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Hang on, so medicare told the hospitals and insurance companies to run their businesses that way? The transaction described in the article was entirely between

by jbooth 15y ago

Hang on, so medicare told the hospitals and insurance companies to run their businesses that way? The transaction described in the article was entirely between private business entities. I get that they set their prices in a way that distorts the market to some extent but it seems that that distortion is far less than what the really-smart-guys-in-suits have been able to manage all by themselves. I understand the impulse that markets make things better. I really do. Look at computer parts for example, there's a robust market that keeps driving down prices and really delivers. But what about the healthcare industry resembles a sane market at all? There's effectively no market forces at work, due to the way that private sector businesses have structured it.

CWuestefeld 15y ago
I'll be honest. I don't get why hospitals continue to play the game. If I were running the place, I'd just pull out of Medicare. It seems that they're afraid of the millions of dollars of lost revenue, without considering the greater sum of expenses that they'd free up.
- jbooth 15y ago
  I sincerely doubt that the bean-counters at hospital are losing a ton of money on medicare but are too confused by the large 'revenue' figure to subtract a larger 'expenses' figure and realize they're making a loss. As a matter of fact, I can't recall ever reading an op/ed or anything by a hospital administrator complaining that they're being fleeced by medicare and losing a bunch of money on it. But I've seen a billion op/eds in the same template as TFA, bemoaning the byzantine and obfuscatory private insurance regime as something that completely destroys any market forces that should exist in the industry. I mean, one hospital charged one thousand times as much as another for the same treatment. I have to conclude that bringing up medicare while the private insurance industry system is this flagrantly broken is nothing but a red herring.
  - CWuestefeld 15y ago
    And I'm telling you that my wife is that bean counter. Her job is (a) budgeting, and (b) getting reimbursement from Medicare and Medicaid. As well as anyone in the organization (which is to say, not too well, because of the deficiencies with cost accounting that I mentioned), she knows those numbers. I don't think a month goes by when I don't ask her this question. Something always comes up, where she's saying "Medicare just denied another $500K payment" or somesuch. And I'll say to her "you live by the sword, you die by the sword". She admits that the net profit via Medicare is negative. But the decisions makers don't want to consider it. In this case, it's possible that they consider it their mission because they are a Catholic hospital. I can't see any answer in the general case.
    - jbooth 15y ago
      Well, I'll take your word for it. I do think that the major problems come from being in a halfway-space between public and private sector for the whole industry, combined with the fact that the entirely-private insurance system breaks any market forces which could lower prices.
  - pseale 15y ago
    I've worked as the IT guy in a hospital, and have talked to our "finance guy", and he says the same thing--outpatient surgeries and childbirths pay for Medicare (in)patients and the ER. And yes, there is inefficiency unrelated to Medicare, and yes, I've seen the anecdote about how doctors who own an MRI machine refer patients to get MRIs six times more frequently. But Medicare underpaying, alongside what I remember hearing was a "bad payor mix" from ER patients, hurts. If you're truly curious about how healthcare works, follow this blog http://histalk2.com/ http://histalk2.com/ and get a flavor for what's concerning IT people (which oftentimes is money).
  - tsotha 15y ago
    Eh? Every source I've read on the subject says Medicare doesn't cover the cost of service. And that is, in part, the reason for the "byzantine and obfuscatory private insurance regime". When you go to the hospital you're paying for the medicare patient in the next bed, and you're paying for the indigent guy in the bed beyond. But they can't very well give you a bill that with a line item that says "shifted costs from the old guy in bay 3 - $900".
- llimllib 15y ago
  > I'd just pull out of Medicare. Many hospitals do; many don't because they feel it's a moral obligation to provide care to Medicare patients. Here's an example of that attitude: http://www.kevinmd.com/blog/2011/12/dropping-medicare-break-heart.html http://www.kevinmd.com/blog/2011/12/dropping-medicare-break-... In order to stay in Medicare/Medicaid (which, as I said, many see as a moral requirement), hospitals are often required to lay off staff. Here's an example of 100 layoffs at Dartmouth Hitchcock hospital: http://www.unionleader.com/article/20111109/NEWS02/711099983 http://www.unionleader.com/article/20111109/NEWS02/711099983
- lurker14 15y ago
  Unsurprisingly, it's complicated. For example, at one hospital where my family member works as a therapist: The hospital receives federal funding for area X, so the clinic area Y must accept Medicare. in Area Y, medicare pays far less than private insurance per hour of therapy, doesn't reimburse for patient no-shows, but doesn't allow the clinic to drop no-showing patients. So the clinic section of the hospital ends up paying staff hourly wages to do nothing some of the time, and is barely treading water the rest of the time. Now, there's overhead, so it's better to have a full clinic with Medicare underpaying than a half-full clinic with no Medicare, but it's still a ripoff: private insurance / private pay is paying more for the same service than Medicare. If private insurers could and would demand the same terms as Medicare, the clinic would die. Finally, maybe Medicare is still a good deal, due to that Area X funding? Maybe, but that's in a totally separate area, distorting the economics of both areas X and Y. It leads to political BS where the fancy X ward swimming in money and building a palace (like http://www.seattlechildrens.org/ http://www.seattlechildrens.org/, have you seen that lobby?), so they pressure clinic Y to beg for donations from their own staff to stay afloat.

