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This is an infuriating but not surprising read. The only surprising thing to me is to see the number written down. (And that some part of the system was avai

This is an infuriating but not surprising read. The only surprising thing to me is to see the number written down. (And that some part of the system was available to a nurse to see!) I’m a health economist and much of my research is on hospitals. As much as everyone loves to complain about drug companies and insurers as being responsible for high US health care costs, that is not where the money goes. The money goes to doctors and to hospitals. (Specifically: about half of all national health spending to those two groups.) If you want to save money on health care, you need to talk about paying less to doctors and to hospitals. If you don’t want to pay less money to those two sets of entities, you aren’t going to save much money. That’s all there is to it. Yes, we can do better by spending less on drugs, but it’s a small amount compared to the gigantic sums which go to doctors and to hospitals. (Specifically: all drug spending is about ten percent of national health spending.) Yes, we can do better by reducing the administrative burden, but that slice of the pie is less than 10%. (And you will never have 0 admin expenses.) The administrative burden of health insurance is even lower than 10%. So… go ahead and share your ideas for paying doctors and hospitals less, because otherwise you’re talking about stuff which doesn’t amount to much!

YossarianFrPrez 5y ago
Fascinating. I have some questions I'm hoping you can answer. Can you speak to the narrative of administrative bloat in US hospitals? Are doctors paid relatively less in other countries? And is there any chance that the high pay is needed to counter-act overly stressful working conditions in the US (vs., say, the UK's NHS?) I'm also curious about doctors' personal expenses. If most of their salary is going towards rent or homeownership, short of situating a hospital on something like a kibbutz... maybe there is some sort of rent subsidy -- or tax break for landlords that give a 10% rent discount / for banks that give a medical professionals low interest home loans -- that could be enacted. It could allow doctor's effective salaries to stay the same, but medical prices to drop? I'm afraid you are going to say that doctor's biggest personal expense is student loans for medical school! If medical-school-debt were to be wiped out, do you know how much salaries could drop in terms of objective price without changing doctor's effective income?
- tkahnoski 5y ago
  Another factor is not all doctor salaries are the same. Anesthesiologist 400k, Family practice or OB/GYN 200k. Anesthesiologist is buying a lamborghini, the family practice person needs a few years before they can entertain buying a house.
  - tastyfreeze 5y ago
    Any idea why there aren't more people training to be anesthesiologists? A salary like that is a strong incentive for people to enter the professions. Or is this more of a training lag problem where it takes 12-14 years for a labor shortage signal like high salary to start being satisfied by new anesthesiologists?
    - cyberge99 5y ago
      If I’m not mistaken they pay huge malpractice insurance amounts because a misdiagnosed dosage of a lethal chemical (sedative, anesthesia) can be, well, lethal.
    - conanbatt 5y ago
      Skill markets are not very efficient: not all developers jump to blockchain or ML for example. Also there tends to be limits on how many slots for residences and practices there are for different specialties: the system is purposefully capped to make sure that there aren't too many doctors. The way to skip all of this is massive de-reg.
      - lostphilosopher 5y ago
        What are the government regulations that drive this? (If that’s what you mean?)
        conanbatt 5y ago
        You can only practice medicine if you studied in the US. No doctor in the world can practice medicine in the US without having to re-certify their knowledge. Also, education is closely tied with government funding, so it's impossible to bootstrap a college or university to cheapen the cost of education. Thus you can only go all-in to medschool. This is not 100% accurate, there are some alternatives like PA's and NP's. So the current system can absorb only so much. There are also specific funding rules for residencies, which mean that the amount that is given is done based on gov funding.
conanbatt 5y ago
Hospitals are 40% of the NH spending so I would even not look at doctors that way. The market structure is such that there are very few doctors, so you need to do your operations in a way that doctors spend as little as possible with patients, and you delegate as much to assistants and administrative chores. With a massive supply shock on doctors you would not only lower wages for doctors, you would also lower admin costs. One caveat, even though doctors wages are very high, they are also rent-captured by universities that charge mid six-digits for an education and medical insurance, and certifications that are burdensome and expensive. I remember medical malpractice insurance going to several thousand a month for OBGYN. There is a reason why clinical doctors have an abnormally high suicide rate in the US. Then hospitals get massive fed spending and money, plus often local protections that mean you cant open competing hospitals. In the book " The Social Transformation of American Medicine" they talk a lot about how hospitals rent-seeking behavior is to turn themselves as a non-profit, and then ask for federal funding and getting that denied to for-profit hospitals, effectively capping the amount of hospitals you can open. The WHOLE market structure needs a detonation. And this is my desire/wish/prediction: at some point we will get an Uber for medicine. Americans will do most their telemedicine with doctors outside the united states, where education is free, there are not legal requirements or certifications or licenses, etc. This is what immigrants like myself do. A psychiatrist in argentina, for example, charges 5U$S for a visit, while one in Palo Alto, CA charges 1000U$S with a 3 month wait list.
- huitzitziltzin 5y ago
