Bitter Pill: The Exorbitant Prices Of Health Care

Tyler Durden's picture

Instead of asking the endless question of "who should pay for healthcare?" Time magazine's cover story this week by Steve Brill asks a much more sensible - and disturbing question - "why does healthcare cost so much?" While it will not come as a surprise to any ZeroHedge reader - as we most recently noted here - this brief clip on the outrageous pricing and egregious profits that are destroying our health care quickly summarizes just how disastrous the situation really is.  A simplified perspective here is simple, as with higher education costs and student loans: since all the expenses incurred are covered by debt/entitlements, there is no price discrimination which allows vendors to hike prices to whatever levels they want. From the $21,000 heartburn to "giving our CT scans like candy," Brill concludes "put simply, with Obamacare we’ve changed the rules related to who pays for what, but we haven’t done much to change the prices we pay."

 

Via Time,

The $21,000 Heartburn Bill

One night last summer at her home near Stamford, Conn., a 64-year-old former sales clerk whom I’ll call Janice S. felt chest pains. She was taken four miles by ambulance to the emergency room at Stamford Hospital, officially a nonprofit institution. After about three hours of tests and some brief encounters with a doctor, she was told she had indigestion and sent home. That was the good news. The bad news was the bill: $995 for the ambulance ride, $3,000 for the doctors and $17,000 for the hospital — in sum, $21,000 for a false alarm.

"Giving out CT Scans like candy..."

The costs associated with high-tech tests are likely to accelerate. McKinsey found that the more CT and MRI scanners are out there, the more doctors use them. In 1997 there were fewer than 3,000 machines available, and they completed an average of 3,800 scans per year. By 2006 there were more than 10,000 in use, and they completed an average of 6,100 per year. According to a study in the Annals of Emergency Medicine, the use of CT scans in America’s emergency rooms “has more than quadrupled in recent decades.” As one former emergency-room doctor puts it, “Giving out CT scans like candy in the ER is the equivalent of putting a 90-year-old grandmother through a pat-down at the airport: Hey, you never know.”

 

Selling this equipment to hospitals — which has become a key profit center for industrial conglomerates like General Electric and Siemens — is one of the U.S. economy’s bright spots. I recently subscribed to an online headhunter’s listings for medical-equipment salesmen and quickly found an opening in Connecticut that would pay a salary of $85,000 and sales commissions of up to $95,000 more, plus a car allowance. The only requirement was that applicants have “at least one year of experience selling some form of capital equipment.”

When you follow the money, you see the choices we’ve made, knowingly or unknowingly.

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.

 

We’ve created a secure, prosperous island in an economy that is suffering under the weight of the riches those on the island extract.

 

And we’ve allowed those on the island and their lobbyists and allies to control the debate, diverting us from what Gerard Anderson, a health care economist at the Johns Hopkins Bloomberg School of Public Health, says is the obvious and only issue: “All the prices are too damn high.”

The health care market is not a market at all.

It’s a crapshoot. Everyone fares differently based on circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid.

 

If they’re not protected by Medicare or protected only partially by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow knew the prices before they got billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to.

 

How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice.

 

They are powerless buyers in a sellers’ market where the only consistent fact is the profit of the sellers.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
steve from virginia's picture

 

 

 

 

Another person falls into the Zero Hedge pit of Ayn Rand Paul Austrian moron worship and staggers out covered with feces.

 

....

Parrotile's picture

Your Psychiatrist is prescribing an "interesting" combination - Amphetamine, SSRI,  atypical antipsychotic, and Gabapentin, (surely not for seizure control / neuropathy??)

ALL these interact, and the interaction is very much "individual dependent".

I'm not a Psych Dr, but going by even basic safe prescribing guidelines, I'd be interested in a medications review, since the above combination seems hardly a safe one. (Hey, but my Psych. colleagues always tell me that their practices are guided as much by "The Art" as by pharmacotherapeutics, and they follow the mantra "increase the dosage until either we get the desired effect, or the side effecte become intolerable" - so what do I know . . . . .! ! )

Encroaching Darkness's picture

"all three sources of income (plus unemployment insurance for around 15 weeks in 2012) put me over six figures but I feel completely impoverished and stressed out. "

Your anxiety is driving you to extremes. I might suggest something: buy a BP monitor, drug stores frequently have them for little money. Find out where you are, but DO NOT OBSESS OVER IT, low or high.

USE THE MONITOR TO REDUCE YOUR STRESS LEVELS. This will take some time, but it is a learned response, and works this way. In your normal, stressed state, determine your BP. KEEP THE MONITOR ON.

Try meditation, relaxation training, listening to your favorite peaceful music, whatever, but try SOMETHING. Eventually, you will find out what really relaxes you, and reduces your BP. Practice whatever that is, for whatever time you can afford, and watch your overall BP go down, slowly. My BP was borderline hypertensive when I started; but when I figured out what worked for me, I drove it down. Now it's frequently down around 125 / 80, partly due to a medication, but usually just with technique. I am slowly reducing the medication, intending to get off it. My weight has also dropped; I started at around 255, and now at 230, have been as low as 225. Once my weight dropped below 235 or so, my BP dropped several points.

