I’m tired of profit-bashing and business-bashing in healthcare. And every American should be, too!
Well-run, profitable businesses, along with our sense of decency, democratic institutions, education and free enterprise systems, and adherence to the rule of law, have made the United States the most extraordinary nation in recorded history. Together they have unleashed the talents, creativity and productivity of our people, generated enormous sums of capital, and created unheard of social, economic, scientific and political advances.
Is there anything nobler than providing the environment and opportunity for people to fulfill their potential and achieve their dreams, and for providing the goods and services that enable people to raise their standard of living? Not even the practice of medicine can do so much good for so many people. But that’s precisely what businesses do. (That also may explain why far more Americans today are interested in job creation than restructuring healthcare.)
In our system, an individual has an idea, attracts capital, and hires people to build a product or provide a service. When they meet a need, they prosper – and attract more capital and hire more people. Everybody wins. If they fail, they alone suffer the consequences. That’s what capitalism is all about and that’s what has made America great.
Sure, there are ups and downs. Some caused by business cycles, some by global competition, some by excesses on the part of companies and individuals. Unfettered competition can be terribly harmful and that’s where government comes in. Government must ensure there is a level playing field so businesses and individuals have equal opportunity and can compete fairly. Additionally, government should protect against harmful excesses, and apply monetary and fiscal policies to moderate the ups and downs.
The last thing we should do, however, is abandon the very values and forces that have made America great. We should improve not destroy them, so let’s stop bashing businesses and profits.
For example, many think it crass and wrong for insurers, pharma or other healthcare vendors to earn a profit — so they want to get rid of profits. But where will capital to support these activities and innovation come from if investors (who include Wall Street and Main Street investors alike) can’t earn a return on their capital? From the government? Hardly. The government today doesn’t have reserves to fund the $37± trillion in future Medicare liabilities or our massive deficits. Our children and grandchildren will have to meet them. And how much in additional liabilities can our economy carry before our cost to borrow capital becomes prohibitive and we default on our debt? At least the insurance companies have reserves to back their obligations – so shouldn’t we force them to compete fairly rather than disband the concept of private insurance?
Similarly, many docs who consider the pursuit of their calling as noble and the pursuit of profit unseemly, apparently don’t understand that they are just as driven to earn a profit and return on their investment as profit-focused companies are – only they use different words to describe what they do. They claim they provide a noble service and therefore are entitled to large incomes because they have invested years of their lives and lots in tuition to develop their expertise. Described in other terms, isn’t their expertise their trade, and aren’t their practices really small businesses? In truth, aren’t they demanding a return on their investment – just like all businesses do? (If they don’t, their practices won’t survive.) And how much income does one have to earn before part of it is recognized as a return on investment?
Don’t misunderstand. I recognize that all businesses, like all doctors, aren’t noble, and I don’t support the power of insurers today to dictate what they will pay doctors for their services, or most of the other distortions in our healthcare system. But let’s stop the profit and business bashing. Properly directed, the pursuit of profits just might solve our healthcare problems.
Merle Bushkin is Founder, President and CEO of Health Record Corporation, creator of the MedKaz®, a unique, patient-focused medical record system supported by a unique business model, that aggregates a patient’s lifetime health record on a device the patient owns, controls and carries on a key chain, and is updated by care providers. A career investment banker and financial executive, he is an Incorporator of Mt. Ascutney Hospital and Health Center in Windsor, VT.
Filed Under: Superhealthanomics, THCB
Tagged: Capitalism, Healthcare business, Merle Bushkin Jul 12, 2011
“The problem with Medicare is that it has no effective mechanism to live within a budget and respond to cost growth when it’s higher than expected. Private insurers and self-funded plans can raise premiums, deductibles, co-pays and adjust other benefits.”
That’s why any comparison that Medicare is “single-pay” is false. The fact that private insurers are able to just continue to pass cost increases along means they are failing (assuming they are even trying) at any attempt at cost controls. There should be value added from profits, not just to pass pieces of paper from providers to patients.
“I’ve heard numerous hospitals, especially teaching hospitals, claim that they couldn’t make money if they had to accept Medicare rates from all comers even if Medicaid patients reimbursed at Medicare rates and there were no longer any uninsured patients aside from illegal immigrants.”
That’s assuming hospitals in their present form are suited to any kind of cost control. You assume hospitals are running efficiently and that “claims” have legitimacy.
“The fact that private insurers are able to just continue to pass cost increases along means they are failing (assuming they are even trying) at any attempt at cost controls.”
LOL Peter you really should stop writing on things you don’t understand.