  Lots of stuff here… >> Hospitals are 40% of the NH spending so I would even not look at doctors that way. Hospitals are 30% and physicians are 20% >> The market structure is such that there are very few doctors, Agree. Add more medical schools and residency spots. >> With a massive supply shock on doctors you would not only lower wages for doctors, Yes, this is a good idea. >> you would also lower admin costs. Not clear that this is true or why it would happen. >>One caveat, even though doctors wages are very high, they are also rent-captured by universities that charge mid six-digits for an education and medical insurance, and certifications that are burdensome and expensive. Medical school debt may be high, but salaries are higher. Certifications are not likely a large obstacle to more entry, IMO. >> I remember medical malpractice insurance going to several thousand a month for OBGYN. There are plenty of “tort reform” states that cap malpractice payouts. Medical services are not cheaper there. >> There is a reason why clinical doctors have an abnormally high suicide rate in the US. Source needed on this claim. Might be true. I’m skeptical though. High relative to what? >> Then hospitals get massive fed spending and money, They do and certainly in the COVID stimulus bill that was a HUGE waste of public money. >> plus often local protections that mean you cant open competing hospitals. This is called “certificate of need.” These laws are dumb but don’t exist in 15-20 states at this point. More entry would be great, but you need more doctors, more competition and more price transparency too. >> In the book " The Social Transformation of American Medicine" they talk a lot about how hospitals rent-seeking behavior is to turn themselves as a non-profit, and then ask for federal funding and getting that denied to for-profit hospitals, effectively capping the amount of hospitals you can open. Certificate of need laws are state, not federal. >> The WHOLE market structure needs a detonation. I’m on board. But by detonation I really mean: - more medical schools, - more doctors, including permitting foreign doctors to practice here - price transparency - meaningful competition among hospitals on price. >> And this is my desire/wish/prediction: at some point we will get an Uber for medicine. Amazon is starting an Amazon Care product. Looks like urgent care for the time being. My hope is that they open hospitals eventually. >> Americans will do most their telemedicine with doctors outside the united states, where education is free, there are not legal requirements or certifications or licenses, etc. This is what immigrants like myself do. A psychiatrist in argentina, for example, charges 5U$S for a visit, while one in Palo Alto, CA charges 1000U$S with a 3 month wait list. Great idea and this is what my (foreign born) wife does too. A great way to save money. For anyone else reading this far down, you can do it too. There are English speaking doctors everywhere.
chizhik-pyzhik 5y ago
I googled and was surprised to see just how much more doctors are paid in USA- about 2x as much as western european doctors... https://www.advisory.com/en/daily-briefing/2019/09/24/international-physician-compensation https://www.advisory.com/en/daily-briefing/2019/09/24/intern... Hospitals are also privately owned in the USA, whereas they're mostly government-owned in western europe. That's billions of dollars redirected from normal people towards rich stockholders.
- huitzitziltzin 5y ago
  Most large hospitals are not publicly traded. The money is not going to rich stockholders because they don’t have any. Many, for example, are large academic medical centers attached to universities. Also: most large hospitals are technically “nonprofit”. Most of the money there goes to salaries for hospital employees, including well paid administrators. As I note elsewhere in a reply to another comment: it is an ongoing open research question whether “nonprofit” and for profit hospitals actually do anything different. My strong sense (indicated by my “”!) is that the answer is no! They are equally rapacious.
  - conanbatt 5y ago
    The fact that the majority of hospitals are non-profit is part of the racket. The money goes to the hospital administration instead of stockholders. That doesn't make it any better.
    - huitzitziltzin 5y ago
      No it isn’t better. It just means that money is not going to “rich stockholders” as the parent asserts.
sli 5y ago
> As much as everyone loves to complain about drug companies and insurers as being responsible for high US health care costs, that is not where the money goes. The money goes to doctors and to hospitals. (Specifically: about half of all national health spending to those two groups.) A big part of the problem is where the money comes from, not just where it goes. People are less averse to doctors being paid well than they are being stuck with absolutely ridiculous bills that they cannot reasonably pay, which should go without saying. This is why so many people want to rich taxed much more heavily and that money used to subsidize healthcare, instead of the current trend of handwaving the wealthy as "not having liquid assets," something that never seems to matter when a wealthy person wants to pay for something expensive but suddenly matters when the working class wants the IRS to come knocking. If they need to dump stock or some other assets to pay their tax bill, that's their own problem and not anyone else's. It's also something that could be willfully avoided on their own accord. That $768B "defense" budget is absolutely nauseating in the face of medical debt being one of if not the largest cause of bankruptcy in the US.
- rafale 5y ago
  $768B is a great deal for not being under a russian or Chinese hegemony and world philosophy. Freedom comes before universal healthcare.
  - huitzitziltzin 5y ago
    You will be delighted to learn of the existence of (inter alia) - France - Japan - Australia - Great Britain - Finland - Taiwan - New Zealand - South Korea - and many more! All countries which do not spend anything like what we do on defense, are not under Chinese or russian domination, AND nearly all have longer life expectancy than we do while at the same time spending much much much less on a per capita basis on health care than the US does.
    - lp0_on_fire 5y ago
      Each one of those countries you listed _heavily_ relies on the United States military being on their side in the event of a war. You can't make the argument you're making without at least acknowledging US hegemony (which we can argue is good or bad).
mschuster91 5y ago
> The money goes to doctors and to hospitals. For doctors, that pay is well deserved given the exorbitant student loans that doctors carry, and the ridiculous shift length and other work related issues. For hospitals? Here's the real deal where costs can be saved - 25% of hospital expenses is administration expenses [1], and 8% is profit margin [2]. Convert hospitals to non-profit operations owned by a single-payer insurance and immediately save a lot of costs across the entire board. [1] https://www.commonwealthfund.org/publications/journal-article/2014/sep/comparison-hospital-administrative-costs-eight-nations-us https://www.commonwealthfund.org/publications/journal-articl... [2]: https://www.americanprogress.org/article/high-price-hospital-care/ https://www.americanprogress.org/article/high-price-hospital...