Try doing this at the same time each day, if possible; routine also reduces stress. If you eat when / because you're stressed, the additional weight adds load on your heart, and losing the weight will really help.

Best of luck; hope you can find a path to escape the stress, and regain your health.

Stuck on Zero's picture
CEO Compensation of the 25 Top-Grossing Non-Profit Hospitals:

1. Jeffrey Romoff, University of Pittsburgh Medical Center — $5.97 million
2. Delos Cosgrove, MD, Cleveland Clinic — $2.31 million
3. Herbert Pardes, MD, former CEO of NewYork-Presbyterian Hospital (New York City) — $4.35 million
4. Lars Houmann, Florida Hospital Orlando — $2.92 million
5. Thomas Priselac, Cedars-Sinai Medical Center (Los Angeles) — $2.77 million (2011)
6. Martha Marsh, former CEO of Stanford Hospital & Clinics (Palo Alto, Calif.) — $1.92 million
7. Steven Safyer, MD, Montefiore Medical Center (Bronx, N.Y.) — $4.07 million
8. Garry Scheib, executive director of Hospital of the University of Pennsylvania (Philadelphia) — $1.53 million
9. Sandra Gomberg, former interim CEO of Temple University Hospital (Philadelphia) — $508,753
10. John Hillenmeyer, former CEO of Orlando Regional Medical Center — $2.24 million
11. Peter Slavin, MD, Massachusetts General Hospital (Boston) — $2.5 million
12. Robert Garrett, Hackensack (N.J.) University Medical Center — $1.83 million
13. Patrick Gavin, Crozer-Chester Medical Center (Upland, Pa.) — $266,926 (named president in July 2010)
14. Daniel Evans Jr., Indiana University Health Methodist Hospital (Indianapolis) — $2.08 million
15. Elizabeth Nabel, MD, Brigham and Women's Hospital (Boston) — $1.6 million
16. Larry Goldberg, former CEO of Vanderbilt University Medical Center (Nashville, Tenn.) — $842,854
17. Robert Grossman, MD, New York University Langone Medical Center (New York City) — $3.49 million (includes compensation from related organizations)
18. Ronald Hytoff, former CEO of Tampa (Fla.) General Hospital — $2.33 million
19. Kevin Wardell, president of Norton Hospital (Louisville, Ky.) — $743,592
20. Dean Harrison, Northwestern Memorial Hospital (Chicago) — $9.72 million
21. Thomas Lewis, former CEO of Thomas Jefferson University Hospital (Philadelphia) — $1.28 million (2011)
22. Susan Somerville, RN, executive director of North Shore University Hospital (Manhasset, N.Y.) — $839,734
23. Ron Girotto, former CEO of The Methodist Hospital (Houston) — $2.57 million (2009)
24. Ruthita Fike, Loma Linda (Calif.) University Medical Center — $997,707
25. Kevin Sowers, president of Duke University Hospital (Durham, N.C.) — $658,592

ebworthen's picture

"Health"care is a PONZI.

Yet another Ponzi scheme of the U.S.S.A.

Judge Crater's picture

Steven Brill's article in TIME magazine explains how a hospital "chargemaster" (the hospital's computerized billing system) is the key to the fraudulent billing practices at most hospitals.  I never even heard of the term chargemaster before.  Some states block stores like supermarkets (but not gas stations) from charging customers more for using a credit card to make a purchase than if using cash.   Yet, according to Brill's research, hospitals routinely bill uninsured patients tens of thousands of dollars more than if the patient was protected by Medicare or some otehr insurance carrier.  How is the hospitals' chargemaster price gouging legal?  It isn't, of course, when it comes to billing for tests like CT scans and for the pricing of drugs like aspirin.  Imagine if a drug store billed you a dollar an aspirin and charged the guy behind you on line one penny for the same aspirin.  Thanks to Brill, we all know how crooked hospital pricing practices are in the United States. 

Politicians knew about the hospital price gouging using the chargemaster ripoff system, federal and state regulators knew about chargemaster and patient advocates and insurance companies know about chargemaster.  None of the above publicized this rotten chargemaster system, in large part responsible for the 60% of the personal bankruptcies filed each year in the United States by people who can't afford to pay their bloated hospital bills.  It is time for some sleazy class action shyster lawyers to start suing the pants off these price gouging hospitals, especially the phoney "not for profit" hospitals with top executives getting salaries over 5 million dollars a year. Brill's article shows hospitals in a different light, hospitals operated alone the same business plan as a Mafia family's loan sharking and protection racket.  Brill's solution, allow Medicare to enroll more than just people 65 years of age or older, is a solution that no politician will back, whether Democratic or Republican.  The hospitals can afford to buy off the government so hospitals have "protection" from consumer regulations and, until Brill's story, from the lapdog press in the USA.

FreedomGuy's picture

Very interesting comments on this article and thread and most are wrong or incomplete. There are so many issues as to how and why things happen as they do in healthcare that it does really take a book to analyze all the factors. Here are a few of my observations that might add to the discussion.