Following are all the new Medicare figures for 2011:
•Basic Part B premium: $115.40/month
•Part B deductible: $162 (was $155)
•Part A deductible: $1,132 (was $1,100)
•Co-payment for hospital stay days 61-90: $283/day (was $275)
•Co-payment for hospital stay days 91 and beyond: $566/day (was $550)
•Skilled nursing facility co-payment, days 21-100: $141.50/day (was $137.50)
According to Peter Medicare is failing to control cost, if they are even trying, so Peter I take this means we should shut it down and move them to something else since they are failing, by your measure?
I do find it interesting that even with the new perks private insurers are supposedly offering, seniors remain happier with Medicare than those under 65 do with their private insurance. I suspect that reflects the difficulties in filing claims and ealing with rejected pay for services, rationing, but I a more detailed study would help. Hmm, will go look for one.
http://healthpolicyandreform.nejm.org/?p=14918&query=TOC
Steve
well this is disappointing. By far your one of the better/more fun people to debate with, you use real facts and know what your talking about. You would be one of the last people I would expect to use a study of studies of opinion polls for an argument.
“We examined this issue through an analysis and review of 21 opinion polls ”
“In October 1964, before the legislation establishing the program was passed, 61% of Americans said they approved of such a proposal (IISR),”
I would like to see this study question because in the words of Democrats the Democrats “Hoodwinked” the public to pass this. They promised a plan so Grandma wouldn’t lose the shirt off her back and passed one instead that did the exact opposit. I wonder if the poll was of the plan as passes or the propoganda to pass it?
“About two thirds (68%) of Americans believe that Medicare’s benefits are worth the cost of the program for taxpayers”
Does anyone think 68% of Americans even know the cost? Of course they don’t link to actual studies just the name of it
“Fifty-one percent of seniors, most of whom are covered by Medicare, rate their health insurance coverage as “excellent.” This is a significantly higher proportion than the 32% of insured Americans under the age of 65 who give their health insurance an “excellent” rating”
Is it Medicare that is rates excellent or Medicare plus their Medicare supplement which gives them 100% coverage? The most of whom are covered by Medicare line tells me the study didn’t ask the qualifying question, are you covered on Medicare or Private Insaurance, without asking this question why would you bother to make the inference? Why not ask the question then use a real number?
the rest is more of the same junk, made for a press corp looking to advance political agenda and sell papers not inform.
“ealing with rejected pay for services,”
Medicare denies more claims then any other insurer. The difference is you can’t appeal their denials. No sense in getting worked up over something you can’t change
“seniors remain happier with Medicare than those under 65 do with their private insurance.”
There might be other studies that support this I don’t thinbk this one does, it just says people over 65, majority of whom have medicare are happier then those under 65 whom for the most part do not. Like above take away MA and Supps I bet this number is not nearly as high
It’s that “peace of mind” I was talking about earlier. Nobody can take your Medicare away if they discover some secret disease or if you missed a premium date, or whatever…. It makes people feel secure even if it’s not as generous as some private plans. Perhaps policy makers should take notice….
Sorry to be so late in responding to this discussion but I’m traveling and Internet access is limited.
To me, the issue is not who insures healthcare but, rather, how healthcare is organized and delivered. How should doctors, hospitals and other care providers be organized and managed so they provide the greatest value – the best care at the lowest cost? In short, how can we get a lot more for our money? Once we have improved quality and reduced costs, we can address who pays for it, government or insurance companies. To do otherwise is to put the cart before the horse. To mix metaphors, it’s like rearranging the deck chairs on the Titanic.
It’s time we recognize, first, that the delivery of healthcare at every level is a highly complex business requiring talent and capital and should be run in a businesslike way – providing appropriate compensation and generating profits to fund new investments and a return on invested capital. I’d like the motives of the care providers to be noble but unless they can survive financially, ie., earn a decent living and generate capital to improve their facilities, their motives won’t count. They’ll either be out of business or struggling as a cottage industry unable to keep up with the developments in their field.
Second, that the most effective way to run a business is to provide value – high quality at low cost. Third, that the way to stimulate high value is through competition, tempered by government regulation that ensures a level playing field for all the players.
Finally, that running a healthcare business should employ proven successful methods including the division of labor. Care providers should deliver care and not waste their time on administrative and business matters. Likewise, business people – yes, the MBAs of the world amongst others — should handle the administrative and business tasks and not meddle in the delivery of care. At the policy level, the providers and business managers together should set the performance standards that guide the delivery of care.
Merle, this is utopia. When it comes to most goods and services, most people will shop for the best value. When it comes to medical care they will seek the best quality regardless of price. This eliminates usual competition theories.
When MBAs set business goals, provision of care becomes subservient to profit figures, and the whole thing goes out the window.