- munk-a 5y ago
  Having seen the working conditions of testers in the video game industry I can say that: > For doctors, that pay is well deserved given the exorbitant student loans that doctors carry, and the ridiculous shift length and other work related issues. Is pure BS. Many professions end up carrying student loan repayment for decades and that isn't usually used as an excuse for increased pay - additionally there are plenty of professions (and folks working two jobs) that end up putting in more hours than doctors. These costs aren't describable using either of those causes. Additionally, most hospitals are already technically non-profit organizations - it's just that administrators can end up having purely ridiculous take-homes. A single payer system probably is the solution but mostly because of the price setting and ease of billing - if you compare Canada to the US you'll notice that the Board of Physicians sets procedure and drug pricing provincially rather than being left up to a patchwork of random private corporations. (As an aside, I'm both a Canadian-American dualie (American first - I emigrated to Canada) and I work in a company that tracks US Healthcare insurance information)
- huitzitziltzin 5y ago
  >> For doctors, that pay is well deserved given the exorbitant student loans that doctors carry, and the ridiculous shift length and other work related issues. Disagree on many, many counts. - do you know many specialists? Ridiculous hours are not part of the picture post-residency! - deserved why? On the basis of what? More than a taxi driver who works long hours? A convenience store worker who works long hours? - student loans are not that hard to pay off at US (medical) salaries! There are surgical specialities where the average pay is north of $500k. Family medicine and pediatrics make a lot less. >> Convert hospitals to non-profit operations owned by a single-payer insurance and immediately save a lot of costs across the entire board - converting hospitals to non profits isn’t going to do much because most are already not for profit. - you save money with single payer (ideally) by paying lower prices… which is my original point. There is administrative bloat and burden in the system but it’s on the order of 10% of spending, not 40%. And, just to be clear, you have to administer hospitals in single payer too so you don’t get rid of those costs entirely. I can support single payer, but I support it to pay lower prices to doctors and hospitals (and pharma, but as I noted above that’s not a big slice of the pie either).
mwerd 5y ago
Get rid of onerous documentation requirements. There - you cut 10%-20% of hospital administration costs, and you haven't changed how much doctors are being paid per hour, but you have increased their productivity, so they can see more patients for the same salary. Find me a payer who will agree to it and I'll show you the solution to healthcare bloat.
- lotsofpulp 5y ago
  The documentation requirements did not come out of thin air. Some docs during the 80s/90s/00s made out extremely well. One of the infamous ones is ortho surgeons hitting everyone with dubious back surgeries since it was all paid for by Medicare even though there was little evidence back surgeries worked. A lot of the doctors/dentists/pharmacists made out very well in previous decades, resulting in the healthcare expenditures becoming a political flashpoint, culminating in ACA, and thus the pendulum starts swinging the other way. Sucks for newer generation of doctors.
  - mwerd 5y ago
    theres still billions in fraud, waste, and abuse. I don't think the increased documentatiom addressed the problem you describe and created many new problems of its own.
lemmsjid 5y ago
Thanks for the context. My layperson reader-of-newspapers understanding is that there are three issues with doctor supply: one is that it's expensive to become a doctor, which is hand in hand with spiraling educational costs, two is that it's painful to be a doctor, because of red tape, and three is that it is incredibly difficult to become a doctor and we actually don't have a lot of knowledge as to whether or not the rigorous selection process and training is actually completely necessary to produce a good doctor. In fact, the rigorous process might be selecting out people who would otherwise be good. (This being one commentary on the subject: https://www.baltimoresun.com/opinion/op-ed/bs-ed-op-0516-doctor-requirements-20210514-yl63wdqc6ndjhmyz757zsytldq-story.html https://www.baltimoresun.com/opinion/op-ed/bs-ed-op-0516-doc...)
- huitzitziltzin 5y ago
  It is expensive, but they are extremely well compensated. Don’t let them BS you. It doesn’t take that long to pay back a million dollars of med school debt at a salary of 400k per year. Bigger issue is low supply: too few medical schools admitting too few students keeps supply Low and prices high. Current doctors love it. (That’s the same reason non-US-trained doctors can’t come to practice here. You can bet that they’d love to at our salaries!) Probably the training process is dysfunctional and needlessly brutal. But that doesn’t make prices high on its own. Just open more med schools, add residency slots, and make it easier for doctors from other places to come here and practice.
  - conanbatt 5y ago
    > It doesn’t take that long to pay back a million dollars of med school debt at a salary of 400k per year. It should be clear that in this relationship, the rent-seeker is the university education. Doctors and wanna-be doctors are victims here. From whom? Mainly other doctors. Similar to any union.
ericbarrett 5y ago
Which doctors are getting it? A friend of mine does ear and neck surgery in the US. For operations where the hospital bills $25,000, he receives $300. Some more goes to the anesthesiologist and other personnel involved, but the vast bulk to the hospital itself. Compensation does seem to vary by field, so I'm curious what you've seen.
- antisthenes 5y ago
  Depends how it's structured I guess. Is he an employee of the hospital, or does the hospital contract the doctor for surgeries? If he's an employee, it only makes sense that he gets a "base" salary and bonuses for actual surgeries. That makes it less risky for him, if, for example, there's a whole month of people not needing ear/neck surgeries. If the doctor's practice is contracted by the hospital to come in and perform the surgeries as needed, you can bet your ass that doctor would be charging $5k+ per surgery.
  - ericbarrett 5y ago
    He has his own practice and I believe it's under a contract of some kind.
    - pkaye 5y ago
      There is a surgeon on YouTube that talks about a lot of stuff like how much he roughly makes per surgery, what is costs are, how much his loans are, etc. https://www.youtube.com/user/antoniowebbmd https://www.youtube.com/user/antoniowebbmd
