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Why is healthcare so expensive (Read 244 times)

    Somewhat thought provoking article in CNN.  As a physician's spouse I can tell that she does not make half of what a tech worker like me makes on an hourly basis,so it's likely not physician compensation that is driving these costs.

      It's a very, very, very long list of reasons.

        I got through only 4 pages of that, got depressed and thought of venting.

         

        Finally got through all of that and this I think is the summary

         

        "Over the past few decades, we’ve enriched the labs, drug companies, medical device makers, hospital administrators and purveyors of CT scans, MRIs, canes and wheelchairs. Meanwhile, we’ve squeezed the doctors who don’t own their own clinics, don’t work as drug or device consultants or don’t otherwise game a system that is so gameable. And of course, we’ve squeezed everyone outside the system who gets stuck with the bills"

        Basically hospital consolidation gives them monopoly power in a region to set outrageous prices.  

         

        Non profit hospitals want higher profits to expand and could therefore pay their executives more.

         

        American consumers subsidize the rest of the world when they pay the highest cost of these drugs. 

         

        Doctors may over test because a) its profitable to them or b) Cover their liability.

         

        Medicare patients don't have enough liability and could be over using medical facilities.


        Feeling the growl again

          Virtually every part of the system is part of the problem.  Physician pay is not excluded; the example in the article was oncology and last I checked the average oncologist made >$475,000 per year.  At an institution like MD Anderson it is undoubtedly much, much higher.

           

          Once you end up in a hospital is when costs really skyrocket.  I group many of the issues under lack of transparency (the system is so complex you never really know what you are paying for a good/service) and therefore there is no competition to keep prices down.

           

          Getting people covered really doesn't address the problem, because it doesn't solve the fundamental cost issue.  That's why the people in the example couldn't afford decent insurance to begin with.

          "If you want to be a bad a$s, then do what a bad a$s does.  There's your pep talk for today.  Go Run." -- Slo_Hand

           

            The lack of transparency makes the "promise" of a high deductible plan hard to realize. How can you be a better consumer when you can't get information?  I wonder if it just leads to reduced utilization - reluctance to spend the money. Which may be good, but may not be, for example in the case of those with chronic conditions.  I can make some choices at the margins (less-expensive Rx), but if there's so little price competition in most basic healthcare, putting me in charge of the spending doesn't help much.

              Specialists maybe (oncologists are likely the highest paid, not sure about surgeons), a primary care physician working 40-50 hours a week likely makes around $120-160K (~$50-65/patient minus overhead of around 60%), while not bad, is hardly exorbitant considering the hours they put in outside the office, the licensing requirements, being on call, the ever hanging threat of a law suit over their head and  that they needed 8 years of college plus 3 years of residency and not much hope of making much more in the future unless they want to work longer hours.

              Jeff F


              Free Beer

                I know this is over-simplified but the incentives in the system fail to control costs.  Health care providers only make money if you are sick, so what is the incentive to keep you well.  I have always felt we should pay our healthcare providers when we are well, and stop paying them when we are sick.  The incentive would then be to keep us well.  I know this is the HMO model, but HMO's have had to water down this strategy to survive in a system that incents them to behave in other ways.

                 

                I know, I know, oversimplified, but I think there is some substance to this...

                Chantilly75


                It's always something...

                  Bureaucracy is the big factor here.

                  There are too many paper pushers at the top level, who have nothing to do with actual patient care.

                  They attend meetings and fill out forms and generally try to run a hospital like a business.  CEO's, Vice president of this n' that, plus assorted office personnel.

                  They are also very susceptible to salesmen who try to push the latest equipment on them, which adds to the cost of a hospital stay.

                  Said equipment quite frequently turns out to be a flash-in-the-pan, and not any better than the old equipment.

                   "I got nothing to do and all day to do it"  Styx

                   

                   

                   

                    Obviously over simplifying this, but I believe that one of the biggest factors as to why healthcare is so expensive is the consumer.

                     

                    We do not (in general) price shop healthcare like we might a car or a new laptop. We don't ask the question: "Is this % improvement in my chance of recovery worth the $X price tag (total cost, not just the piece we pay out of pocket)?"

                     

                    Instead we ask: "Is there ANY % improvement in my chance of recovery and what is my co-pay?"

                     

                    For this reason we don't really have the drive for cost competition between treatment providers that other industries might have.

                      Also, of course, no one ever says: "Well, Timmy's ten years old and has 100,000 miles on him already...it's probably less expensive to get a new one than fix this one up..."


                      Feeling the growl again

                        Obviously over simplifying this, but I believe that one of the biggest factors as to why healthcare is so expensive is the consumer.

                         

                        We do not (in general) price shop healthcare like we might a car or a new laptop. We don't ask the question: "Is this % improvement in my chance of recovery worth the $X price tag (total cost, not just the piece we pay out of pocket)?"

                         

                        Instead we ask: "Is there ANY % improvement in my chance of recovery and what is my co-pay?"

                         

                        For this reason we don't really have the drive for cost competition between treatment providers that other industries might have.