“According to Peter Medicare is failing to control cost,”
Nate, if you re-read you’ll see I said private insurers are failing to control costs. You yourself bash private insurers and hospitals for high costs. Medicare is having little if any effect on system costs – given that you say providers “cost shift” from Medicare says you also believe Medicare has little effect.
Margalit, I have to disagree with you. The way healthcare works today, a patient doesn’t have a clue whether they are getting the “best quality” of care. How would they know? There is no information available with which to compare the effectiveness of care providers or the prices they charge.
So what do they do? They typically go to the provider someone recommends. And even if the doctor was recommended by their current provider, they have no assurance that they are the “best” because their current provider doesn’t know who is the “best” either (a recent study found that most refer patients to the providers they know in their community). The best providers, of course, typically get the diagnosis and treatment right sooner, and make fewer mistakes, thereby providing better quality of care at considerably lower costs.
What’s needed to ensure that patients can choose providers intelligently is information — the very kind of information currently not available! Thus, our first challenge is to provide the information people need to be able to select the “best” — and probably the lowest-cost – provider. What is their experience? What outcomes do they achieve? What is the survival rate of their patients? And so on. The next is to publish what providers charge for their service (there also are studies demonstrating that even today those charging the most often have worse outcomes than those charging less). When this competitive information is available, patients will be able to make informed choices. Those providers who give the greatest value will prosper; the others probably will fail. Such competition benefits everyone – and doesn’t require or involve intervention by insurers or government!
The next issue is how to run a practice, a hospital or other care provider organization. You want to do away with management types because they don’t contribute to care and “profit figures.” I submit that following your approach will diminish the quality of care and bankrupt both care providers and our economy.
Like it or not, it costs money to provide care, equip offices, develop new tools, meds and techniques, compensate providers, provide working capital, install medical record systems, pay rent, pay for insurance, protect against risk, etc., etc., etc. Where do those funds come from in your system? Government? That’s a bad joke! Neither our government nor any other government can afford to pay for ever-escalating healthcare costs let alone provide the funds healthcare systems require to maintain and improve their operations. (An IBM study a couple of years ago concluded that unless the escalating cost of care is seriously reduced by 2040, every country in the world would be bankrupt – and I believe they are right.)
In my system, the required funds come from profits generated by the care providers and capital supplied by investors (who may include providers). How do you get profits and attract capital? By good management. Who should we rely on for good management? Good, trained managers – not providers and most definitely not government.
I should add that I didn’t say care providers or care delivery should be “subservient to profit figures.” I said care providers together with their business managers should set the performance standards and policies that govern their organization so they can increase the value they provide patients.
Your approach is out to reduce if not eliminate profits and administrative costs in healthcare. Mine is out to reduce the cost of care.
I don’t know what the totals are for healthcare profits and administration, but it has to be a modest fraction of the $2.5 trillion we spend each year for healthcare. If you assume it is as high as 10%, that would total $250 billion. And if you can cut that by 30%, you would save $75 billion annually. In government-ese, that’s $750 billion over ten years. That would be sensational! But of course you have to reduce that by the capital our government would have to invest just to keep our system running, modern and growing, so the net gains would be something less — you pick how much. Also be aware that if our government used GAAP accounting like businesses do, we’d have to include unfunded liabilities like some $37 trillion for Medicare obligations and more for other obligations such as Social Security, so we’d be bankrupt now!
On the other hand, if we continue to spend the same amount for administration and are able to attract capital, increase competition and, in the process improve the quality of care and reduce its costs by a mere 5%, we will save $125 billion per year, or $1.25 trillion over ten years – and our government won’t have to lay out money for capital improvements or working capital.
Which alternative would you choose?
I would choose the best alternative available. Unfortunately I don’t see how capital, investments, profits, and such have anything to do with direct delivery of medical care.
I agree that pharma and device should be for profit and concentrate on these things.
I agree that hospitals and large medical groups need professionals to manage the money. However, the overriding concern should be the practice of medicine, not the making of money. Medicine should not be the means by which money is made. Instead, money should be an outcome (good or bad) of practicing good medicine. So basically, the best interest of patients should take precedent over making another dollar. This cannot be accomplished in the classic capitalist structure you suggest.
On top of this, small and solo private practices are currently the leanest and meanest organizations in health care; the most efficient and the most preferred by patients. Why on earth are we trying to destroy this efficiency in favor of unproven, untested and largely delusional “economies of scale” supposedly available in health care factories?
Are there certain people that need to make more money than what they are already making now, so taking control of independent physicians and obliterating all choices for patients, is considered best strategy?
This is not going to reduce costs of health care. It is only going to divert the flow of money to fewer and bigger pockets.