1. Everything you see in American healthcare whether better or worse revolves around extensive government control, regulation and reimbursements in the medical field. Love or hate, doctors, pharma, insurers, hospitals, device makers, etc. they are all responding to the forces within the system trying to do the best they can legally. In summary, our government system actually drives up costs and complexity. In a free system you always work towards simplicity and efficiency. In countries you would go to for medical tourism you will see far more freedom.

2. The private system subsidizes the government system. Ask anyone in any part of the system, hospital, meds, doctor's offices, nursing homes, etc. and they will tell you that at best government payments keep the lights on but the private patients carry the economic load. The main reason your doctor may take Medicare and even Medicaid is because there are other patients with better reimbursements to sort of average things out. ObamaCare is in for the surpreme nasty realization of this as it purposely destroys then takes over what remains of the private sector. It is why they will not be able to cut costs as they promised. This subsidy extends to illegal aliens and on the bigger level the USA subsidizes Europe and the rest of the world. Europe will find out once America goes full socialist.

3.  Cash/unisured pay the highest amounts for hospitals, meds and other things because they do not have any contracts or bulk buyers. Your insurance companies demand discounts on almost everything and they have the expertise to know what to ask for. The discount is from some theoretical full price that the service costs. That would be the price a person would pay with no negotiation, i.e., the uninsured average guy. So, everything is priced accordingly. You can usually negotiate for the insurance rate with persistance. Also, because government has laws that demand the lowest prices offered you cannot get a charity rate so to speak or suddenly the government must get the same price for all it's patients.

4. Most aspects of medicine are high risk and high reward. The input requirements for most of medicine are exceedingly high in the United States. A doctor will train for about 11 years of expensive schooling and be in his 30's before beginning to earn any income. New meds need a half billion dollars or more to get to market. Build a new hospital and put some basic equipment and staff into it. You need more money than Google. If you watch TV at night how many class action lawsuit ads to you see related to health, drugs and medical devices? They are on every night. Do you see the same for any other industry? So, lowering the end product prices of doctors, medicines, hospital care and even insurance is nearly impossible until you are able to lower the cost of producing a doctor, hospital, medicine, etc. Part of the reason you can get meds cheaply in Mexico is because they are not controlled substances and everyone has access without any formularies or even a prescription in many cases.

I work in a partof the healthcare industry and I am always amused by people who pretend to know every aspect of it and exactly what to do. No one knows every aspect. Insurers come the closest as they pay all the bills, but even they have their limits. The best thing is not to label any part of it as "evil" but to try and understand what forces are at work to make it the way it is.  At the end of the day remember to take a deep breath and realize that we do live longer with more function preservation than anyone in the history of mankind even though we are relatively sedentary, fat and eat processed foods. Something must be going right.

Accounting101's picture

Thank you for proving my earlier point. The freedom to pay more for less.

Accounting101's picture

Thank you for proving my earlier point. The freedom to pay more for less.

DaveyJones's picture

you have some cause and effect problems here.

it's all regulations fault. Well...who is lobbying that "regulation?" Who is it benefiting? Why do we avoid the world market? Mexico isn't the only country making medication. (By the way they do have one of the oldest medical schools in the world). Who benefits? What industries did the current administration cut deals with in numerous secret meetings before even taking one step out in the public light? What "sacrifices" did these industries make?. What did they gain? 

It's all the lawyers fault. The lobbying lawyers, for certain. But some of those pesky "class actions" are absolutely necessary to try to stop the criminal drug corp and their cronies at the regulatory bodies. (See the OXY story for one, the GMO version of l-tryptophan for another). Plenty more examples and it's getting worse..as they get larger and more "persuasive" shall we say. Kinda of why they inveted class action. A little leverage  

Why doesn't the health industry (along with government) empahsize nutrition?  Who benefits? It's the cheapest and most effective health plan.  

fijisailor's picture

In all other developed countries and including many third world countries socialized medicine is offered as well as private for pay care.  The socialized care forces the privatized care to be competetive and affordable.  Only the US has this silly idea that corporations will deliver medical care at a reasonable cost which obviously doesn't work in theis bribed and captured market.  My solution is to carry catastophic coverage only in the US and all for all other care I fly overseas and still pay less than the cost for care in the US.

Helvetico's picture

Your money or your life: that's the American health care motto. A lot of you fail to realize that it's not just one thing: overpaid doctors, profiteering big pharma, profiteering insurance companies, CT scan makers, health equipment salesmen, hospital CEO's. Everybody involved in health care is on the take, making giant piles of money at the expense of other people's lives.

Go to Time and read the actual article (http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-...). The most sensible actor in the entire mess is Medicare. I know this is hard for a lot of you dogmatic, free-market-worshiping fanatics, but the private sector is the bad guy here. In fact, Brill's proposed solution involves extending Medicare coverage to everybody in order to cap costs. He suggests (brace yourselves) making people pay according to what they can afford, thereby preventing old folks with multiple conditions from making absurdly cheap, unnecessary visits. 

Will Americans ever opt for the public health insurance model? Hell, no! Big gubmint is the bad guy, even when they're paying for my parents' knee replacements, stents, pacemakers and artificial corneas. My folks and millions of Americans like them (including the Free Market Fanatics on ZH) have been well-programmed by the Health Care Lobby: you don't want big gubmint and some mulatto like Obongo telling you what to do; you'd rather be fucked out of your money and your life by a faceless cunt of a CEO who looks like Mr. Rogers. 

