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That's simply not true. Administrative costs account for 25% of a hospital's budget and 1.43 of GDP: https://www.commonwealthfund.org/publications/journal-arti

That's simply not true. Administrative costs account for 25% of a hospital's budget and 1.43 of GDP: https://www.commonwealthfund.org/publications/journal-article/2014/sep/comparison-hospital-administrative-costs-eight-nations-us https://www.commonwealthfund.org/publications/journal-articl... In the study that you sent they would be included under the inpatient and outpatient costs rather than administrative.

bhupy 5y ago
Yeah but you're mixing up denominators. The question is how you factor in 25% of a hospital's budget to the per capita cost of healthcare provision in the link that I included, which includes all other costs. Those other costs are so high that that even zeroing out the administrative cost doesn't do much to bridge the gap. I'll try to describe it in a different way. In the link that I provided, the US pays (on average) $8,021 per capita on non-admin costs, while peer countries pay $3,602 per capita on non-admin costs. Even accounting for the fact that 25% of a hospital's revenue is administrative, it 1) is not at all the case that admin costs are in the same ballpark as the difference between the two ($4,500 per person), 2) doesn't do much to bridge the non-admin gap, which forms the lion's share of the cost difference, since if you zero out the admin costs, even the costs that provider offices pay (25% of their total revenue), you're still left with the fact that the US pays over 2x peer countries. Keep in mind that the "in-patient and outpatient costs" and prescription drug costs do NOT include provider office costs either.
- wefarrell 5y ago
  The link that I spent specifically mentions hospital admin costs per capita and per GDP: >"Hospital administration costs ranged from 1.43 percent of gross domestic product (GDP) in the United States ($667 per capita) to 0.41 percent of GDP ($158 per capita) in Canada." > Reducing U.S. spending on a per capita basis to Canada’s level would have saved $158 billion in 2011 They are a significant expense. They're certainly not the only expense in healthcare and there is no single area that is driving up costs. There is substantial waste throughout the system. > Keep in mind that the "in-patient and outpatient costs" and prescription drug costs do NOT include provider office costs either. How are you so sure of that? I see no indication in the study that provider administration wouldn't be lumped under the provider costs.
  - bhupy 5y ago
    > They are a significant expense. They're certainly not the only expense in healthcare and there is no single area that is driving up costs. They are certainly a "significant" expense, but zeroing it out isn't going to bridge the gap. > How are you so sure of that? I see no indication in the study that provider administration wouldn't be lumped under the provider costs. Because they say so: "inpatient and outpatient care, which includes payments to hospitals, clinics, and physicians for services and fees such as primary care or specialist visits, surgical care, and facility and professional fees (see Methods for more details)" The fee-for-service model makes it easy to isolate this amount. For every CPT/CDT code, there's a charged amount, an allowed amount, and a paid amount, and they're specific to the medical procedure.
- handrous 5y ago
  Combining the two links, it looks like this: > I'll try to describe it in a different way. In the link that I provided, the US pays (on average) $8,021 per capita on non-admin costs, while peer countries pay $3,602 per capita on non-admin costs. Even accounting for the fact that 25% of a hospital's revenue is administrative, it 1) is not at all the case that admin costs are in the same ballpark as the difference between the two ($4,500 per person), 2) doesn't do much to bridge the non-admin gap, which forms the lion's share of the cost difference, since if you zero out the admin costs, even the costs that provider offices pay (25% of their total revenue), you're still left with the fact that the US pays over 2x peer countries. Isn't a useful analysis. The admin costs in the US are roughly $937 + ($8,021 * 0.25) = $2942.25—and possibly worse, depending on how much of the stuff from other categories might fall under "hospital budget", though that may be evened out by the difference between budget and revenue (which is the biggest unknown factor here, trying to combine the info from the two links). Hospital admin costs in comparable states seems to be 20% in the worst case plus that $201 of non-hospital admin costs. Worst case, $201 + ($3,602 * 0.20) = $921.40 How is that not a very large part of the difference in costs? It looks like ~40% of the difference in total per capita spending, in fact. I'm sure that's a little off, but where am I going wrong that allows it to become negligible in your analysis?
  - bhupy 5y ago
    > The admin costs in the US are roughly $937 + ($8,021 * 0.25) = $2942.25—and possibly worse, depending on how much of the stuff from other categories might fall under "hospital budget", though that may be evened out by the difference between budget and revenue (which is the biggest unknown factor here, trying to combine the info from the two links). This is incorrect, the inpatient and outpatient costs do not include the hospital admin fees. That figure only includes the fee-schedule payments per procedure. The fee-for-service model makes it rather easy to isolate that amount. That's why your statement here: > How is that not a very large part of the difference in costs? It looks like ~40% of the difference in total per capita spending, in fact. I'm sure that's a little off, but where am I going wrong that allows it to become negligible in your analysis? doesn't quite make sense. You can't take that 25% and apply t against the in-patient and out-patient costs, because it's not at all clear that it fits into that bucket.