I do agree that more information and more transparency from every quarter, including payers, would be a positive thing for all involved.
“small and solo private practices are currently the leanest and meanest organizations in health care; the most efficient and the most preferred by patients. Why on earth are we trying to destroy this efficiency in favor of unproven, untested and largely delusional “economies of scale” supposedly available in health care factories?”
Self funded plans ran by TPAs are the leanest, most efficient, and much better service then huge government insurance companies and Democrats have been hell bent on eliminating them for 15 years or longer. I think there are two main possiblites on why Liberals insist and destroying what works.
First idea is liberals are really so stupid they actually believe the changes they advocate will actually improve things. They have all these academics that have never worked a day in the field showing them all these studies proving their new idea will work and take us all to utopia.
The second idea and the one I believe is power and control. Its very hard to get 100,000 small independent thinkers to do what you want. If you replace them with 100 mega organizations who own their existance to you then it is much easier to get them to do what you want.
For example are ACOs as Obama and Berwick imagine them going to work, of course not they would be huge failures. But managing 100 ACOs would be a heck of a lot easier then 100,000 independent docs. If your going to try to change pratice patterns and the way an entire industry operates dictating to 100 ACOs who’s existance you control like a puppet is possible, 100,000 docs who mostly hate you already, not going to happen.
Nate, you remain full of it on TPAs and never do acknowledge a basic truth: TPAs and ASOs are privileged in the market by ERISA, which greatly reduces administrative burdens and benefit requirements for self-insured plans compared to fully-insured plans. This advantage grew, rather than shrank, with the recent ACA legislation.
I don’t have a firm view on whether the best way to deal with this is to make insurance (fully-insured) regulations national like self-insured, or keep the national vs state regulation discrepancy but just stop mandating benefits at the national level for fully insured while self insured is exempt.
“TPAs and ASOs are privileged in the market by ERISA,”
What is this privilege? If we make mistakes we personally go to federal prison instead of non ERISA plans where the company is liable? Can you name any administrative burden that is lessoned under ERISA?
We have been doing ERISA and Fully Insured administration since 1980 but maybe I have been doing it wrong all these years? Our start was actually with the check book of fully insured carriers that was all we did then moved into ERISA. I’m sure you will get us straitened out though Jonathan.
So laws that outlaw groups under 50 from self funding help self funding? Or saying groups must purchase a minimum specific deductible or aggregate coverage has to be a certain ratio all helps self funding? Medicare, Mediaicd, and VA look backs that fall outside stop loss policies helped self funding?
“I don’t see how capital, investments, profits, and such have anything to do with direct delivery of medical care.”
Margalit –
For commercial insurers, roundly 40% of their medical claims costs are for care delivered in a hospital setting – inpatient + outpatient with emergency room care counting as part of outpatient. For Medicare, Part A (hospital claims) account for approximately 45% of its costs. Hospitals are enormously capital intensive as well as labor intensive. In major cities like NYC and Boston, it costs at least $600 per square foot to build new hospital space excluding the expensive equipment required. At least 60% of operating costs are for staff wages and benefits. 85% of the nation’s hospital beds belong to non-profit organizations today yet hospital care is the biggest driver of medical cost growth. While I agree that no providers, especially hospitals, should be padding bills or doing procedures solely to drive revenue, they have to know their costs and cover their costs. They need to be able to raise capital in the debt market to expand when needed and to buy new equipment as well as to maintain their facility and replace what wears out or becomes obsolete. They need to attract and hold capable employees. No margin, no mission.
As for doctors practicing solo or in small groups, technology and scale are becoming increasingly important. Larger groups and systems can more easily afford interoperable electronic records capability. Doctors are challenged to keep up with the literature even in their own fields. Treating complex elderly patients with multiple co-morbidities requires collaboration with other providers more easily accomplished in a multi-specialty group practice. Medicine is increasingly a team sport.
I’m glad you agree that drug and device companies should be for-profit.
“Thus, our first challenge is to provide the information people need to be able to select the “best” — and probably the lowest-cost – provider.”
Who is going to fund, collect, analyze and publish this “information”? Why would the lowest cost be the best? I would argue that perception is the higher the cost determines the best. What you want is a value quotient, who will make that determination – Consumer Reports?
“When this competitive information is available, patients will be able to make informed choices.”
Are they? Based on what, with what expertise?
“I submit that following your approach will diminish the quality of care and bankrupt both care providers and our economy.”
The present “system” is doing a pretty good job of that already.
“On top of this, small and solo private practices are currently the leanest and meanest organizations in health care; the most efficient and the most preferred by patients.”