You'll die early, but at least you'll have your freedom, you stupid fucks.

 

 

Accounting101's picture

Exactly!!! Medicare for all is the only way out of this nightmare. We know it costs less and provides for better health outcomes. Unfortunately, critical thinking and understanding causal relationtionhips are not things we excel at in this country. It's our god given right to pay more for less!

steve from virginia's picture

 

 

 

"You'll die early, but at least you'll have your freedom, you stupid fucks."

 

Another person falls into the Zero Hedge pit of Ayn Rand Paul Austrian moron worship and staggers out covered with feces.

 

Clearly, tycoons and their free markets hasn't fucked them over enough.

Downtoolong's picture

 

 

 

My last annual physical checkup.

                                                                                    Estimated Cost

Rent for 45 minutes sitting in chair in waiting room                           $15

10 minutes with doctor in examination room                                   $100    

10 minutes with Lab Technician                                                    $40

10 minutes for actual outside lab tests                                          $40

Vials, syringes, gauzes, plastic pee-cup, supplies                             $20

Medical Waste Disposal                                                               $30

Shitload of money someone besides all these people made      $2,735

                                                                                      ---------

Total cost of checkup paid by insurance company                       $2,980

 

P.S. My Co-Pay was $10. Conclusion, SNAFU

steve from virginia's picture

 

 

90% of US health problems are lifestyle-related: poor diets, no exercise, pollution, drug/alcohol abuse, accidents/trauma, smoking, stress ... all of which are costly to 'gain'.  

 

Poor diets require expensive fast/convenience food and restaurants.

 

No exercise requires cars and TVs. Pollution requires 'labor saving devices' over extended periods, drugs and booze are expensive, accidents/violence require cars and firearms, smoking and stress require modernity to make people crazy.

 

If people are willing to overpay for shitty lives, they are willing to overpay for the consequences. Medical 'system' is part of the junkie-pusher regime.

 

 

roadhazard's picture

The guy that wrote this article (31 pages) for Time mag. (on the shelves now) was on the daily show last night. Beware the "Charge Master".

silvereye's picture

Some facts

(1) Im an eye surgeon...I a solo practice... for 11 years now.  I atteded the top "name brand" universities and training programs.  I graduated in the top 10% of my medical school class at one of the top 2 medical schools.  I graduated in the top 1% of my undergrad class.  I scored in the 99th percentile on my 3 medical license exams.  (USMLE).  As an aside, these tests are very easy by the way, as an eye guy I was still able to score very high in all the general medical field questions...(perhaps only a testiment to my education as a professional test taker for the first part of my life?).  Seriously though...its a mind bogglingly large quantity of information to absorb. 

The AMA did not help me directly in any way.  I have never been and will never be a member.  I never understand the AMA conspiracy theories that people write about involving about manpower control etc.  Manpower in my field, eye surgery, is limited by the number of high quality training institutions and available physician teacher time available....not to mention the number of patients who dont mind having a student doctor or surgeon work on them....I suppose we could all train in the third world...but there are no teachers there and logistical problems....

The US Government paid for my education and actually paid me a salary to attend medical school...that is who helped me...other than myself.  That is another story...but FYI.  Same with my wife by the way...also a surgeon....also tuition and salary paid to attend medical school by US Govt.  No financial payback was required in our cases....we happened to be in a small group that they wanted and there is a little known 100% govt funded plan for a 100 or so kids a year to attend medical school free and clear and with small but livable pay also. (my first year salary as a medical student was $550 a month in case anyone is wondering....in 1989).  We have paid them back with our tax money surely, but the US Govt spent probably $400K or so training my wife and myself.  Lucky I guess....

My work is difficult, both medically and surgically.  I am excellent at it, but not perfect.  Mistakes are disaserous to people's lives.  By societies judgement and standards...Im very smart...however I often run into difficult situations that test my expereince...

I never understand how so many people write that we doctors are only busy as we somehow conspire to limit our numbers and comments of this nature. The vast majority of doctors are not such clever and nefarious business people in general...certainly not at the University level where position numbers are decided for specialists...

Perhaps that does apply in some fields...but I simply dont think that there are that many humans who can do what I do....it sounds very arrogant written down like that..and I'm not sure I even used to believe it....but I have seen now what goes on..and to do it RIGHT..(and with LESS waste) is very dificult.

If I was ever able to stand in the way of all the wasted MRI testing orderd for visual complaints in a hospital ED...I think I would be very very wealthy indeed if I could capture a small fraction of the amount of money I would "save.."...Of course one persons savings is another persons loss....

Anyway, its important to understand that its not simply an issue of "training more people" or giving out more licenses....there are already plenty of low quality docs out there....DEREGULATING....which is what some people seem to think is the solution here...(like that worked out well elsewhere?)...is not the answer. 

More doctors usually equals more expenditure in the current system anyway of third party pay....that is why insurance companies want to LIMIT their panels of docs and facilities....more docs = more services provided.

The laws of supply and demand are highly distorted.

Anyway...