perl4ever 5y ago
This isn't the first time I've read something like this. However, it's not satisfying at face value. The reason is that as a consumer of health care services, I see two trends. One is fewer and fewer actual doctors - a group practice I go to seems to be built around a single doctor and lots of nurses or physicians assistants. The doctor only gets involved in really exceptional cases. The other is that everybody, whether a doctor or not, seems to have an incredibly packed schedule, like they need to see dozens of people per day. So if they're making so much money, why is it like this?
anamax 5y ago
> you need to talk about paying less to doctors and to hospitals One graph that I've seen shows a huge increase in the number of hospital administrators while the number of MDs has been relatively flat. Granted, the Y axis is percentage, not numbers, so it may be that we went from 1 administrator for every 100 doctors to 10, which is both a huge percentage increase and probably not a significant dollar increase. One instance of this graph is in the middle of: https://www.athenahealth.com/knowledge-hub/practice-management/expert-forum-rise-and-rise-healthcare-administrator https://www.athenahealth.com/knowledge-hub/practice-manageme...
lr1970 5y ago
> So… go ahead and share your ideas for paying doctors and hospitals less, because otherwise you’re talking about stuff which doesn’t amount to much! Think twice before you ask for it - you might get it. I often hear that doctors in US make more than they should. Compared to what? My significant other is a practicing physician in a second highly compensated (after surgeons) medical specialty. Besides her daily work she has at least one (sometimes two) night calls a week in the hospital plus another one or two calls from home (should be back to the H on a 30 minutes notice). I am embarrassed that as a computer scientist I make more than her working from home in a comfy chair in front of a screen. Paying doctors less than other skills professions is a sure way to guarantee that the next generation of doctors will be composed from the folks that could not make it into the "better" professions. Don't forget there is no "restart" button on a human corpse after failed surgery. You want a person holding your life in their hands to be top notch. Last thing to point out: even in equitable societies like Western Europe doctors make more compared to other skilled professionals like software engineers. America is unique that FAANG pays more to their engineers that Mayo Clinic to its physicians.
- huitzitziltzin 5y ago
  In a more competitive and transparent market, doctors will be compensated closer to the marginal product of their labor (which is generally quite high!). I do not think doctors will get paid $35,000 per year. I am not trying to decide their salaries myself.
- conanbatt 5y ago
  Software engineer salaries in the US are also the result of government regulation, namely immigration. With an uncapped H1B for tech workers you would get millions of developers a year and depress this wages considerably.
- tsol 5y ago
  >I am embarrassed that as a computer scientist I make more than her working from home in a comfy chair in front of a screen Compensation isn't correlated with how rigorous a job is, or we might pay laborers more. It's simply what the market is willing to pay for that skillset. Why is that? There are a lot of reasons but I'll agree they aren't great. But I'm not sure how one could change that
jevoten 5y ago
> Yes, we can do better by reducing the administrative burden, but that slice of the pie is less than 10%. Does this less than 10% include the time doctors themselves spend on administration? I've heard that filling out complicated billing and insurance forms takes up a big chunk of their time.
specialist 5y ago
Question 1: Can you recommend any healthcare economics primers, surveys, whatever for us curious noobs? Question 2: If you were in charge, what would the future perfect healthcare system look like? Are there any systems today which resemble that system? -- Despite my efforts to learn, and experience in the industry, I'm at a complete loss. At best, I can spot some zombie silver bullet ideas. (eg "Tort reform FTW.") And I keep having "aha!" moments. TIL from this discussion is the connection between shortage of doctors and rise in administrative overhead. D'uh. I don't know why I hadn't thought of that. I'd long assumed a major, perhaps biggest, driver was guarantors ratcheting up administrative burden to reduce payouts. There's too many layers to this onion.
- huitzitziltzin 5y ago
  For question 1: Health economics - either sloane and hsieh OR bhattacharya, Hyde and tu are basic undergrad health Econ books. Health policy - feldstein health policy issues is something I have used. There is overlap in coverage there but health Econ and health policy are somewhat different classes. David cutler also has two worthwhile and short books: the quality cure and your money or your life. Both are good. Question 2: - more medical schools - more residency slots - no restrictions on foreign doctors practicing medicine here - price transparency - proper incentives for consumers to care about what provider they choose - no employer provided health insurance. This is a source of many many many problems. Probably more but that’s off the top of my head right now
clairity 5y ago
we should pay doctors, nurses, and other direct care staff well, not because they’re ‘heroes’ but because they are the literal care providers and we want good care. hospitals, on the other hand, suffer from the same kinds of capital-driven distortionary economics we see all across the economy. i’d also posit that 90% of the medical insurance industry could go away and it’d not affect care outcomes a single iota. none of the admin overhead of insurance is necessary, except for catastrophic insurance.
markus_zhang 5y ago
I'm wondering why there is no regulation on this kind of up marking by the hospital?
satellite2 5y ago
Doctors and hospitals often complain that a large share of their revenue is spent on equipment, procedures and labs. Can you comment on that?
- GabrielBen 5y ago
  Hospitals are very interested in running their operations close-to-a-loss. This is more important than the spend-share on equipment or salaries. Hospitals are setup mostly as non-profits, which means they have no incentive to have an operating margin. Furthermore, hospitals can have lots of leverage, as sometimes they are the only one in 20 miles or more: so the closer they are to bankrupcy, the more money they can ask government. Hospitals are very close to the mercantilist corporations pre-liberalism in this way: they are protected from competition and from their own failure.

