to the nearest hospital. And in some cases, there person is not conscious when brought there.
If the US doesn't work to bring health care costs back down to earth, we can expect Medicare costs to bankrupt the government budget as more and more of the population is retirement age. (Baby boomers are retiring.)
It's not like hospitals are wildly profitable to run though? I think the inflated costs are due to the little understood phenomenon of "cost disease" rather than owners of hospitals extracting outrageous rent for themselves as I think you are implying.
It's pretty futile to point out the one factor that makes US health care so expensive. The whole system is highly corrupt and obfuscated and allows doctors, administrators, investors, construction companies, insurances, pharma companies and multiple middlemen to make outrageous money.
I am not sure how to fix this but an important first step would be to mandate full transparency of all pricing. In addition the same service should cost the same for uninsured and insured patients. Same for in- and out-of-network billing.
Right now a patient basically has no way of navigating this. Even if you are insured there is a much greater than zero probability that you will get hit with some random charges you could not have anticipated. You just have to hope for the best when you go to a hospital.
Ah, so then that's what this boils down to? The high cost of health care is a symptom of capitalism run a muck? We're being charged these exorbitant rates simply because they can get away with it? If only we had a single payer that was able to negotiate, these costs would evaporate over night? Not sure it's that simple...
Although, in a way it does kind of make sense. Unlike consumer goods (television, cars, etc.), one's health is something they're likely willing to break-the-bank for. So without any kind of restraint, I could see costs getting out of control. The hospital is focused on making as much money as they can, and the consumer is focused on preserving their health. If one doesn't have their health after all, what do they have?
Add an ever increasing demand (baby boomers are aging rapidly) and suddenly, things begin to look much worse for the demand side of the equation.
They know on average. How else would they project how big of a hospital to build?
It’s a massive shit show because they don’t care. There’s no cost incentive to be efficient. And many healthcare providers are cost plus so if they have higher costs it actually results in higher absolute pay.
As with anyone who has a soul and a conscience, im shocked by health care costs.
A lot of people say this is a failure of capitalism. It is precisely the opposite- it’s regulatory capture. Healthcare and insurance are among the most highly regulated industries in the US. All that regulation has had decades to fix the problem and hasn’t; it’s caused the creation of workarounds like “charge masters” and “pharmacy benefit managers” that make prices more opaque.
Why do we even allow negotiated price for insurance? Sounds like antitrust/price fixing/collusion to me? Why doesn’t each health care provider publish their prices and the insurer publishes what they’ll pay and the patient is responsible for the difference?
Guys, I'm starting to think there's no amount of capital that can bring the necessary efficiency/low prices to the American healthcare system while also maintaining a profit motive.
A couple things, first off, if costs are higher in the US, they shouldn't be, we're not living in a radically different reality in the UK. Market forces should be lowering those costs, but they're not, because the actual cost centers are completely insulated from any market whatsoever by the insurance system.
RE: administrative inefficiency, from my limited experience (laying off teachers in local gov't back in 2004 because healthcare premiums were going up by 15-18% a year), the administrative overhead in actually managing the insurance is pretty small as a % of the costs paid to hospitals.
But then you step back and think, well what the hell, why are the costs paid to the hospitals so high? Because the whole system's broken. So if you try to measure administrative overhead, it looks small, but the general administrative system is creating this environment where the costs themselves are through the roof. Some is unnecessary medicine, a lot seems to be the completely arbitrary price structure. In the linked article, one hospital charged 6 bucks for a treatment, another charged several thousand. That's not a market.
You're correct about the spread of cost disease, it has essentially reached every corner of US healthcare. The part that hospitals are particularly guilty of, is unnecessary admin expense inflation. The US education system has seen an almost identical problem. Building buildings that aren't needed, hiring 10x the admin staff that the system had 30 or 40 years ago, etc. It's the system rewarding itself, bureaucrats hiring more bureaucrats, playing lords as they go on building sprees that aren't needed. There are very few readily available levers in the US healthcare system, that can be used to properly pull back against such cost spirals and spending behavior.
IMHO, the push-and-pull between insurance companies and hospitals is a big problem here. They seem to be in a co-dependent battle to consistently raise the costs of everything. I don't think any solution to managing cost will succeed unless we're altering the incentives for both insurance companies and hospitals.
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