(2) I started the practice from scratch with my own savings

(3) I marketed the practice myself in the old fashioned way, networking.

(4) I see all the patients all of the time.

(5) I manage the practice by myself.  I have financed all aspects of the practice myself.  No safety net if I were to fail.

(6) I take ALL insurances that allow me into the fold...there are some medicare private plans that are very big in my area that only contract with specific specialist. it has nothing to do with my prices or my credentials...its an old boy network and its about connections and control.  Bidding a lower price for the contract would have no effect.  This is another silent issue that the public does not know about...preferential doing out of govt money....that is what "private medicare" with HMO does.  It does NOT save money.  It is just a method of control and financial diversion for some business people who otherwise would not be needed.

(7) No one gives me anything.  No pension will be coming from some union or govt agency.  Well, Ill get medicare and SS someday if it still exists.

(8) I pay for everything, so I run an efficient business with the correct amount of staff.

(9) My business could be destroyed at any time by changes in health care that would squeeze me out in one way or another...divertiing dollars elsewhere...

(10) The business laws are absolutley set up against me in many ways.  For example....many of my contracts...which are nearly impossible to negotiate for a solo provider...allow the company contracting with me to SELL MY CONTRACT to other insurance companies...so I may offer discounts to companies Ive never heard of before..be on lists I dont know about..etc....of course I have the option to not contract (but then you lose a lot of business...).  It is highly illegal to conspire with others in my field about prices or contract and as far as I know its not done...no one has ever asked me anything like that...in fact no one has ever asked me to do anything illegal.  The most I ever got out of a drug company was a dinner and once I got a round of golf.  Even that is not allowed anymore.  Food in the context of education is allowed.  However I DO NOT participate in free dinners etc.  We dont even get pens or mugs or pads of paper anymore.  Its all been eliminiated.  Try that with congress!

(11) The prices paid to me are all determined by someone else except for the few cases that pay me in cash as they have no insurance.

Im going to give some examples of what is actually paid out to me on average...(this is range from state mediCal/medicare to PPO)

New complete exam: $48-$200

Follow up exam: $37-$150

Cataract removal with new lens insertion: $550-$1300..medicare is $650.  My fee is $4,000..the balance is written off..its a fantasy...not real money....medicare paid $3,000 in the early 1980's. 

Laser treatment of retina: $350-$1100

Injection into eye with biologic medicine....$90-$400

Surgical removal of chalazion...$90-$250

Poeple often confuse the CHARGES with what is actual owed and paid.  After contract adjustments are made I actually collect about 33% of what I charge.  Charges are HIGH because if one charges less than the highest allwed payment then you get only what you charge.

So for example...perhaps my surgeon CHARGE for cataract removal is $4,000....but medicare pays me $500...the secondary pays me $150..and I write off the rest.  So the actual COST to the govt and ins and pt for my surgery and 3 months of followup care is $650.

I have not met anyone of my patinets who thinks that $650 is unfair.  Many of them could care less, many of them are appaled that the govt only pays $650.  (most of my pts are medicare age of course since that is who gets cataracts).  I have to admit its hard to stomach the 17% decrease in that which govt gave me as of 2013.  The reason...they determined we are quicker and more efficient...thus we should be paid less since it takes less time....haha.  Try that with Goldman Sachs....!  Tell them...since you are so good at underwriting my stock...Im going to pay you less!....good luck.

Overall, I am NOT complaining about my income.  My income is significant because I work efficiently, my work is accurarate and very high quality (which leads to more efficiency and more happy "customers" and is also the moral and ethical way to go).

My income is significant because I run my own small business.  My income is significant because I manage the business myself and manage it well vs pay someone else to also do that work.  My income is significant because people want to come to me.  My income is significant because the reality is that there are NOT that many people who can do my job.  You can give our licenses all day..but they are going to mess it up more frequently.

My income is significant because there is SOME JUSTICE in the world (rarely) and I am actually compensated for the fact that I actually DO SOMETHING usefull for others.  I improve or restore sight, I relieve pain, I relieve anxiety....

If you want to CUT my income...in fact increasing general health would make a big difference.

In my case many of my patients are diabetic type 2 and a better lifestyle could possibly have eliminated the need for my services.

By the way, physician incomes are 10% of the medicare budget. 

Its not a great place to target for cutting overall healthcare costs....in fact..you might want to increase the pay of primary care doctors, increase their training and quality, and MAYBE THEY WOULD REFER LESS PEOPLE....MAYBE THEY WOULD HELP MORE PEOPLE LEAD A HEALTHY LIFESTYLE....MAYBE THEY WOULD USE THEIR BRAIN INSTEAD OF WASTE MORE MONEY ON NOT NEEDED MRI....

More weak doctors is not the answer.....we have SO MANY weak ones now!...

..less regulation is not the answer here anymore than in the banking system......plain old free market economics wont work well here just as it does not work well in banking....too much room for robber baron type fraud.  Its already happening....but at least its spread out a lot....

If it became a totally unregulated market (but with govt money coming in...and that IS going to keep happening at some level no matter what Americans now expect it) then it would be EVEN MORE ripe for crony capitalism.