Under your “survival of the fittest” model then these types of practices should be flourishing – but PCPs are disappearing and complaining of low returns and long hours.
“Such competition benefits everyone – and doesn’t require or involve intervention by insurers or government!”
Then where is it? Wouldn’t the private market seize on this market opportunity?
“Where do those funds come from in your system? Government?”
Well a good portion of “those funds” are now coming from government(taxpayers). Actually in a single-pay/government run system the funds come from taxpayers. Hospitals are the high cost health care delivery model, if you want them to get more profits then they’ll just cost even more.
“so we’d be bankrupt now!”
As of August 2nd we will be bankrupt! Fixing SS is easy, fixing Medicare within the present “for profit system” would require a combination of cost reduction and revenue generation that leaves profits and provider revenues intact – get that past seniors.
Margalit,
Why would any physician practice medicine if they don’t make money?
Of course they should make money, and primary care should make double what they make now.
The question here is whether they should have the ability to be independent and pay themselves, or should they all be forced to become employees and be paid by the non-clinical bosses. I prefer the former.
As to the question that if they are so efficient, why don’t they flourish, this is because we constantly stack the deck against them. Small practices are placed at a major disadvantage by the current Darwinian system of negotiating contracts with payers, so they get paid a fraction of what large system are able to extract from insurers. Not only this makes health care more expensive for patients, but it also obliterates any type of payment based on better quality.
And to Barry’s argument that technology is too expensive for small shops, this is a myth that we keep reinforcing to serve the larger purpose of industrializing medicine. There is plenty affordable technology out there, and there are plenty of solo docs who use it.
As to the need for collaboration, isn’t that what computers and interoperability is all about? Collaboration regardless of one’s physical location. This team sport cliche is not like basketball, it’s like World of Warcraft. Technology has transcended geography and the only reason to insist on physically placing docs under the control of corporations is to manage them, control their practice and remove any professional autonomy that they currently have. The assumption is that some experts somewhere know better how to take care of sick people than those who actually do that for a living.
Why only double? Is that arbitrary factor more pallitable than 5 times what they make now?
It’s more in line with what sub-specialists make now, accounting for the pains and tribulations of specialization.
First, I’d like to thank all of you who have posted an extraordinary number of comments to this blog. You have cited many facts and provided extensive information many of us didn’t know. So from all the heat, I think a lot of light has been generated. I know it has for me. Special thanks to Steve, Barry, Nate, Peter, rbaer and Margalit,
Margalit,
“Unfortunately I don’t see how capital, investments, profits, and such have anything to do with direct delivery of medical care.”
They are the life-blood of any business, and at the end of the day, the practice of medicine is a business and must be run like one. You strongly resist any fiscal or management constraints on care providers but thinking that they can provide their service without constraints is, to put it mildly, naïve and foolhardy. No society can write a blank check for healthcare. There must be mechanisms built into the healthcare system to improve its quality and cost-effectiveness.
And I think you are sorely mistaken about what’s driving independent practitioners into the hands of hospitals and large practices. It’s not money-grubbing MBAs and business people!
The reasons doctors are joining larger healthcare organizations are varied. Some are young with a lot of debt. They want the assurance they will have a steady income to pay off their debt. And as long as they owe a lot of money, they can’t afford many of the tools they would need to establish and equip an independent practice or to buy an established one. Many older docs refuse to lay out the money that will be required to meet the EMR and Meaningful Use requirements the federal government is forcing on them. In the short term, all they see is that doing so will disrupt their practice and materially reduce their income. In the longer term, they can’t see that they’ll ever get a return on their investment since the savings will flow to everyone else. (I must say I agree with them. Also, I can’t help but point out that it is government that is forcing this on them against their will! So much for the idea that control by government is benign!) Additionally, the increasing complexity of medicine and the masses of information they must digest to remain current, are overwhelming many doctors – so many of them prefer to join with others to ensure their patients are cared for properly.
Peter, you asked a lot of questions. I’ll try to answer a few of them.
1 Who is going to fund, collect, analyze and publish this “information?” Most of the established healthcare information providers and entrepreneurs most certainly will fill this vacuum at no cost to the public or our government.
2 On what basis will patients be able to “make informed choices” when competitive information is available? On the same bases as they make other decisions. They’ll talk to their providers, friends, advisors, et al, do their homework and then decide whom they want to use.
3 Re: competition at the level of care delivery: it has largely been ignored, and the attention given to insurance has largely sucked the air out of discussions about how to assemble and publish competitive performance and cost information. We’ve got to raise its importance and get it done!
Merle,
I am not a gambling person, but I would be willing to bet that you will not fine even one doctor citing inability to keep up with his/her profession as a reason for selling out to a hospital.