YossarianFrPrez 5y ago

Fascinating. I have some questions I'm hoping you can answer. Can you speak to the narrative of administrative bloat in US hospitals? Are doctors paid relatively less in other countries? And is there any chance that the high pay is needed to counter-act overly stressful working conditions in the US (vs., say, the UK's NHS?) I'm also curious about doctors' personal expenses. If most of their salary is going towards rent or homeownership, short of situating a hospital on something like a kibbutz... maybe there is some sort of rent subsidy -- or tax break for landlords that give a 10% rent discount / for banks that give a medical professionals low interest home loans -- that could be enacted. It could allow doctor's effective salaries to stay the same, but medical prices to drop? I'm afraid you are going to say that doctor's biggest personal expense is student loans for medical school! If medical-school-debt were to be wiped out, do you know how much salaries could drop in terms of objective price without changing doctor's effective income?

tkahnoski 5y ago
Another factor is not all doctor salaries are the same. Anesthesiologist 400k, Family practice or OB/GYN 200k. Anesthesiologist is buying a lamborghini, the family practice person needs a few years before they can entertain buying a house.
- tastyfreeze 5y ago
  Any idea why there aren't more people training to be anesthesiologists? A salary like that is a strong incentive for people to enter the professions. Or is this more of a training lag problem where it takes 12-14 years for a labor shortage signal like high salary to start being satisfied by new anesthesiologists?
  - cyberge99 5y ago
    If I’m not mistaken they pay huge malpractice insurance amounts because a misdiagnosed dosage of a lethal chemical (sedative, anesthesia) can be, well, lethal.
  - conanbatt 5y ago
    Skill markets are not very efficient: not all developers jump to blockchain or ML for example. Also there tends to be limits on how many slots for residences and practices there are for different specialties: the system is purposefully capped to make sure that there aren't too many doctors. The way to skip all of this is massive de-reg.
    - lostphilosopher 5y ago
      What are the government regulations that drive this? (If that’s what you mean?)
      - conanbatt 5y ago
        You can only practice medicine if you studied in the US. No doctor in the world can practice medicine in the US without having to re-certify their knowledge. Also, education is closely tied with government funding, so it's impossible to bootstrap a college or university to cheapen the cost of education. Thus you can only go all-in to medschool. This is not 100% accurate, there are some alternatives like PA's and NP's. So the current system can absorb only so much. There are also specific funding rules for residencies, which mean that the amount that is given is done based on gov funding.

conanbatt 5y ago

Hospitals are 40% of the NH spending so I would even not look at doctors that way. The market structure is such that there are very few doctors, so you need to do your operations in a way that doctors spend as little as possible with patients, and you delegate as much to assistants and administrative chores. With a massive supply shock on doctors you would not only lower wages for doctors, you would also lower admin costs. One caveat, even though doctors wages are very high, they are also rent-captured by universities that charge mid six-digits for an education and medical insurance, and certifications that are burdensome and expensive. I remember medical malpractice insurance going to several thousand a month for OBGYN. There is a reason why clinical doctors have an abnormally high suicide rate in the US. Then hospitals get massive fed spending and money, plus often local protections that mean you cant open competing hospitals. In the book " The Social Transformation of American Medicine" they talk a lot about how hospitals rent-seeking behavior is to turn themselves as a non-profit, and then ask for federal funding and getting that denied to for-profit hospitals, effectively capping the amount of hospitals you can open. The WHOLE market structure needs a detonation. And this is my desire/wish/prediction: at some point we will get an Uber for medicine. Americans will do most their telemedicine with doctors outside the united states, where education is free, there are not legal requirements or certifications or licenses, etc. This is what immigrants like myself do. A psychiatrist in argentina, for example, charges 5U$S for a visit, while one in Palo Alto, CA charges 1000U$S with a 3 month wait list.