What is the answer....simple...stop people getting old...stop the flow of new technology....stop the desire of people to live forever......stop all that by making people pay out of pocket?  Perhaps....but I hope you hire someone for me to negotaite prices all day with my 40 patients.

Now in India they can get cataract surgery done for about $20.  If all other prices here were at the level they are in India...haha...staff...rent...supplies....insurance....billing costs....and American's would tollerate that system...being lined up all day...not meeting the surgeon...ever....no ability to sue....no govt control over every aspect of the clinic....

By the way....FYI...it COSTS ME about $80,000 per year just to COLLECT what I am contractually owed from ins companies and patients....that is the level of complexity in the billing system for ME as a business person.

What IS the answer....I dont think each person negotiating everything with me is a great idea....govt already sets my prices.....shaving off half of all docs fees would bankrupt us since most take home less than 50% of what they collect.  So cut our fees 25% and we get our salary cut in half.....not nice.

Then you would save 25% of 10% of the medicare budget...(and private costs too I guess)....so that would cut the medicare budget 2.5%...do NOTHING to improve the quality of medicine or quality of doctors...maybe make it worse...I know if it was NOT a good pay profession...despute my desire to help and all that...I would have gone into another line of work.  Some percent of docs might reture or leave even 5% would lead to a further crunch in the # of doctors available to see pts...and there are LOTS of them...even more coming with the demographic trends.

That 2.5% cut would help for about 1 year....then we would have less high paid doctors..and nothing else would change....

So I have to say I dont think doctors salaries are the problem....although doctors attitudes towards cost control COULD be one big answer...

But then you get ethical problems too....I get paid to NOT order a test..etc...hum...

Would you rather I get paid to do your surgery or get paid to delay it...haha....either way you need quality ethical doctors!

You want to fight with me when you want surgery to clear up your vision and I dont think your vision is bad enough to need it.  Do you want me on your side or against it....fee for service is often said to be a problem...but the alternative is fee for no service...or slower (yea even slower!) service...of much less service.

What we need are cheaper ways to heal people and definatley start with keeping people healthy FIRST.

Hospitals are expensive and some of the fees make no sense.  But have you ever tried to build a hospital in this country?  Follow the amazing number of crazy govt rules....(dont get me started on that)....and see all the hospital staff who DO seem to me to just sit around and take legally required breaks all day.

If society wants docs who have to worry about making loan payments and living paycheck to paycheck then that is what it will get...and that may happen....but it will NOT solve the problem with medical costs.  Drugs, hospitals, test, regulation, real estate, equipment....this is where 90% of the money is going. 

Anyway, its a huge part of the economy.  If its contracted then something else will have to grow in exchange.  More people can have big screen TV's I suppose....

silvereye's picture

Some facts

(1) Im an eye surgeon...I a solo practice... for 11 years now.  I atteded the top "name brand" universities and training programs.  I graduated in the top 10% of my medical school class at one of the top 2 medical schools.  I graduated in the top 1% of my undergrad class.  I scored in the 99th percentile on my 3 medical license exams.  (USMLE).  As an aside, these tests are very easy by the way, as an eye guy I was still able to score very high in all the general medical field questions...(perhaps only a testiment to my education as a professional test taker for the first part of my life?).  Seriously though...its a mind bogglingly large quantity of information to absorb. 

The AMA did not help me directly in any way.  I have never been and will never be a member.  I never understand the AMA conspiracy theories that people write about involving about manpower control etc.  Manpower in my field, eye surgery, is limited by the number of high quality training institutions and available physician teacher time available....not to mention the number of patients who dont mind having a student doctor or surgeon work on them....I suppose we could all train in the third world...but there are no teachers there and logistical problems....

The US Government paid for my education and actually paid me a salary to attend medical school...that is who helped me...other than myself.  That is another story...but FYI.  Same with my wife by the way...also a surgeon....also tuition and salary paid to attend medical school by US Govt.  No financial payback was required in our cases....we happened to be in a small group that they wanted and there is a little known 100% govt funded plan for a 100 or so kids a year to attend medical school free and clear and with small but livable pay also. (my first year salary as a medical student was $550 a month in case anyone is wondering....in 1989).  We have paid them back with our tax money surely, but the US Govt spent probably $400K or so training my wife and myself.  Lucky I guess....

My work is difficult, both medically and surgically.  I am excellent at it, but not perfect.  Mistakes are disaserous to people's lives.  By societies judgement and standards...Im very smart...however I often run into difficult situations that test my expereince...

I never understand how so many people write that we doctors are only busy as we somehow conspire to limit our numbers and comments of this nature. The vast majority of doctors are not such clever and nefarious business people in general...certainly not at the University level where position numbers are decided for specialists...

Perhaps that does apply in some fields...but I simply dont think that there are that many humans who can do what I do....it sounds very arrogant written down like that..and I'm not sure I even used to believe it....but I have seen now what goes on..and to do it RIGHT..(and with LESS waste) is very dificult.

If I was ever able to stand in the way of all the wasted MRI testing orderd for visual complaints in a hospital ED...I think I would be very very wealthy indeed if I could capture a small fraction of the amount of money I would "save.."...Of course one persons savings is another persons loss....

