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> Even the medicaid/medicare procedures are reimbursable. Medicare reimburses rates below-cost. About 7% below COGS, which means they lose money per-patient, e

> Even the medicaid/medicare procedures are reimbursable. Medicare reimburses rates below-cost. About 7% below COGS, which means they lose money per-patient, even before they have to pay doctors, nurses, janitorial staff, etc. > Or you know, hospitals with residency programs could just use of the massive insurance money they make to fund residency positions. The "massive insurance money" is used to subsidize the losses that hospitals make on Medicare patients. > It's not like the residents aren't employees or something Great point. And that's why companies generally don't hire employees unless they work they do is profitable for the company. As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them".

sanderjd 9y ago
You keep giving me the sense (like with your "7% below COGS" statistic) that you do actually know why residencies aren't profitable, but you keep making an indirect economic argument instead of talking about that directly. All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit.
- chimeracoder 9y ago
  > All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit. Because hospitals have to pay: - residents' salaries - attendings' salaries - health insurance - residents' insurance (for practicing) - licensing fees - taxes It turns out, that all comes out to a lot of money. And hiring additional residents doesn't really save them much money, or bring in much additional revenue. The costs are greater than the revenue or savings. So, it's not profitable. > to do work that we know costs tons of money (because we see the bills) That's a question of medical billing, which is a whole other separate topic. In short: hospitals don't receive anywhere near the sticker amount for those bills, and a massive chunk of reimbursements from privately-insured patients goes towards recouping the losses that Medicare and Medicaid patients incur (as explained elsewhere, hospitals lose money on a per-patient basis for publicly-insured patients).
  - sanderjd 9y ago
    Thanks for the detailed response! It seems to me that all of that (both the fully loaded costs of an employee, and the complexity of medical billing) applies equally to any other doctor, with a single exception. The exception is the portion of the attendings' costs that can be "charged" to each resident. Is it that the additional cost in attendings' time, along with the reduced ability to earn larger sums for complex unsupervised procedures, outweighs the lower salary?
sjg007 9y ago
For profit hospitals and doctors do not have to accept medicare or medicaid patients. Non-profits are required to to get non-profit tax exempt status. Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do. It is also not rational for these profit seeking doctors/hospitals to accept medicare patients but they do which directly conflicts with your statement that hospitals only do profitable things. One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures). If you didn't have these patients then your utilization would be lower and therefore your COGs would be higher as well. Also you might not be able to scale your hospital to take on the profitable procedures. Residents are also lower paid which give the hospital greater incentive to have them treat the medicaid/medicare patients as well. So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs.
- chimeracoder 9y ago
  > Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do. I never said all do - I said that in aggregate, Medicare reimbursements are 7% less than COGS. "Efficiency" doesn't really enter the picture, because COGS isn't driven by efficiency (ie, overhead); it's driven by upstream costs. > So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs. Nope, none of the stuff you mentioned falls under COGS. > One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures) This is the classic "we'll lose money per customer, but make it up in volume" argument.
  - sjg007 9y ago
    >Nope, none of the stuff you mentioned falls under COGS. Ok, then please define what you mean by COGs. >This is the classic "we'll lose money per customer, but make it up in volume" argument. You misunderstand the argument. Since I wasn't clear, these two articles highlight the main points: https://www.kff.org/report-section/a-primer-on-medicare-how-does-medicare-pay-providers-in-traditional-medicare/ https://www.kff.org/report-section/a-primer-on-medicare-how-... https://www.washingtonpost.com/business/economy/medicare-pricing-drives-high-health-care-costs/2013/12/31/24befa46-7248-11e3-8b3f-b1666705ca3b_story.html?utm_term=.dff15cfbd3a7 https://www.washingtonpost.com/business/economy/medicare-pri... Also with respect to these and the efficiency argument, please see: https://theincidentaleconomist.com/wordpress/hospitals-medicare-margins/ https://theincidentaleconomist.com/wordpress/hospitals-medic...
jzylstra 9y ago
> As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them". This isn't quite in line with reality. If you familiarize yourself with specific hospital system figures, you find gems like this: Of Beaumont Hospital's 395 residents, 91 are not covered by Medicare and so are paid for by Beaumont. The $57 million for GME represents 4.73% of Beaumont's net patient revenue in 2013, or about $189,368 per resident. [0] The 91 residents that are trained within the hospital system without medicaid funding speaks to the fact that residents are in fact employees. [0] http://www.modernhealthcare.com/article/20150719/news/307199999 http://www.modernhealthcare.com/article/20150719/news/307199...
- chimeracoder 9y ago
  > The 91 residents that are trained within the hospital system without medicaid funding speaks to the fact that residents are in fact employees ...nobody ever said that residents weren't employees? The point is that they are and hospitals aren't going to go out and hire more unless it's profitable for them to do so. (Which it isn't, or else they would have done so, and that article even says as much).