by jbooth 15y ago

CWuestefeld 15y ago

I'll be honest. I don't get why hospitals continue to play the game. If I were running the place, I'd just pull out of Medicare. It seems that they're afraid of the millions of dollars of lost revenue, without considering the greater sum of expenses that they'd free up.

jbooth 15y ago
I sincerely doubt that the bean-counters at hospital are losing a ton of money on medicare but are too confused by the large 'revenue' figure to subtract a larger 'expenses' figure and realize they're making a loss. As a matter of fact, I can't recall ever reading an op/ed or anything by a hospital administrator complaining that they're being fleeced by medicare and losing a bunch of money on it. But I've seen a billion op/eds in the same template as TFA, bemoaning the byzantine and obfuscatory private insurance regime as something that completely destroys any market forces that should exist in the industry. I mean, one hospital charged one thousand times as much as another for the same treatment. I have to conclude that bringing up medicare while the private insurance industry system is this flagrantly broken is nothing but a red herring.
- CWuestefeld 15y ago
  And I'm telling you that my wife is that bean counter. Her job is (a) budgeting, and (b) getting reimbursement from Medicare and Medicaid. As well as anyone in the organization (which is to say, not too well, because of the deficiencies with cost accounting that I mentioned), she knows those numbers. I don't think a month goes by when I don't ask her this question. Something always comes up, where she's saying "Medicare just denied another $500K payment" or somesuch. And I'll say to her "you live by the sword, you die by the sword". She admits that the net profit via Medicare is negative. But the decisions makers don't want to consider it. In this case, it's possible that they consider it their mission because they are a Catholic hospital. I can't see any answer in the general case.
  - jbooth 15y ago
    Well, I'll take your word for it. I do think that the major problems come from being in a halfway-space between public and private sector for the whole industry, combined with the fact that the entirely-private insurance system breaks any market forces which could lower prices.
- pseale 15y ago
  I've worked as the IT guy in a hospital, and have talked to our "finance guy", and he says the same thing--outpatient surgeries and childbirths pay for Medicare (in)patients and the ER. And yes, there is inefficiency unrelated to Medicare, and yes, I've seen the anecdote about how doctors who own an MRI machine refer patients to get MRIs six times more frequently. But Medicare underpaying, alongside what I remember hearing was a "bad payor mix" from ER patients, hurts. If you're truly curious about how healthcare works, follow this blog http://histalk2.com/ http://histalk2.com/ and get a flavor for what's concerning IT people (which oftentimes is money).
- tsotha 15y ago
  Eh? Every source I've read on the subject says Medicare doesn't cover the cost of service. And that is, in part, the reason for the "byzantine and obfuscatory private insurance regime". When you go to the hospital you're paying for the medicare patient in the next bed, and you're paying for the indigent guy in the bed beyond. But they can't very well give you a bill that with a line item that says "shifted costs from the old guy in bay 3 - $900".
llimllib 15y ago
> I'd just pull out of Medicare. Many hospitals do; many don't because they feel it's a moral obligation to provide care to Medicare patients. Here's an example of that attitude: http://www.kevinmd.com/blog/2011/12/dropping-medicare-break-heart.html http://www.kevinmd.com/blog/2011/12/dropping-medicare-break-... In order to stay in Medicare/Medicaid (which, as I said, many see as a moral requirement), hospitals are often required to lay off staff. Here's an example of 100 layoffs at Dartmouth Hitchcock hospital: http://www.unionleader.com/article/20111109/NEWS02/711099983 http://www.unionleader.com/article/20111109/NEWS02/711099983
lurker14 15y ago
Unsurprisingly, it's complicated. For example, at one hospital where my family member works as a therapist: The hospital receives federal funding for area X, so the clinic area Y must accept Medicare. in Area Y, medicare pays far less than private insurance per hour of therapy, doesn't reimburse for patient no-shows, but doesn't allow the clinic to drop no-showing patients. So the clinic section of the hospital ends up paying staff hourly wages to do nothing some of the time, and is barely treading water the rest of the time. Now, there's overhead, so it's better to have a full clinic with Medicare underpaying than a half-full clinic with no Medicare, but it's still a ripoff: private insurance / private pay is paying more for the same service than Medicare. If private insurers could and would demand the same terms as Medicare, the clinic would die. Finally, maybe Medicare is still a good deal, due to that Area X funding? Maybe, but that's in a totally separate area, distorting the economics of both areas X and Y. It leads to political BS where the fancy X ward swimming in money and building a palace (like http://www.seattlechildrens.org/ http://www.seattlechildrens.org/, have you seen that lobby?), so they pressure clinic Y to beg for donations from their own staff to stay afloat.