5 ms·

Yep. Just to elaborate here: In order to open a new hospital in an area you need to acquire a 'certificate of need'[1]. You know who approves those certificates

• koboll 8y ago
  "Certificate of Need (C.O.N.) programs are aimed at restraining health care facility costs and facilitating coordinated planning of new services and facility construction ... The basic assumption underlying CON regulation is that excess capacity stemming from overbuilding of health care facilities results in health care price inflation." Two paragraphs in and I need to stop reading this, I'm getting murderously furious.
  • darawk 8y ago
    Ya, it's kind of incredible. And it's equally incredible how few people seem to know about this. It'd be such an easy thing to fix, and it would substantially improve competition for hospital services. It's completely beyond me why this isn't getting changed.
    • aaavl2821 8y ago
      I completely agree. If we had to pick one thing to change to lower healthcare costs in the US, this wouldn't be a bad choice. Hospital costs are by far the largest contributor to US healthcare expenditure at 30%, and when you add in physician costs (since they are increasingly owned by hospitals) that's almost 50% of cost My sort of crazy theory is that there is a behind the scenes lobbying / media battle between pharma, the hospital lobby, and the insurance lobby and that this dictates a lot of the national conversation around healthcare. Because healthcare is so opaque and complex, and because there is so much political energy around healthcare, it is hard for the public to be informed about the facts so they just respond to emotionally driven narratives in the media. Right now pharma is public enemy number one so everyone complains about drug prices even though hospitals are probably just as bad if not worse. Both trade groups spend roughly the same on lobbying although hospitals probably have more "soft" political power bc they are major employers in pretty much every county
      • Cd00d 8y ago
        I suspect that FAR more people are paying for prescription pharma than are visiting hospitals. So, it's not totally irrational that pharma is perceived as a greater "enemy" than hospitals even given possibly equivalent price inflation.
        • pg_bot 8y ago
          Pharmaceuticals represent about 10% of healthcare spending for Americans. Inpatient and outpatient comes out to around 52% of annual healthcare costs.[0-1] While there are many issues in the pharmaceutical industry, as a whole I think they get an unnecessarily bad rap. Most of America's healthcare problems are self inflicted. There are a lot of things that need to be adjusted in order to let markets run effectively. [0]: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/PieChartSourcesExpenditures.pdf https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta... [1]: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/quickref.pdf https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...
          • aaavl2821 8y ago
            The US is actually middle-of-the-pack compared to other OECD countries in terms of rx drug spend as a percent of total healthcare costs. So while drugs are more expensive in the US, that's mostly just due to overall higher US healthcare costs, not because there's anything special about pharma in the US. I know other countries spend more than the US on primary / preventative care (though dont have a source offhand); would be interested to know whether hospital spend as % of national HC spend is higher in the US (ive seen data suggesting that cost of a hospital bed for one night in the US is significantly higher than other OECD countries, but don't recall by how much)
        • aaavl2821 8y ago
          That makes sense that more people spending money on drugs means it is a bigger focus for the public. However i'd strongly question the assumption that hospitals have less price inflation than drugs -- i think that the fact that we give hospitals the benefit of the doubt while blaming drug companies and insurers is a big part of the problem. The fact that far more people pay for rx drugs than hospital visits, yet hospital visits account for 3x as much spend, seems to me to be another data point suggesting we should focus more on hospital costs and less on drug costs
    • BurningFrog 8y ago
      > It'd be such an easy thing to fix, But this system was put in place for the purpose of keeping competition out and medical costs up. This is not an unfortunate accident in regulation. It reflects the political power of those who benefit from it.
  • tynpeddler 8y ago
    Wow, I'm not sure if I've ever read a sentence in my life so devoid of a basic understanding of economics.
    • conanbatt 8y ago
      Hospitals understand economics just fine, dont worry about it.
  • jrowley 8y ago
    While this program sounds bad, it seems like something like it could have prevented this from occurring: https://www.npr.org/sections/health-shots/2018/09/25/647531500/taken-for-a-ride-doctor-injured-in-atv-crash-gets-56-603-bill-for-air-ambulance https://www.npr.org/sections/health-shots/2018/09/25/6475315... Genuine question, how do you think governments should regulate this market?
    • AnthonyMouse 8y ago
      Air medical transport is only necessary in an emergency, at which point the customer needs it suddenly and has no opportunity to compare prices or refuse service. This is exactly the market failure that causes municipal fire departments to exist, and should be solved in the same way, potentially by just having the fire department own and operate the helicopter(s).
      • elliekelly 8y ago
        It's bananas that emergency medical services like air transport can be "in network" and "out of network." As if the patient in need of services has the capacity or ability to control which helicopter comes to pick them up from their near-death experience.
  • conanbatt 8y ago
    CON is the perfect name for it.
• Spooky23 8y ago
  The reality is that there are way too many hospital beds, which are essentially government institutions sustained by Medicare.
  • darawk 8y ago
    Can you elaborate on that?
    • Spooky23 8y ago
      Most populated states have an overage of hospital beds, and anywhere from 40-50% of hospital revenues are from Medicare and 12-16% from Medicaid. It’s pretty obvious when you visit a hospital, very few younger patients are hospitalized. Private insurance makes it very difficult to remain as an inpatient... even a major surgery like a spinal fusion is a 48 hour stay. These institutions are mostly unnecessary and only exist because of their political power and government funding. There are exceptions, especially in rural areas and places in the south where the population of old people has boomed.
      • your-nanny 8y ago
        optimizing for expected averagevoccupancy is a good way to fail when facing a region wide medical emergency. excess capacity needs to be there.
    • maxerickson 8y ago
      Insurance and public payers have pushed to make more care outpatient or delivered at less intensive facilities. Occupancy rates have declined even as the number of licensed beds has gone down (with population increasing substantially, so the per capita effect is even bigger): https://www.cdc.gov/nchs/data/hus/2015/089.pdf https://www.cdc.gov/nchs/data/hus/2015/089.pdf Especially look at small hospitals, which Medicare pays using a different formula to help keep them open (which isn't a bad thing, it increases access to care for lots of people).
• maxerickson 8y ago
  At the Federal level it's really Medicare certification that is the stumbling block. Federal certificate of need laws were repealed in the 1980s, shortly after they were first tried. States that don't have CON laws don't particularly have lower healthcare costs than states that do have them.
  • darawk 8y ago
    https://www.mercatus.org/publication/health-spending-reined-in-CON-laws https://www.mercatus.org/publication/health-spending-reined-... Do you disagree with this analysis, or do you just think 3-5% isn't that much?
    • maxerickson 8y ago
      A single step that reduces costs by 5% is a good thing to do, but it isn't going to fix costs all by itself.
      • darawk 8y ago
        Totally agree. But unfortunately our healthcare system looks like it's going to require the stacking of 50 or so of these 5% fixes.
• archgoon 8y ago
  However, in the case of UPMC, it's not due to CON, as CON laws aren't in Pennsylvania based on that link.