huitzitziltzin 5y ago
Lots of stuff here… >> Hospitals are 40% of the NH spending so I would even not look at doctors that way. Hospitals are 30% and physicians are 20% >> The market structure is such that there are very few doctors, Agree. Add more medical schools and residency spots. >> With a massive supply shock on doctors you would not only lower wages for doctors, Yes, this is a good idea. >> you would also lower admin costs. Not clear that this is true or why it would happen. >>One caveat, even though doctors wages are very high, they are also rent-captured by universities that charge mid six-digits for an education and medical insurance, and certifications that are burdensome and expensive. Medical school debt may be high, but salaries are higher. Certifications are not likely a large obstacle to more entry, IMO. >> I remember medical malpractice insurance going to several thousand a month for OBGYN. There are plenty of “tort reform” states that cap malpractice payouts. Medical services are not cheaper there. >> There is a reason why clinical doctors have an abnormally high suicide rate in the US. Source needed on this claim. Might be true. I’m skeptical though. High relative to what? >> Then hospitals get massive fed spending and money, They do and certainly in the COVID stimulus bill that was a HUGE waste of public money. >> plus often local protections that mean you cant open competing hospitals. This is called “certificate of need.” These laws are dumb but don’t exist in 15-20 states at this point. More entry would be great, but you need more doctors, more competition and more price transparency too. >> In the book " The Social Transformation of American Medicine" they talk a lot about how hospitals rent-seeking behavior is to turn themselves as a non-profit, and then ask for federal funding and getting that denied to for-profit hospitals, effectively capping the amount of hospitals you can open. Certificate of need laws are state, not federal. >> The WHOLE market structure needs a detonation. I’m on board. But by detonation I really mean: - more medical schools, - more doctors, including permitting foreign doctors to practice here - price transparency - meaningful competition among hospitals on price. >> And this is my desire/wish/prediction: at some point we will get an Uber for medicine. Amazon is starting an Amazon Care product. Looks like urgent care for the time being. My hope is that they open hospitals eventually. >> Americans will do most their telemedicine with doctors outside the united states, where education is free, there are not legal requirements or certifications or licenses, etc. This is what immigrants like myself do. A psychiatrist in argentina, for example, charges 5U$S for a visit, while one in Palo Alto, CA charges 1000U$S with a 3 month wait list. Great idea and this is what my (foreign born) wife does too. A great way to save money. For anyone else reading this far down, you can do it too. There are English speaking doctors everywhere.

chizhik-pyzhik 5y ago

I googled and was surprised to see just how much more doctors are paid in USA- about 2x as much as western european doctors... https://www.advisory.com/en/daily-briefing/2019/09/24/international-physician-compensation https://www.advisory.com/en/daily-briefing/2019/09/24/intern... Hospitals are also privately owned in the USA, whereas they're mostly government-owned in western europe. That's billions of dollars redirected from normal people towards rich stockholders.

huitzitziltzin 5y ago
Most large hospitals are not publicly traded. The money is not going to rich stockholders because they don’t have any. Many, for example, are large academic medical centers attached to universities. Also: most large hospitals are technically “nonprofit”. Most of the money there goes to salaries for hospital employees, including well paid administrators. As I note elsewhere in a reply to another comment: it is an ongoing open research question whether “nonprofit” and for profit hospitals actually do anything different. My strong sense (indicated by my “”!) is that the answer is no! They are equally rapacious.
- conanbatt 5y ago
  The fact that the majority of hospitals are non-profit is part of the racket. The money goes to the hospital administration instead of stockholders. That doesn't make it any better.
  - huitzitziltzin 5y ago
    No it isn’t better. It just means that money is not going to “rich stockholders” as the parent asserts.

sli 5y ago

> As much as everyone loves to complain about drug companies and insurers as being responsible for high US health care costs, that is not where the money goes. The money goes to doctors and to hospitals. (Specifically: about half of all national health spending to those two groups.) A big part of the problem is where the money comes from, not just where it goes. People are less averse to doctors being paid well than they are being stuck with absolutely ridiculous bills that they cannot reasonably pay, which should go without saying. This is why so many people want to rich taxed much more heavily and that money used to subsidize healthcare, instead of the current trend of handwaving the wealthy as "not having liquid assets," something that never seems to matter when a wealthy person wants to pay for something expensive but suddenly matters when the working class wants the IRS to come knocking. If they need to dump stock or some other assets to pay their tax bill, that's their own problem and not anyone else's. It's also something that could be willfully avoided on their own accord. That $768B "defense" budget is absolutely nauseating in the face of medical debt being one of if not the largest cause of bankruptcy in the US.

rafale 5y ago
$768B is a great deal for not being under a russian or Chinese hegemony and world philosophy. Freedom comes before universal healthcare.
- huitzitziltzin 5y ago
  You will be delighted to learn of the existence of (inter alia) - France - Japan - Australia - Great Britain - Finland - Taiwan - New Zealand - South Korea - and many more! All countries which do not spend anything like what we do on defense, are not under Chinese or russian domination, AND nearly all have longer life expectancy than we do while at the same time spending much much much less on a per capita basis on health care than the US does.
  - lp0_on_fire 5y ago
    Each one of those countries you listed _heavily_ relies on the United States military being on their side in the event of a war. You can't make the argument you're making without at least acknowledging US hegemony (which we can argue is good or bad).

mschuster91 5y ago

> The money goes to doctors and to hospitals. For doctors, that pay is well deserved given the exorbitant student loans that doctors carry, and the ridiculous shift length and other work related issues. For hospitals? Here's the real deal where costs can be saved - 25% of hospital expenses is administration expenses [1], and 8% is profit margin [2]. Convert hospitals to non-profit operations owned by a single-payer insurance and immediately save a lot of costs across the entire board. [1] https://www.commonwealthfund.org/publications/journal-article/2014/sep/comparison-hospital-administrative-costs-eight-nations-us https://www.commonwealthfund.org/publications/journal-articl... [2]: https://www.americanprogress.org/article/high-price-hospital-care/ https://www.americanprogress.org/article/high-price-hospital...