Physicians in small practice, particularly PCPs are being terrorized into giving up private practice. With SGR cuts being threatened at least 3 or 4 time every year, and with unfair competition from large systems, and with misinformation regarding price and complexity of technology being rampant (see my post here from today), what else are they supposed to do?
And I agree with you that government, or so called experts advising government, are largely responsible for pushing this agenda along. And hospitals are gobbling them up and paying more than they should, creating a bubble that will have to burst sooner or later. Guess who is going to get hurt then?
“Re: competition at the level of care delivery: it has largely been ignored, and the attention given to insurance has largely sucked the air out of discussions about how to assemble and publish competitive performance and cost information. We’ve got to raise its importance and get it done!”
Merle –
We also need to outlaw the confidentiality agreements that currently preclude the disclosure of actual commercial contract reimbursement rates and, in the case of device manufacturers, the prices hospitals pay to the manufacturers which can vary widely among hospitals based on their volume, power and influence. How are patients or referring doctors supposed to know what anything actually costs if these confidentiality agreements remain in place? If government wants to rein in healthcare cost growth, this is an issue it can do something about. What’s stopping them?
I’m told that in Massachusetts, the Health Care Quality and Cost Council has already collected much of this information but, so far, has chosen not to release it even though it has the power to do so. Why?
Margalit, the suggestion that the explosion of medical information and the increasing pressure to keep up are driving doctors – consciously or unconsciously — to specialize and join forces with other providers, comes from Dr, Atul Gawande, not from me.
I agree that all doctors, but especially PCPs, are catching the brunt of the pressure to reduce healthcare costs. They typically lack the political and economic clout of hospitals, insurers, vendors and government to shift the burden to the other guy. Ans sadly, these other guys aren’t solving our healthcare problems. They merely are rearranging their chairs on the Titanic while the PCPs and other docs are finding that they don’t have chairs to sit on let alone rearrange!
The truth is we can’t afford the system we have. Period. On top of that, our system doesn’t work well. So what should we do? Your solution seems to be to leave the providers alone and shift the burden to government to fund everyone’s healthcare costs. Sounds appealing to some, I guess, but it merely preserves the same broken system and high costs. Besides, the government is us, the taxpayers, and we can’t afford to continue on our present course. It’s that simple.
The solution must be to reduce costs at the care-delivery level. And the people who can and should lead this effort are providers. But they can’t do it alone and won’t do it unless their actions benefit both themselves and their patients. Their incomes should go up not down. And the way to achieve this is through competition combined with transparency, and ensuring that each provider organization is competently managed.
I completely agree with you that the current fad of financially-weak hospitals acquiring financially-weak medical practices is destined to blow up in our faces. Selling to a hospital may look like the ideal solution today for many doctors feeling enormous financial pressures. But tomorrow, I predict many will unravel. In my experience as an investment banker, I can count on one hand the number of mergers where two weak organizations combined to form a strong combined organization.
Barry, I was not aware that vendor relationships with healthcare providers frequently involve the types of confidentiality agreements you describe. Of course they should be outlawed.
There is an easy way around the hospital medical equipement supplier BS, insurance can write their policy in most cases to pay cost plus or some amount based on the invoice/actual cost, if the provider wants paid they are forced to provide it.
Merle,
The funny thing about primary care is that, by definition, they cannot specialize. I agree with most of Dr. Gawande’s writings, but not all.
Another pet peeve of mine is the purpose use of incorrect terminology hoping that if we use it often enough it will become a reality. There is no such thing as providers. This term lumps together physicians and corporate entities that are in the medical care business, presuming that they all have the same interests and the same qualities. They don’t.
Education has professors and students, the law has attorney and client, culinary establishments have chefs and patrons, and health care has doctors and patients. Changing the paradigm to providers and consumers, is changing the color of the relationships and IMHO, is equally cheapening for both doctors and patients.
And, no, I am not expecting the government to fix this. Yes, I do want to leave the physicians alone, but I do not want to leave hospitals and health systems alone (example why providers is not a good term). I actually like Nate’s suggestion below, plus agreed upon professional fees for physicians.
I was expecting the government to move us closer to an equitable tax financed universal system, but that was not meant to be (yet). I expect nothing from the current administration. Nothing at all.
“I expect nothing from the current administration. Nothing at all.”
Great news Margalit, it might be to early to give up all hope n change. It appears the Clown in Chief is ready to admit another critical mistake in ObamaCare and even more surprising is willing to consider fixing it!
“Lawmakers in the House and Senate introduced bipartisan legislation Thursday to remove restrictions on tax-exempt health spending accounts, the latest provision of the healthcare reform law to come under attack by Democrats.”
