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HEALTH PLANS/HOSPITALS: Maverick pulls hosptials out of HMOs

This medical maverick,  (or that’s what the paper’s calling him) owns three hospitals in The OC (California) and has cancelled all his HMO contacts—going after Medicare patients and charging HMOs and PPOs full fare for those admitted via the ER (and being very difficult about transferring them out).

My two questions are:

1) What happens when the HMOs won’t pay the full charge for ER and post ER care—if they feel they have to, that has very interesting anti-trust implications. Why shouldn’t all hospitals cancel their HMO contracts and just charge the Medicare rate? (at least in areas like Orange County where Medicare pays more than the HMOs do)

2) He owned a medical group that got bought by Phycor which then went bust, so that his stock was worthless. So where did the money come from to buy his helicopter and the hospitals?

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Randy R CoxanoniJPTom Leithpidgas Recent comment authors
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Randy R Cox
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The defenders of “free market” call it the greatest system in the world…but it ain’t a free market. How can they be so proud of what we have.
Old people get free care. Children get free care. Poor people get free care. Government workers get government health care. Military get government health care.
Everybody get free care except those who work.
For a free market system, there sure are a lot of government regulations.

anoni
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anoni

free market = meeting of minds, supply reaching demand cartel = ctrl of supply OR why docs dont drive taxis…? — artificial scarcity: http://www.usatoday.com/news/health/2005-03-02-doctor-shortage_x.htm — middle class sln: Minute Clinics, overseas http://www.samitivej.co.th/index_en.aspx comprehensive >40yo female check-up. $368 for total exam including eye, chest xray, EKG, mammogram, abd ultrasound, labs — price gouging: 1000% markup is not a business model, its robbery (see Costco’s 15% markup max coded into operations) an insiders experience with gouging- As I mentioned about six weeks ago, I ended up going to the hospital while I was on vacation in California. Of course one of the… Read more »

JP
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JP

I contine to be amazed when someone attempts to give the HMOs a taste of their own medicine how the armchair quarterbacks come to the aid of a system that has ripped off California providers for years. California is luck is has not had a hospital/physician provider revolt!!

Jack E. Lohman
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>>> “Wait, increased demand led to higher prices? Get out of town!” Wow, Pid, what century are you living in. In case you haven’t heard the rumor, health care costs are increasing at the rate of 15% per year. Well beyond inflation and well beyond population growth. OF COURSE the “cost per test” has remained relatively stable, BUT the number of tests have increased dramatically because increased test volumes adds substantially to the physician’s bottom line. And no, it is not all physicians, but it is enough physicians to substantially affect the system. >>> “The rest of that paragraph makes… Read more »

pidgas
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pidgas

>>> “You mean that giving people stuff for less cost increases demand/consumption?!! I’m shocked. SHOCKED!” Yes, and the unintended consequences were that costs went up, not down. So HSAs and other methods of deterring patients are going to see some very negative consequences. Wait, increased demand led to higher prices? Get out of town! The rest of that paragraph makes no sense. It is one huge non-sequiter. If Medicare were the only coverage you can bet your bottom dollar they would reimburse fairly, or they’d have hospitals closing and physicians becoming plumbers. If that’s enough to help you sleep at… Read more »

Jack E. Lohman
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>>> “Individuals cannot make the right decisions for themselves? I reject that wholeheartedly. One of the foundational ideas of western society is that individual liberty should be maximized. Why should health care be an exception to that?” First, Pid, one should never say never and I broke that rule. The 20% of patients that drain 80% of the costs (or whatever the exact percentages are) are not usually in a position to make the decisions for themselves and it is usually made by the physician, as Brian Klepper pointed out elsewhere. Brian: “In truth, patients’ diagnostic and treatment choices represent… Read more »

pidgas
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pidgas

In the real world that simply won’t happen. Patients (in general) will rarely make the right decisions if cost is a factor. Decisions yes; right ones rarely. I’ve said this elsewhere, but patients simply are not going to seek out the lowest bidder when it comes to their health or that of a loved one. Individuals cannot make the right decisions for themselves? I reject that wholeheartedly. One of the foundational ideas of western society is that individual liberty should be maximized. Why should health care be an exception to that? Individuals sometimes make poor decisions. Sometimes they just do.… Read more »

