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> Hospitals charge this because they CAN. They are doing what businesses do and that is maximizing their profit. Including all the non-profit hospitals? What'

> Hospitals charge this because they CAN. They are doing what businesses do and that is maximizing their profit. Including all the non-profit hospitals? What's their motivation?

ceejayoz 8y ago
Fancy new buildings, giant endowments, amenities for staff, raising administrator salaries "to retain premium talent", etc. "Non-profit" doesn't mean "can't make a profit".
- chimeracoder 8y ago
  > Fancy new buildings Rarely paid for with reimbursement revenues. > giant endowments Definitely not paid for with reimbursement revenues. > amenities for staff Try cutting these, and see how quickly 1199 SEIU comes down on you. > raising administrator salaries "to retain premium talent", etc. Even if you assumed that there were no relationship between the wages paid and the quality of work performed (there is), these are nowhere near big enough to account for the difference. They're also not that far out of line with other countries, either: 25% in the US, compared to 20% in the Netherlands, for example. But more so than that: they're SG&A expenses, which are further down the balance sheet than the reimbursement revenues. And yet, hospitals actually lose money on the top line for Medicare patients (who represent about 40% of the market). That's the real reason reimbursement rates are raised for private insurers - the private insurers are required (by law) to pay more, and they need to subsidize the sub-COGS reimbursements from the public insurers (Medicare, and to a lesser extent Medicaid). So no, none of the things you listed actually explain the reason hospitals charge private insurers the rates they do.
josho 8y ago
People misunderstand non-profits. There is nothing stopping you or I from starting a non-profit and soliciting donors then paying yourself a $1M salary. Non-profit simply means any surplus of revenue is spent. So, the more revenue generated by a non-profit's paying customers means they get to funnel that to their core mission (likely research, possibly those that can't pay, or cynically more salary for those running the show).
- eximius 8y ago
  http://lmgtfy.com/?q=nonprofit+reasonable+compensation http://lmgtfy.com/?q=nonprofit+reasonable+compensation That is patently false. Basically every part of what you said is false. There are rules that prevent that and that is not what a non-profit means.

> Hospitals charge this because they CAN. They are doing what businesses do and that is maximizing their profit. Including all the non-profit hospitals? What's their motivation?

ceejayoz 8y ago

Fancy new buildings, giant endowments, amenities for staff, raising administrator salaries "to retain premium talent", etc. "Non-profit" doesn't mean "can't make a profit".

chimeracoder 8y ago
> Fancy new buildings Rarely paid for with reimbursement revenues. > giant endowments Definitely not paid for with reimbursement revenues. > amenities for staff Try cutting these, and see how quickly 1199 SEIU comes down on you. > raising administrator salaries "to retain premium talent", etc. Even if you assumed that there were no relationship between the wages paid and the quality of work performed (there is), these are nowhere near big enough to account for the difference. They're also not that far out of line with other countries, either: 25% in the US, compared to 20% in the Netherlands, for example. But more so than that: they're SG&A expenses, which are further down the balance sheet than the reimbursement revenues. And yet, hospitals actually lose money on the top line for Medicare patients (who represent about 40% of the market). That's the real reason reimbursement rates are raised for private insurers - the private insurers are required (by law) to pay more, and they need to subsidize the sub-COGS reimbursements from the public insurers (Medicare, and to a lesser extent Medicaid). So no, none of the things you listed actually explain the reason hospitals charge private insurers the rates they do.

josho 8y ago

People misunderstand non-profits. There is nothing stopping you or I from starting a non-profit and soliciting donors then paying yourself a $1M salary. Non-profit simply means any surplus of revenue is spent. So, the more revenue generated by a non-profit's paying customers means they get to funnel that to their core mission (likely research, possibly those that can't pay, or cynically more salary for those running the show).

eximius 8y ago
http://lmgtfy.com/?q=nonprofit+reasonable+compensation http://lmgtfy.com/?q=nonprofit+reasonable+compensation That is patently false. Basically every part of what you said is false. There are rules that prevent that and that is not what a non-profit means.