munk-a 5y ago
Having seen the working conditions of testers in the video game industry I can say that: > For doctors, that pay is well deserved given the exorbitant student loans that doctors carry, and the ridiculous shift length and other work related issues. Is pure BS. Many professions end up carrying student loan repayment for decades and that isn't usually used as an excuse for increased pay - additionally there are plenty of professions (and folks working two jobs) that end up putting in more hours than doctors. These costs aren't describable using either of those causes. Additionally, most hospitals are already technically non-profit organizations - it's just that administrators can end up having purely ridiculous take-homes. A single payer system probably is the solution but mostly because of the price setting and ease of billing - if you compare Canada to the US you'll notice that the Board of Physicians sets procedure and drug pricing provincially rather than being left up to a patchwork of random private corporations. (As an aside, I'm both a Canadian-American dualie (American first - I emigrated to Canada) and I work in a company that tracks US Healthcare insurance information)
huitzitziltzin 5y ago
>> For doctors, that pay is well deserved given the exorbitant student loans that doctors carry, and the ridiculous shift length and other work related issues. Disagree on many, many counts. - do you know many specialists? Ridiculous hours are not part of the picture post-residency! - deserved why? On the basis of what? More than a taxi driver who works long hours? A convenience store worker who works long hours? - student loans are not that hard to pay off at US (medical) salaries! There are surgical specialities where the average pay is north of $500k. Family medicine and pediatrics make a lot less. >> Convert hospitals to non-profit operations owned by a single-payer insurance and immediately save a lot of costs across the entire board - converting hospitals to non profits isn’t going to do much because most are already not for profit. - you save money with single payer (ideally) by paying lower prices… which is my original point. There is administrative bloat and burden in the system but it’s on the order of 10% of spending, not 40%. And, just to be clear, you have to administer hospitals in single payer too so you don’t get rid of those costs entirely. I can support single payer, but I support it to pay lower prices to doctors and hospitals (and pharma, but as I noted above that’s not a big slice of the pie either).

mwerd 5y ago

Get rid of onerous documentation requirements. There - you cut 10%-20% of hospital administration costs, and you haven't changed how much doctors are being paid per hour, but you have increased their productivity, so they can see more patients for the same salary. Find me a payer who will agree to it and I'll show you the solution to healthcare bloat.

lotsofpulp 5y ago
The documentation requirements did not come out of thin air. Some docs during the 80s/90s/00s made out extremely well. One of the infamous ones is ortho surgeons hitting everyone with dubious back surgeries since it was all paid for by Medicare even though there was little evidence back surgeries worked. A lot of the doctors/dentists/pharmacists made out very well in previous decades, resulting in the healthcare expenditures becoming a political flashpoint, culminating in ACA, and thus the pendulum starts swinging the other way. Sucks for newer generation of doctors.
- mwerd 5y ago
  theres still billions in fraud, waste, and abuse. I don't think the increased documentatiom addressed the problem you describe and created many new problems of its own.

lemmsjid 5y ago

Thanks for the context. My layperson reader-of-newspapers understanding is that there are three issues with doctor supply: one is that it's expensive to become a doctor, which is hand in hand with spiraling educational costs, two is that it's painful to be a doctor, because of red tape, and three is that it is incredibly difficult to become a doctor and we actually don't have a lot of knowledge as to whether or not the rigorous selection process and training is actually completely necessary to produce a good doctor. In fact, the rigorous process might be selecting out people who would otherwise be good. (This being one commentary on the subject: https://www.baltimoresun.com/opinion/op-ed/bs-ed-op-0516-doctor-requirements-20210514-yl63wdqc6ndjhmyz757zsytldq-story.html https://www.baltimoresun.com/opinion/op-ed/bs-ed-op-0516-doc...)

huitzitziltzin 5y ago
It is expensive, but they are extremely well compensated. Don’t let them BS you. It doesn’t take that long to pay back a million dollars of med school debt at a salary of 400k per year. Bigger issue is low supply: too few medical schools admitting too few students keeps supply Low and prices high. Current doctors love it. (That’s the same reason non-US-trained doctors can’t come to practice here. You can bet that they’d love to at our salaries!) Probably the training process is dysfunctional and needlessly brutal. But that doesn’t make prices high on its own. Just open more med schools, add residency slots, and make it easier for doctors from other places to come here and practice.
- conanbatt 5y ago
  > It doesn’t take that long to pay back a million dollars of med school debt at a salary of 400k per year. It should be clear that in this relationship, the rent-seeker is the university education. Doctors and wanna-be doctors are victims here. From whom? Mainly other doctors. Similar to any union.

ericbarrett 5y ago

Which doctors are getting it? A friend of mine does ear and neck surgery in the US. For operations where the hospital bills $25,000, he receives $300. Some more goes to the anesthesiologist and other personnel involved, but the vast bulk to the hospital itself. Compensation does seem to vary by field, so I'm curious what you've seen.

antisthenes 5y ago
Depends how it's structured I guess. Is he an employee of the hospital, or does the hospital contract the doctor for surgeries? If he's an employee, it only makes sense that he gets a "base" salary and bonuses for actual surgeries. That makes it less risky for him, if, for example, there's a whole month of people not needing ear/neck surgeries. If the doctor's practice is contracted by the hospital to come in and perform the surgeries as needed, you can bet your ass that doctor would be charging $5k+ per surgery.
- ericbarrett 5y ago
  He has his own practice and I believe it's under a contract of some kind.
  - pkaye 5y ago
    There is a surgeon on YouTube that talks about a lot of stuff like how much he roughly makes per surgery, what is costs are, how much his loans are, etc. https://www.youtube.com/user/antoniowebbmd https://www.youtube.com/user/antoniowebbmd

perl4ever 5y ago

This isn't the first time I've read something like this. However, it's not satisfying at face value. The reason is that as a consumer of health care services, I see two trends. One is fewer and fewer actual doctors - a group practice I go to seems to be built around a single doctor and lots of nurses or physicians assistants. The doctor only gets involved in really exceptional cases. The other is that everybody, whether a doctor or not, seems to have an incredibly packed schedule, like they need to see dozens of people per day. So if they're making so much money, why is it like this?