Jack E. Lohman
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Health care can either be a social service or a market commodity, Tom, and I prefer the former. Otherwise, why don’t we also turn police and fire services over to the private sector and let them charge on the basis of how many tickets they write or fires they put out? Because some things are best pooled and run by the government. Health care is one of them. Accepting the free-market concept in medicine is to invite the profit-seekers into a very personal process in which vulnerable patients are subjected to excessive testing and unnecessary surgeries because they are profitable.… Read more »

Tom Leith
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Tom Leith

Jack E. Lohman writes: > How high does it have to go to satisfy > you and the free-market proponents? But Jack! A “free market proponent” finds this question nonsensical. He is satisfied so to speak at whatever level the free market settles at. That’s what “freedom” means. What many (most?) free market proponents fail to recognize is that “free markets” aren’t necessarily “competitive markets” that optimally allocate resources, and that the necessary conditions for healthcare approximating an ideally competitive market just don’t exist, largely (but not entirely) due to power and information asymmetries. Even under Enthoven-esque competition among health… Read more »

Jack E. Lohman
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Pid, we “slid” towards the free market as the politicians and Medicare gutted the Stark rules and those that prohibited hospitals from employing their own physicians, and physicians being able to refer patients to hospitals they had an investment in, and referring patients to labs they owned or had an investment in, and the elimination of the certificate of need rules, and on and on and on. I do agree with you, however, that it is outrageous that hospitals get rewarded for making mistakes (by getting paid to correct them). >>> “the people consuming services have no idea and/or no… Read more »

pidgas
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pidgas

Jack, In what way have we “slid” towards the free market over the past decade? In what way has it compensated for the market damage done by Medicare? It’s astonishing and wrong that providers get paid for their rework. You think that’s because a market exists? When was the last time you paid double for breakfast because, gee, the waitress couldn’t find the first one they made? Physicians and hospitals get paid for that rework because insurers make money on the turn of every dollar, government doesn’t “care” (i.e. it’s too bureaucratic and unwieldy to really address the problem), and… Read more »

Jack E. Lohman
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Until you got to the last paragraph, Pid, I thought you were going to offer a solution. But frankly, it is the slide toward the free market over the past decade that got us into this mess. I, too, don’t think more of the same is the solution, and that goes for the free-market as well. Every time I look at how the VA system costs about $4000 per patient per year, for patients that are typically sicker than the norm, I become more convinced that a salaried system ought to be our goal. Entrusting physicians who are paid on… Read more »

pidgas
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pidgas

I know that Impossible is Nothing . Nevertheless, providing health care is an enormous endeavor. It is dizzyingly complex and fraught with moral dilemmas, and the government has proven in the last 40 years via Medicare that the law of unintended consequences is ignored at our peril. Whenever I think about “expanding Medicare” (whatever part you choose) to control costs, I think about what has happened to health care spending since the introduction of Medicare in the 60’s. Then I think about the bureaucracy…do people generally have any idea how fundamentally screwed up the Medicare system is? Forget simple issues… Read more »

Jack E. Lohman
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But CT, it doesn’t have to be that way. In my view Medicare doesn’t mind sticking it to providers in some cases because they know full well that the provider will make it up in other cases. If it were an overall loss they would have providers dropping out of the system right and left. Volume doesn’t matter when the average payment is a loss. And incidentally, the only difference between Medicare payments in California and those in Wisconsin is the regional cost-of-living adjustment, so they net out to be essentially the same. What we need is a change in… Read more »

CT
Guest

I don’t understand how antecedal evidence from one region of the country negates the claim that in many, if not most incidences, Medicare is a losing reimbursement system for providers. So it might turn out that in Southern California Medicare reimbursement trumps that of some private options. As pdbMD points out “The HMOs in Cali have had a stranglehold on the market since the early 1990s and physician reimbursement is relatively low compared to other parts of the country.” But that is one situation? Who in the world is making a universal claim that in EVERY situation Medicare is a… Read more »