“The bill would nix a provision that since January has required a prescription for buying over-the-counter medicines with medical savings accounts such as Flexible Spending Arrangements and Health Savings Accounts. The language was added as a way to keep the bill’s costs down because it was estimated to save $5 billion over 10 years by cutting down on unnecessary drug purchases.”
“But it appears to have had the opposite effect of increasing people’s use of medical services. Indeed, many doctors complain that they’re seeing patients for the sole purpose of writing out prescriptions for over-the-counter medicines.”
“The White House is so far not opposing the repeal bill.
“We look forward to studying this legislation,” an Obama administration official said. “As the president has said, anything can be improved, and we are open to ideas that make care better and more affordable.”
Granted anyone that knew anything about healthcare and Insurance knew this would be a disaster before it started and ideally Congress wouldn’t screm up and cost millions of dollars to learn these lessons but at least when it becomes painfully obvious they fixed it. As long as they keep repealing all the mistakes in ObamaCare when they are obvious and cost us a fortune we should be rid of the whole bill before 2020.
1099 reporting gone
FSA OTC limits gone
Next up Medicare revisory board?
“The bill drops one day after Rep. Allyson Schwartz (D-Pa.), a key centrist, testified against the law’s Medicare cost-control panel. So far, at least eight Democrats have co-sponsored legislation to repeal the law’s Independent Payment Advisory Board (IPAB).”
I was hoping for the annual and lifetime max or the appeal boondoggle to go next but those haven’t really kicked in on cost yet. I fear we are going to have to waste a few hundred million and another million or so people lose insurance before they fix those.
How do you define corporate entities that don’t share the same interest and qualities as physicians. I would bet 90+% of all physicians work under a corporate entity. I think I understand the point your trying to make but aren’t you doing the same thing with your disdain for anything corporate? Not all, in fact most healthcare corporate entities share the same interest and qualities as physicians, why lump them in with the few bad corporations?
For example, in the news this weekend is the story of the famous heart surgeon who lost his medical license. My quick read of it the hospital helped bust him and has done everything they can to make right by the patients that were subjected to unnecessary surgery. In this case the qualites you subscribe to phycians are only being displayed by the corporation hospital and the physician is acting the like corporations you despise.
http://baltimore.cbslocal.com/2011/07/14/dr-loses-license-former-patients-attorneys-react/
Another great but unfortunant example happened where I live in Vegas. This wasn’t some big evil corporation but one ? I don’t know what would lead a person to do what he did, doctor. I can think of far more bad physicians then I can corporations.
“LAS VEGAS (AP) — Nearly 40,000 people learned this week that a trip to the doctor may have made them sick.
In a type of scandal more often associated with Third World countries, a Las Vegas clinic was found to be reusing syringes and vials of medication for nearly four years. The shoddy practices may have led to an outbreak of the potentially fatal hepatitis C virus and exposed patients to HIV, too.
The discovery led to the biggest public health notification operation in U.S. history, brought demands for investigations and caused scores of lawyers to seek out patients at risk for infections.
Nate, those who put profit ahead of ethics are outliers amongst physicians. Those who put ethics ahead of profits are outliers amongst large corporations.
wow, no unfounded bias there, and this is based on what Margalit?
Based on the definition of the profession of medicine for umpteen thousand years, and based on the fiduciary responsibility implicit in corporations responsibility to shareholders.
Margalit and Nate –
To clarify my earlier point regarding the pricing of medical devices, it’s the large teaching hospitals that can command the best prices from device manufacturers because of both their size and their influence as the surgeons trained at these hospitals fan out around the country to enter practice. Such a hospital may pay $4,000 each for a certain type of device while a relatively small community hospital that also offers the type of surgery that would use that device might pay as much as $11,000 for an admittedly smaller quantity per year. The rub is that the teaching hospitals are not allowed to tell any other hospital how much they paid because of confidentiality agreements. While it is legitimate to offer volume discounts because it’s cheaper to sell to, say, Wal-Mart by the truck or freight car load than to a much smaller vendor by the case, a nearly three to one ratio as in my device example is undoubtedly excessive. Reimbursing the hospital a percentage above cost would reward higher costs rather than help to restrain costs. How much the hospital itself marks up the device in its pricing to the insurer or the patient is a separate issue.
I’ll stop bashing when the so-called “health care” system becomes about real health. In other words, when it becomes focused on prevention. Oops, I forgot there might not be any profit in that.
Let just call the industry what it is – The Disease Care system.
Denise H. Williams
Licensed Massage Therapist
Wow, I have to say the statistics and comments for this post is extremely overwhelming!