bhupy 5y ago

Yeah but you're mixing up denominators. The question is how you factor in 25% of a hospital's budget to the per capita cost of healthcare provision in the link that I included, which includes all other costs. Those other costs are so high that that even zeroing out the administrative cost doesn't do much to bridge the gap. I'll try to describe it in a different way. In the link that I provided, the US pays (on average) $8,021 per capita on non-admin costs, while peer countries pay $3,602 per capita on non-admin costs. Even accounting for the fact that 25% of a hospital's revenue is administrative, it 1) is not at all the case that admin costs are in the same ballpark as the difference between the two ($4,500 per person), 2) doesn't do much to bridge the non-admin gap, which forms the lion's share of the cost difference, since if you zero out the admin costs, even the costs that provider offices pay (25% of their total revenue), you're still left with the fact that the US pays over 2x peer countries. Keep in mind that the "in-patient and outpatient costs" and prescription drug costs do NOT include provider office costs either.

wefarrell 5y ago
The link that I spent specifically mentions hospital admin costs per capita and per GDP: >"Hospital administration costs ranged from 1.43 percent of gross domestic product (GDP) in the United States ($667 per capita) to 0.41 percent of GDP ($158 per capita) in Canada." > Reducing U.S. spending on a per capita basis to Canada’s level would have saved $158 billion in 2011 They are a significant expense. They're certainly not the only expense in healthcare and there is no single area that is driving up costs. There is substantial waste throughout the system. > Keep in mind that the "in-patient and outpatient costs" and prescription drug costs do NOT include provider office costs either. How are you so sure of that? I see no indication in the study that provider administration wouldn't be lumped under the provider costs.
- bhupy 5y ago
  > They are a significant expense. They're certainly not the only expense in healthcare and there is no single area that is driving up costs. They are certainly a "significant" expense, but zeroing it out isn't going to bridge the gap. > How are you so sure of that? I see no indication in the study that provider administration wouldn't be lumped under the provider costs. Because they say so: "inpatient and outpatient care, which includes payments to hospitals, clinics, and physicians for services and fees such as primary care or specialist visits, surgical care, and facility and professional fees (see Methods for more details)" The fee-for-service model makes it easy to isolate this amount. For every CPT/CDT code, there's a charged amount, an allowed amount, and a paid amount, and they're specific to the medical procedure.
handrous 5y ago
Combining the two links, it looks like this: > I'll try to describe it in a different way. In the link that I provided, the US pays (on average) $8,021 per capita on non-admin costs, while peer countries pay $3,602 per capita on non-admin costs. Even accounting for the fact that 25% of a hospital's revenue is administrative, it 1) is not at all the case that admin costs are in the same ballpark as the difference between the two ($4,500 per person), 2) doesn't do much to bridge the non-admin gap, which forms the lion's share of the cost difference, since if you zero out the admin costs, even the costs that provider offices pay (25% of their total revenue), you're still left with the fact that the US pays over 2x peer countries. Isn't a useful analysis. The admin costs in the US are roughly $937 + ($8,021 * 0.25) = $2942.25—and possibly worse, depending on how much of the stuff from other categories might fall under "hospital budget", though that may be evened out by the difference between budget and revenue (which is the biggest unknown factor here, trying to combine the info from the two links). Hospital admin costs in comparable states seems to be 20% in the worst case plus that $201 of non-hospital admin costs. Worst case, $201 + ($3,602 * 0.20) = $921.40 How is that not a very large part of the difference in costs? It looks like ~40% of the difference in total per capita spending, in fact. I'm sure that's a little off, but where am I going wrong that allows it to become negligible in your analysis?
- bhupy 5y ago
  > The admin costs in the US are roughly $937 + ($8,021 * 0.25) = $2942.25—and possibly worse, depending on how much of the stuff from other categories might fall under "hospital budget", though that may be evened out by the difference between budget and revenue (which is the biggest unknown factor here, trying to combine the info from the two links). This is incorrect, the inpatient and outpatient costs do not include the hospital admin fees. That figure only includes the fee-schedule payments per procedure. The fee-for-service model makes it rather easy to isolate that amount. That's why your statement here: > How is that not a very large part of the difference in costs? It looks like ~40% of the difference in total per capita spending, in fact. I'm sure that's a little off, but where am I going wrong that allows it to become negligible in your analysis? doesn't quite make sense. You can't take that 25% and apply t against the in-patient and out-patient costs, because it's not at all clear that it fits into that bucket.