Anyway, its important to understand that its not simply an issue of "training more people" or giving out more licenses....there are already plenty of low quality docs out there....DEREGULATING....which is what some people seem to think is the solution here...(like that worked out well elsewhere?)...is not the answer. 

More doctors usually equals more expenditure in the current system anyway of third party pay....that is why insurance companies want to LIMIT their panels of docs and facilities....more docs = more services provided.

The laws of supply and demand are highly distorted.

Anyway...

(2) I started the practice from scratch with my own savings

(3) I marketed the practice myself in the old fashioned way, networking.

(4) I see all the patients all of the time.

(5) I manage the practice by myself.  I have financed all aspects of the practice myself.  No safety net if I were to fail.

(6) I take ALL insurances that allow me into the fold...there are some medicare private plans that are very big in my area that only contract with specific specialist. it has nothing to do with my prices or my credentials...its an old boy network and its about connections and control.  Bidding a lower price for the contract would have no effect.  This is another silent issue that the public does not know about...preferential doing out of govt money....that is what "private medicare" with HMO does.  It does NOT save money.  It is just a method of control and financial diversion for some business people who otherwise would not be needed.

(7) No one gives me anything.  No pension will be coming from some union or govt agency.  Well, Ill get medicare and SS someday if it still exists.

(8) I pay for everything, so I run an efficient business with the correct amount of staff.

(9) My business could be destroyed at any time by changes in health care that would squeeze me out in one way or another...divertiing dollars elsewhere...

(10) The business laws are absolutley set up against me in many ways.  For example....many of my contracts...which are nearly impossible to negotiate for a solo provider...allow the company contracting with me to SELL MY CONTRACT to other insurance companies...so I may offer discounts to companies Ive never heard of before..be on lists I dont know about..etc....of course I have the option to not contract (but then you lose a lot of business...).  It is highly illegal to conspire with others in my field about prices or contract and as far as I know its not done...no one has ever asked me anything like that...in fact no one has ever asked me to do anything illegal.  The most I ever got out of a drug company was a dinner and once I got a round of golf.  Even that is not allowed anymore.  Food in the context of education is allowed.  However I DO NOT participate in free dinners etc.  We dont even get pens or mugs or pads of paper anymore.  Its all been eliminiated.  Try that with congress!

(11) The prices paid to me are all determined by someone else except for the few cases that pay me in cash as they have no insurance.

Im going to give some examples of what is actually paid out to me on average...(this is range from state mediCal/medicare to PPO)

New complete exam: $48-$200

Follow up exam: $37-$150

Cataract removal with new lens insertion: $550-$1300..medicare is $650.  My fee is $4,000..the balance is written off..its a fantasy...not real money....medicare paid $3,000 in the early 1980's. 

Laser treatment of retina: $350-$1100

Injection into eye with biologic medicine....$90-$400

Surgical removal of chalazion...$90-$250

Poeple often confuse the CHARGES with what is actual owed and paid.  After contract adjustments are made I actually collect about 33% of what I charge.  Charges are HIGH because if one charges less than the highest allwed payment then you get only what you charge.

So for example...perhaps my surgeon CHARGE for cataract removal is $4,000....but medicare pays me $500...the secondary pays me $150..and I write off the rest.  So the actual COST to the govt and ins and pt for my surgery and 3 months of followup care is $650.

I have not met anyone of my patinets who thinks that $650 is unfair.  Many of them could care less, many of them are appaled that the govt only pays $650.  (most of my pts are medicare age of course since that is who gets cataracts).  I have to admit its hard to stomach the 17% decrease in that which govt gave me as of 2013.  The reason...they determined we are quicker and more efficient...thus we should be paid less since it takes less time....haha.  Try that with Goldman Sachs....!  Tell them...since you are so good at underwriting my stock...Im going to pay you less!....good luck.

Overall, I am NOT complaining about my income.  My income is significant because I work efficiently, my work is accurarate and very high quality (which leads to more efficiency and more happy "customers" and is also the moral and ethical way to go).

My income is significant because I run my own small business.  My income is significant because I manage the business myself and manage it well vs pay someone else to also do that work.  My income is significant because people want to come to me.  My income is significant because the reality is that there are NOT that many people who can do my job.  You can give our licenses all day..but they are going to mess it up more frequently.

My income is significant because there is SOME JUSTICE in the world (rarely) and I am actually compensated for the fact that I actually DO SOMETHING usefull for others.  I improve or restore sight, I relieve pain, I relieve anxiety....

If you want to CUT my income...in fact increasing general health would make a big difference.

In my case many of my patients are diabetic type 2 and a better lifestyle could possibly have eliminated the need for my services.

By the way, physician incomes are 10% of the medicare budget. 

Its not a great place to target for cutting overall healthcare costs....in fact..you might want to increase the pay of primary care doctors, increase their training and quality, and MAYBE THEY WOULD REFER LESS PEOPLE....MAYBE THEY WOULD HELP MORE PEOPLE LEAD A HEALTHY LIFESTYLE....MAYBE THEY WOULD USE THEIR BRAIN INSTEAD OF WASTE MORE MONEY ON NOT NEEDED MRI....