                         

                        The problem I have with saying it is the consumer, is that the system is constructed in such a way as to make it virtually impossible for the consumer to takes steps to reduce cost (see above discussions on lack of transparancy).  Ever try to take a bill from your insurance and figure it out?  The insurance is billed X amount, due to invisible incentives and rebates they only actually pay a percentage of that, etc etc.

                         

                        It is impossible for the average person to figure out what is going on.

                         

                        But where the consumer IS at fault is the drive to over-consume.  Most of us were raised in a time where a lot of working families had full coverage.  Antibiotics were given out like candy.  So now people go to the doctor and demand drugs for every little sniffle instead of realizing that odds are it is a virus the drugs won't help and waiting to see if it clears up on its own.

                        "If you want to be a bad a$s, then do what a bad a$s does.  There's your pep talk for today.  Go Run." -- Slo_Hand

                         


                        Feeling the growl again

                          Specialists maybe (oncologists are likely the highest paid, not sure about surgeons), a primary care physician working 40-50 hours a week likely makes around $120-160K (~$50-65/patient minus overhead of around 60%), while not bad, is hardly exorbitant considering the hours they put in outside the office, the licensing requirements, being on call, the ever hanging threat of a law suit over their head and  that they needed 8 years of college plus 3 years of residency and not much hope of making much more in the future unless they want to work longer hours.

                           

                          Well, the problem is I am sure every cog in the machine can justify their cost to the system similarly.  PCPs are a shriveling profession for many of the reasons you mention, but that still leaves a lot of other physician types making a whole lot of money.  Oncologists are not the highest-paid; surgeons can make way more.  I know a lot of physicians and outside of peds and PCPs none of them have money worries, to put it lightly.  If one chooses to be a ped or PCP I would think they did not go into that thinking it was the best-paying option and had other motivations for wanting to do it.

                           

                          And, many other countries have controlled costs by making physicians essentially government employees and they make way less than in the US even with similar training requirements.

                           

                          It's not just what they make but how they make it.  They are paid to provide services.  They are paid to keep people in their business network.  So they have incentives to treat and provide services when it would be better for the patient not to do so, and refer to physicians in their own business network to keep the money flowing in.  The good ones are astute businessmen but these incentives are not necessarily good for patients and drive cost in the system.  They are human too.

                           

                          As an example a family member was diagnosed with cancer by a urologist.  The urologist tried to railroad him into an expensive therapy he could provide....which I knew was not proven and was NOT standard of care for that stage of disease.  I told the family member to get a second opinion, but everyone within reasonable driving distance was in business with the original urologist (rural area) and so would not see him.  The reason the urologist was pushing this therapy was that he would get to keep the patient and bill for the procedure, and he did this knowing full well that it was not in the best interest of the patient.  So I go the family member into a university center hours away where the physicians do not directly financially benefit from the therapies they order.  He got standard of care treatment and was cured.

                           

                          A large chunk of the overhead of a PCP office is in processing claims.  All that mess is really an issue.  Think how much the PCP could save if they didn't need to have several people just to navigate reimbursement.

                          "If you want to be a bad a$s, then do what a bad a$s does.  There's your pep talk for today.  Go Run." -- Slo_Hand

                           

                             

                            A large chunk of the overhead of a PCP office is in processing claims.  All that mess is really an issue.  Think how much the PCP could save if they didn't need to have several people just to navigate reimbursement.

                             

                            Agree - Why should insurance cover routine out patient visits that costs $100.  I am all for yearly out of pocket payments first before insurance/Medicare kicks in, the threshold set by income and wealth of course. As a healthy person who likely spends less than a few hundred dollars a year it might be easier for me to say, but it should cut down on the paper work and insurance costs for most. 


                            Joggaholic

                               A large chunk of the overhead of a PCP office is in processing claims.  All that mess is really an issue.  Think how much the PCP could save if they didn't need to have several people just to navigate reimbursement.

                               

                              Once my kid spent about a week in the hospital, and I got CC'ed on the back-and-forth billing paperworks (between the insurance/hospital/doctors) for over 2 years afterward


                              HobbyJogger & HobbyRacer

                                 

                                The problem I have with saying it is the consumer, is that the system is constructed in such a way as to make it virtually impossible for the consumer to takes steps to reduce cost (see above discussions on lack of transparancy).  Ever try to take a bill from your insurance and figure it out?  The insurance is billed X amount, due to invisible incentives and rebates they only actually pay a percentage of that, etc etc.

                                 

                                ...

                                ...

                                 

                                Plus, you're just talking about figuring out the cost afterward.

                                 

                                Figuring it out ahead of time, with a hospital involved, is even more insanely tough. Radiology claims to know nothing about costs. Billing claims to know nothing about treatments (so they can't say anything about cost). And of course you have to be healthy and patient enough to go around fighting all the bureaucracy attempting to get any cost estimate, before you get treatment.

                                It's a 5k. It hurt like hell...then I tried to pick it up. The end.

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