sanderjd 9y ago

You keep giving me the sense (like with your "7% below COGS" statistic) that you do actually know why residencies aren't profitable, but you keep making an indirect economic argument instead of talking about that directly. All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit.

chimeracoder 9y ago
> All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit. Because hospitals have to pay: - residents' salaries - attendings' salaries - health insurance - residents' insurance (for practicing) - licensing fees - taxes It turns out, that all comes out to a lot of money. And hiring additional residents doesn't really save them much money, or bring in much additional revenue. The costs are greater than the revenue or savings. So, it's not profitable. > to do work that we know costs tons of money (because we see the bills) That's a question of medical billing, which is a whole other separate topic. In short: hospitals don't receive anywhere near the sticker amount for those bills, and a massive chunk of reimbursements from privately-insured patients goes towards recouping the losses that Medicare and Medicaid patients incur (as explained elsewhere, hospitals lose money on a per-patient basis for publicly-insured patients).
- sanderjd 9y ago
  Thanks for the detailed response! It seems to me that all of that (both the fully loaded costs of an employee, and the complexity of medical billing) applies equally to any other doctor, with a single exception. The exception is the portion of the attendings' costs that can be "charged" to each resident. Is it that the additional cost in attendings' time, along with the reduced ability to earn larger sums for complex unsupervised procedures, outweighs the lower salary?

sjg007 9y ago

For profit hospitals and doctors do not have to accept medicare or medicaid patients. Non-profits are required to to get non-profit tax exempt status. Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do. It is also not rational for these profit seeking doctors/hospitals to accept medicare patients but they do which directly conflicts with your statement that hospitals only do profitable things. One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures). If you didn't have these patients then your utilization would be lower and therefore your COGs would be higher as well. Also you might not be able to scale your hospital to take on the profitable procedures. Residents are also lower paid which give the hospital greater incentive to have them treat the medicaid/medicare patients as well. So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs.

chimeracoder 9y ago
> Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do. I never said all do - I said that in aggregate, Medicare reimbursements are 7% less than COGS. "Efficiency" doesn't really enter the picture, because COGS isn't driven by efficiency (ie, overhead); it's driven by upstream costs. > So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs. Nope, none of the stuff you mentioned falls under COGS. > One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures) This is the classic "we'll lose money per customer, but make it up in volume" argument.
- sjg007 9y ago
  >Nope, none of the stuff you mentioned falls under COGS. Ok, then please define what you mean by COGs. >This is the classic "we'll lose money per customer, but make it up in volume" argument. You misunderstand the argument. Since I wasn't clear, these two articles highlight the main points: https://www.kff.org/report-section/a-primer-on-medicare-how-does-medicare-pay-providers-in-traditional-medicare/ https://www.kff.org/report-section/a-primer-on-medicare-how-... https://www.washingtonpost.com/business/economy/medicare-pricing-drives-high-health-care-costs/2013/12/31/24befa46-7248-11e3-8b3f-b1666705ca3b_story.html?utm_term=.dff15cfbd3a7 https://www.washingtonpost.com/business/economy/medicare-pri... Also with respect to these and the efficiency argument, please see: https://theincidentaleconomist.com/wordpress/hospitals-medicare-margins/ https://theincidentaleconomist.com/wordpress/hospitals-medic...

jzylstra 9y ago

> As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them". This isn't quite in line with reality. If you familiarize yourself with specific hospital system figures, you find gems like this: Of Beaumont Hospital's 395 residents, 91 are not covered by Medicare and so are paid for by Beaumont. The $57 million for GME represents 4.73% of Beaumont's net patient revenue in 2013, or about $189,368 per resident. [0] The 91 residents that are trained within the hospital system without medicaid funding speaks to the fact that residents are in fact employees. [0] http://www.modernhealthcare.com/article/20150719/news/307199999 http://www.modernhealthcare.com/article/20150719/news/307199...

chimeracoder 9y ago
> The 91 residents that are trained within the hospital system without medicaid funding speaks to the fact that residents are in fact employees ...nobody ever said that residents weren't employees? The point is that they are and hospitals aren't going to go out and hire more unless it's profitable for them to do so. (Which it isn't, or else they would have done so, and that article even says as much).