There are a lot of problems with the current system, and the PPACA does little to fix them. But you make 2 really powerful points:
“For example, many think it crass and wrong for insurers, pharma or other healthcare vendors to earn a profit — so they want to get rid of profits. But where will capital to support these activities and innovation come from if investors (who include Wall Street and Main Street investors alike) can’t earn a return on their capital? From the government? Hardly. ”
And the BEST one:
“The government today doesn’t have reserves to fund the $37± trillion in future Medicare liabilities or our massive deficits. Our children and grandchildren will have to meet them. ”
We should be embarassed about the condition we’ve put our kids and grand kids in. Economic growth is the only way to fix this mess, and healthcare is a huge part of the economy. PROFIT=ECONOMIC GROWTH=TAXES=MEDICARE—you can’t afford Medicare without Profits. Who will pay?
Health Insurance is a cruel Joke that became a exhorbinent Money Pit that puts the lemon nickel and dime automotive expense as loose change. The reason that many of Us Bash Profits is Because the product is inferior to the expense. Medicare would not have been established if it were not for the Fact that Private Industry wanted NO PART IN ELDERLY CARE! As they only wanted Healthy Patients!
Putting profits first has absolutely driven Health Care from 1st among 40 Industrialized countries to 38th . Your Point on Profits has traded true Health Care as a Facade of providing quality Care at the expense of the patient!
Thanks to Greed This Business has placed Patient Safety on the Back Burner , Increased Staph Infections,Never Events , and Medical Errors.
Making a Profit is not bad in itself, But it should not be used as a Money soaking Milking Machine that seldom fixes the Problem. Driving prices thru the roof and managing to make patients worse.
Sorry Gary your not spreading your ignorant BS today.
“The reason that many of Us Bash Profits is Because the product is inferior to the expense. Medicare would not have been established if it were not for the Fact that Private Industry wanted NO PART IN ELDERLY CARE!”
NOTHING in history supports this. You bash profit becuase your an ignorant propogandist that doesn’t know anything. There are tomes of history that tells us exactly why Medicare was passed and exactly what it did. Medicare was passed so Grandma wouldn’t lose the shirt off her back. 13% of seniors had trouble paying catostrophic expenses. Medicare excluded the very catostrophic expenses it was suppose to protect them from. Its private insurance in the form of Medicare Supps, and retiree coverage that prevents Grandma from losing the shirt off her back. Today 19% of seniors have trouble paying their medical bills, almost a 50% increae after the solution was passed.
Even Democrats at the time admitted it was all a fraud.
Despite their limited coverage, the bills came to be known as “Medicare,” a term coined by a reporter to describe a previously established comprehensive health care program for military dependents. Many people therefore assumed that the bills before Congress would cover all forms of medical care, including outpatient physician fees and extended illnesses. When Rep. Albert Ullman (D., Ore.) cited allegations that the “public is somehow being hoodwinked” and “being misled” and asked HEW’s Wilbur Cohen about the degree to which the public misunderstood the program, Cohen stated that “we do recognize this problem and I think it has been complicated by the use of the term ‘medicare’ which is an erroneous term when applied to this program” (U.S. House Hearings 1965: 104). Although government officials sometimes expressed dismay about this public misimpression, the misinformation nonetheless fueled support for passage of a bill they strongly supported.
The gulf between what the public thought and what was actually in the bill was enormous. The most pressing rationale for compulsory health insurance continually put forward by government officials and echoed by the public was the specter that responsible older people could be ruined financially by catastrophic illness. Yet neither the 1963 nor the 1965 proposal provided coverage for catastrophic illness. During the 1965 Senate Finance Committee hearings, Chairman Russell Long (D., La.) asked HEW Secretary Anthony Celebrezze, whose department had written the bill, “Why do you leave out the real catastrophes, the catastrophic illnesses?” (U.S. Senate Hearings 1965: 182). When Celebrezze replied that it was “not intended for those that are going to stay in institutions year-in and year-out,” Senator Long countered: “Well, in arguing for your plan you say let’s not strip poor old grandma of the last dress she has and of her home and what little resources she has and you bring us a plan that does exactly that unless she gets well in 60 days.”
Celebrezze concurred, stating that means-tested public assistance would provide “additional help.” (U.S. Senate Hearings 1965: 182-83). Long added that “Almost everybody I know of who comes in and says we ought to have medicare picks out the very kind of cases that you and I are talking about where a person is sick for a lot longer than 60 days and needs a lot more hospitalization” (U.S. Senate Hearings 1965: 184). [14] Yet the very element that government officials continued to cite to win public support for Medicare was deliberately omitted from the administration’s bills.
I have nothing to comment on it.