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Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of

Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away. The insurance system and perverse incentives embedded in it is the primary reason healthcare is expensive here. Also many countries have price controls on drugs, and US does not (thus subsidizing RoW in regards to new drug research). https://www.chiefhealthcareexecutive.com/view/hospitals-losing-billions-in-2022-more-than-half-could-have-negative-margins https://www.chiefhealthcareexecutive.com/view/hospitals-losi...

rqtwteye 4y ago
"Also many countries have price controls on drugs, and US does not (thus subsidizing RoW in regards to new drug research)" I think this line is BS propaganda by the pharmaceutical industry. I am 100% sure the US would be way better off if they controlled prices and then subsidized research directly instead of paying outrageous prices. As far as hospitals losing money, this doesn't mean that they are using their money efficiently. My ex used to do auditing of hospitals and a lot of them showed a circle of friends consisting of local construction company, architects, business consultants, doctors and others. They all lived well on charging a lot of money to the hospitals and the hospital execs didn't check because they were all buddies.
lowercased 4y ago
> Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away. But... if they're already losing money because they're inefficient, with a 'profit motive' in place... it's obviously not enough of a motive to be efficient. They may be losing money not because of inefficiency anyway, but assuming so... existence of 'profit motive' coupled with inefficiency should be evidence enough that they're not linked.
jzymbaluk 4y ago
> Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away If I had the choice between system A with excellent community health outcomes, but didn't turn a profit, was heavily subsidized, and ran with operational bloat, versus system B which ran lean/efficiently but produced poor health outcomes I would choose A every single time and I imagine most people would Currently in the US we have neither. We have a bloated/inefficient system that also produces poor community health outcomes. But at least a few private equity firms might turn a profit, so at least there's that??
antisthenes 4y ago
> Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away. This comes up in every thread about healthcare and it's just plain wrong/backwards. The reason they appear to be losing money or close to losing money is by design, because of the incentive to be inefficient. It's a way to balloon the "costs" in their accounting and demonstrate to the outside observers that they are "oh so poor" and need help, whereas in reality, they charge exorbitant amounts for procedures and then mark it off as "losses" when consumers can't pay.
- adam_arthur 4y ago
  If you look at Hospital REITs, the majority of the systems have low rent coverage on a cash flow basis. Look at the distribution yields/low multiples applied to hospital real estate... many are priced with high tenant default/bankruptcy risk. e.g. MPW Hospitals are not the same as Medical Office, which tend to be more profitable. Where are the facts to corroborate your statement?

rqtwteye 4y ago

"Also many countries have price controls on drugs, and US does not (thus subsidizing RoW in regards to new drug research)" I think this line is BS propaganda by the pharmaceutical industry. I am 100% sure the US would be way better off if they controlled prices and then subsidized research directly instead of paying outrageous prices. As far as hospitals losing money, this doesn't mean that they are using their money efficiently. My ex used to do auditing of hospitals and a lot of them showed a circle of friends consisting of local construction company, architects, business consultants, doctors and others. They all lived well on charging a lot of money to the hospitals and the hospital execs didn't check because they were all buddies.

lowercased 4y ago

> Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away. But... if they're already losing money because they're inefficient, with a 'profit motive' in place... it's obviously not enough of a motive to be efficient. They may be losing money not because of inefficiency anyway, but assuming so... existence of 'profit motive' coupled with inefficiency should be evidence enough that they're not linked.

jzymbaluk 4y ago

> Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away If I had the choice between system A with excellent community health outcomes, but didn't turn a profit, was heavily subsidized, and ran with operational bloat, versus system B which ran lean/efficiently but produced poor health outcomes I would choose A every single time and I imagine most people would Currently in the US we have neither. We have a bloated/inefficient system that also produces poor community health outcomes. But at least a few private equity firms might turn a profit, so at least there's that??

antisthenes 4y ago

> Most hospitals are already losing money or close to losing money. Taking away profit motive from them e.g. by subsidizing operation would only increase cost of care, because the incentive to run lean/efficiently goes away. This comes up in every thread about healthcare and it's just plain wrong/backwards. The reason they appear to be losing money or close to losing money is by design, because of the incentive to be inefficient. It's a way to balloon the "costs" in their accounting and demonstrate to the outside observers that they are "oh so poor" and need help, whereas in reality, they charge exorbitant amounts for procedures and then mark it off as "losses" when consumers can't pay.

adam_arthur 4y ago
If you look at Hospital REITs, the majority of the systems have low rent coverage on a cash flow basis. Look at the distribution yields/low multiples applied to hospital real estate... many are priced with high tenant default/bankruptcy risk. e.g. MPW Hospitals are not the same as Medical Office, which tend to be more profitable. Where are the facts to corroborate your statement?