anamax 5y ago

> you need to talk about paying less to doctors and to hospitals One graph that I've seen shows a huge increase in the number of hospital administrators while the number of MDs has been relatively flat. Granted, the Y axis is percentage, not numbers, so it may be that we went from 1 administrator for every 100 doctors to 10, which is both a huge percentage increase and probably not a significant dollar increase. One instance of this graph is in the middle of: https://www.athenahealth.com/knowledge-hub/practice-management/expert-forum-rise-and-rise-healthcare-administrator https://www.athenahealth.com/knowledge-hub/practice-manageme...

lr1970 5y ago

> So… go ahead and share your ideas for paying doctors and hospitals less, because otherwise you’re talking about stuff which doesn’t amount to much! Think twice before you ask for it - you might get it. I often hear that doctors in US make more than they should. Compared to what? My significant other is a practicing physician in a second highly compensated (after surgeons) medical specialty. Besides her daily work she has at least one (sometimes two) night calls a week in the hospital plus another one or two calls from home (should be back to the H on a 30 minutes notice). I am embarrassed that as a computer scientist I make more than her working from home in a comfy chair in front of a screen. Paying doctors less than other skills professions is a sure way to guarantee that the next generation of doctors will be composed from the folks that could not make it into the "better" professions. Don't forget there is no "restart" button on a human corpse after failed surgery. You want a person holding your life in their hands to be top notch. Last thing to point out: even in equitable societies like Western Europe doctors make more compared to other skilled professionals like software engineers. America is unique that FAANG pays more to their engineers that Mayo Clinic to its physicians.

huitzitziltzin 5y ago
In a more competitive and transparent market, doctors will be compensated closer to the marginal product of their labor (which is generally quite high!). I do not think doctors will get paid $35,000 per year. I am not trying to decide their salaries myself.
conanbatt 5y ago
Software engineer salaries in the US are also the result of government regulation, namely immigration. With an uncapped H1B for tech workers you would get millions of developers a year and depress this wages considerably.
tsol 5y ago
>I am embarrassed that as a computer scientist I make more than her working from home in a comfy chair in front of a screen Compensation isn't correlated with how rigorous a job is, or we might pay laborers more. It's simply what the market is willing to pay for that skillset. Why is that? There are a lot of reasons but I'll agree they aren't great. But I'm not sure how one could change that

jevoten 5y ago

> Yes, we can do better by reducing the administrative burden, but that slice of the pie is less than 10%. Does this less than 10% include the time doctors themselves spend on administration? I've heard that filling out complicated billing and insurance forms takes up a big chunk of their time.

specialist 5y ago

Question 1: Can you recommend any healthcare economics primers, surveys, whatever for us curious noobs? Question 2: If you were in charge, what would the future perfect healthcare system look like? Are there any systems today which resemble that system? -- Despite my efforts to learn, and experience in the industry, I'm at a complete loss. At best, I can spot some zombie silver bullet ideas. (eg "Tort reform FTW.") And I keep having "aha!" moments. TIL from this discussion is the connection between shortage of doctors and rise in administrative overhead. D'uh. I don't know why I hadn't thought of that. I'd long assumed a major, perhaps biggest, driver was guarantors ratcheting up administrative burden to reduce payouts. There's too many layers to this onion.

huitzitziltzin 5y ago
For question 1: Health economics - either sloane and hsieh OR bhattacharya, Hyde and tu are basic undergrad health Econ books. Health policy - feldstein health policy issues is something I have used. There is overlap in coverage there but health Econ and health policy are somewhat different classes. David cutler also has two worthwhile and short books: the quality cure and your money or your life. Both are good. Question 2: - more medical schools - more residency slots - no restrictions on foreign doctors practicing medicine here - price transparency - proper incentives for consumers to care about what provider they choose - no employer provided health insurance. This is a source of many many many problems. Probably more but that’s off the top of my head right now

clairity 5y ago

we should pay doctors, nurses, and other direct care staff well, not because they’re ‘heroes’ but because they are the literal care providers and we want good care. hospitals, on the other hand, suffer from the same kinds of capital-driven distortionary economics we see all across the economy. i’d also posit that 90% of the medical insurance industry could go away and it’d not affect care outcomes a single iota. none of the admin overhead of insurance is necessary, except for catastrophic insurance.

markus_zhang 5y ago

I'm wondering why there is no regulation on this kind of up marking by the hospital?

satellite2 5y ago

Doctors and hospitals often complain that a large share of their revenue is spent on equipment, procedures and labs. Can you comment on that?

GabrielBen 5y ago
Hospitals are very interested in running their operations close-to-a-loss. This is more important than the spend-share on equipment or salaries. Hospitals are setup mostly as non-profits, which means they have no incentive to have an operating margin. Furthermore, hospitals can have lots of leverage, as sometimes they are the only one in 20 miles or more: so the closer they are to bankrupcy, the more money they can ask government. Hospitals are very close to the mercantilist corporations pre-liberalism in this way: they are protected from competition and from their own failure.