More weak doctors is not the answer.....we have SO MANY weak ones now!...

..less regulation is not the answer here anymore than in the banking system......plain old free market economics wont work well here just as it does not work well in banking....too much room for robber baron type fraud.  Its already happening....but at least its spread out a lot....

If it became a totally unregulated market (but with govt money coming in...and that IS going to keep happening at some level no matter what Americans now expect it) then it would be EVEN MORE ripe for crony capitalism.

What is the answer....simple...stop people getting old...stop the flow of new technology....stop the desire of people to live forever......stop all that by making people pay out of pocket?  Perhaps....but I hope you hire someone for me to negotaite prices all day with my 40 patients.

Now in India they can get cataract surgery done for about $20.  If all other prices here were at the level they are in India...haha...staff...rent...supplies....insurance....billing costs....and American's would tollerate that system...being lined up all day...not meeting the surgeon...ever....no ability to sue....no govt control over every aspect of the clinic....

By the way....FYI...it COSTS ME about $80,000 per year just to COLLECT what I am contractually owed from ins companies and patients....that is the level of complexity in the billing system for ME as a business person.

What IS the answer....I dont think each person negotiating everything with me is a great idea....govt already sets my prices.....shaving off half of all docs fees would bankrupt us since most take home less than 50% of what they collect.  So cut our fees 25% and we get our salary cut in half.....not nice.

Then you would save 25% of 10% of the medicare budget...(and private costs too I guess)....so that would cut the medicare budget 2.5%...do NOTHING to improve the quality of medicine or quality of doctors...maybe make it worse...I know if it was NOT a good pay profession...despute my desire to help and all that...I would have gone into another line of work.  Some percent of docs might reture or leave even 5% would lead to a further crunch in the # of doctors available to see pts...and there are LOTS of them...even more coming with the demographic trends.

That 2.5% cut would help for about 1 year....then we would have less high paid doctors..and nothing else would change....

So I have to say I dont think doctors salaries are the problem....although doctors attitudes towards cost control COULD be one big answer...

But then you get ethical problems too....I get paid to NOT order a test..etc...hum...

Would you rather I get paid to do your surgery or get paid to delay it...haha....either way you need quality ethical doctors!

You want to fight with me when you want surgery to clear up your vision and I dont think your vision is bad enough to need it.  Do you want me on your side or against it....fee for service is often said to be a problem...but the alternative is fee for no service...or slower (yea even slower!) service...of much less service.

What we need are cheaper ways to heal people and definatley start with keeping people healthy FIRST.

Hospitals are expensive and some of the fees make no sense.  But have you ever tried to build a hospital in this country?  Follow the amazing number of crazy govt rules....(dont get me started on that)....and see all the hospital staff who DO seem to me to just sit around and take legally required breaks all day.

If society wants docs who have to worry about making loan payments and living paycheck to paycheck then that is what it will get...and that may happen....but it will NOT solve the problem with medical costs.  Drugs, hospitals, test, regulation, real estate, equipment....this is where 90% of the money is going. 

Anyway, its a huge part of the economy.  If its contracted then something else will have to grow in exchange.  More people can have big screen TV's I suppose....

besnook's picture

great post. the easy money has definitely been squeezed out of the doctors compared to twenty years ago. so where has all the money gone? and where can it be cut? the usa pays twice what other countries pay for healthcare on a per capita measure and get a worse outcome suggesting a huge amount of waste in a system that is meant to encourage an increase in revenue and a maximization of profit from that revenue.

brettd's picture

It is not about medical care.

It's about lawyers.

Laura S.'s picture

People buy all of this crap just because they are scared that they would become sick one day. They put so much of this poison inside their bodies and hope that it would prevent them from suffering any disease. And the industry? Astronomic profits, new drugs available, more aggressive advertising, illegal testing drugs on people in Africa etc. We all know its happening. We can do something about that. Its our decision to stop taking all those painkillers, Viagra pills, benzodiazephams, and other housewife remedies that make us keep going (more or less).
I believe in a vegan lifestyle. It is not diet, because you also save many innocent lives from suffering. There is this famous report called China Study which talks about the benefits of veganism. If you don´t feel comfortable with living on plant diet, I really suggest you try at least The 30-Day Vegan Challenge and see how things evolve. I´m a vegan for five years and the only thing that has happened to me since then was a flu. No problems with cholesterol, no bad digestion, my skin problems got cured and I lost 10 kilos.

NvrGivUp's picture

Through the manipulation of lobbyists, Gov. has allowed the health care industry to become a behemoth completely inefficient monster, much like government. I've read over 40% of costs are not related to the provision of actual care, those costs simply feed the beast. Really sad for miliions and millions who have to pay such a large percentage of their income into a systems that provides so little return. Sure would be nice if government allowed the free market to prevail. I'm sure we'd be blesses with more cures and prevention. Thuogh, healthcare establishment seems hell bent on perpetuaitng illness and doing its part to support its symbiotic relationship with big pharma. ANRF and well run non profits like them provide a real service as > 90% of rev. goes directly back to independent reasearch grants. Too bad it seems the gov. is more interested in forwarding the causes of "special interests" than making real changes to the sysytem. Follow the money!