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Disclaimer at the start: I'm asking this because I want to understand more about the situation that you are presenting, not as an indirect way to "um actually"

Disclaimer at the start: I'm asking this because I want to understand more about the situation that you are presenting, not as an indirect way to "um actually" you. How would margins be defining in this case? When I hear that the margins at gas at a gas station are x%, I understand that they are basically talking about how much I pay per gallon minus how much the gas station paid per gallon. However, it feels like defining margins in a health system would be much more complex. Is it just lookin at the raw materials (e.g. how much do medications, bandages, and scalpels cost the hospital)? Depreciation on expensive equipment like MRIs? Does pay factor in and if so is it just the salaries of people who actually do the work like managers, nurses, and doctors or also the compensation for people like CEOs?

deleted 3y ago
[deleted]
jonathan-adly 3y ago
Here are 2 relevant scenarios. A homeless alcoholic withdraws and gets seizures, spending a week in the ICU. He is not on Medicaid, but qualifies. After paying for all his care and applying for Medicaid on his behalf. The hospital might get 50 cents back for every dollar they spent. (They spent on doctors; nurses, medications; EMR bill, case management, etc.). This guy will essentially come back 5-6 times per year. With negative margins every time because that’s how Medicaid is designed. 2nd scenario is a 70 year old with a knee replacement surgery and great insurance Medicare + supplemental. He spend a day and half in the hospital and the money that his insurance paid, would be ~130-150% cost of care. Average everything out; and you end up with 3-6% margins. Obviously, salaries are big part of the cost. So, perhaps the margins will be better if the CEO is paid less. But, overall its a low-margin business because the biggest payers are Medicaid and Medicare and they more or less pay whatever they want via legislative means.
- bumby 3y ago
  Are you saying medicare/medicaide are net-negative? Is so, what prevents hospitals from refusing to accept them? I suspect they don't because it's not financially solvent to do so, given the number of patients who use those services. That on it's face seems to bring into question the claim that they are net-negative (whether that's due to legislation or other means).
  - arcbyte 3y ago
    Hospitals are required by EMTALA[1] to treat all emergencu patients to the point of stabilization. So it only makes sense to charge whatever insurance is available because there is no turning them away. Im not sure if there are regulations applicable to hospitals that prevent them from refusing to accept medicaid patients for elective procedures. Certaibly there are lots of surgery centers that do refuse medicaid. Also lots of doctors dont take medicaid/medicare. Its within their right to do so. [1]: https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_...
    - bumby 3y ago
      You're right with regard to emergency treatment; so in the case of the withdrawal patient that holds. But hospitals are not required to accept any insurance, including medicare/aide (they are termed "non-participating"). So I don't think the premise holds in the knee-replacement scenario. So, to be generous, maybe there's a case that if a hospital gets a bulk of its revenue from the ER, it's a better business case to accept Medicare. But I don't believe that's the case for most hospitals, so it still leads me to question the premise that medicare is a net negative (or else we'd see a lot more 'non-participating' hospitals).
  - gniv 3y ago
    At least on paper they are net-negative. If you look at a Schedule H of IRS Form 990 they report huge shortfalls from Medicare/Medicaid. This I think helps them claim "community benefit expense". Example Form 990 (search inside for Schedule H): https://my.clevelandclinic.org/-/scassets/files/org/about/financial-statements/form-990-ccf.ashx?la=en https://my.clevelandclinic.org/-/scassets/files/org/about/fi... See also page 8 of this pdf: https://www.aha.org/system/files/media/file/2023/10/Results-from-2020-Tax-Exempt-Hospitals-Schedule-H-Community-Benefit-Reports.pdf https://www.aha.org/system/files/media/file/2023/10/Results-...
    - bumby 3y ago
      Thanks for sharing that. Do you happen to know how they calculate the "community benefit expense" that creates the shortfall? My understanding is that medical billing is inflated so they can anchor a high value to help in their negotiations with medical insurance. I'm wondering if this is the medicare adjusted value (i.e., what medicare says the procedures are worth) or the artificially inflated value?
- someguydave 3y ago
  So you are suggesting that costs are primarily set by how much the government is willing to pay, and are completely independent of medical production?
gniv 3y ago
I think you are right to be suspicious. For example, back when I lived in the US and went for a checkup at a big hospital in NY: first there were greeters at the entrance of the building, then a greeter on the right floor, then a small army of receptionists, then a nurse, then a PA, then the doctor. All these are expenses. Are they necessary? Here in France there is, maybe, a receptionist that sends me to the office where the doctor does everything, including billing. (Frankly, both ways seem a bit extreme.)
- edmundsauto 3y ago
  I believe it is common for the greeters to be vounteers
- RHSeeger 3y ago
  > Here in France there is, maybe, a receptionist that sends me to the office where the doctor does everything, including billing. If the doctor is making an order of magnitude more for their time than the receptionist, it's far more effective to have more receptionists for the work either of them could do.
  - gniv 3y ago
    In principle yes, but the overhead of having an extra person is big. The extra effort done by the doctor is small, especially since a lot of stuff is automated and works well (like appointments and integration with the state insurance). Yes, I was surprised too.
  - Jensson 3y ago
    The trick is to pay doctors less, a country can easily lower doctor salaries by educating more doctors, there is no lack of people who want to be doctors.
    - RHSeeger 3y ago
      As I understand it, "educating more doctors" in the US is a lot more complicated than it sounds. There's a number of different organizations involved, each setting their own limits for their "step" of the process; and there's motivation to not increase the throughput.

deleted 3y ago

[deleted]

jonathan-adly 3y ago

Here are 2 relevant scenarios. A homeless alcoholic withdraws and gets seizures, spending a week in the ICU. He is not on Medicaid, but qualifies. After paying for all his care and applying for Medicaid on his behalf. The hospital might get 50 cents back for every dollar they spent. (They spent on doctors; nurses, medications; EMR bill, case management, etc.). This guy will essentially come back 5-6 times per year. With negative margins every time because that’s how Medicaid is designed. 2nd scenario is a 70 year old with a knee replacement surgery and great insurance Medicare + supplemental. He spend a day and half in the hospital and the money that his insurance paid, would be ~130-150% cost of care. Average everything out; and you end up with 3-6% margins. Obviously, salaries are big part of the cost. So, perhaps the margins will be better if the CEO is paid less. But, overall its a low-margin business because the biggest payers are Medicaid and Medicare and they more or less pay whatever they want via legislative means.

bumby 3y ago
Are you saying medicare/medicaide are net-negative? Is so, what prevents hospitals from refusing to accept them? I suspect they don't because it's not financially solvent to do so, given the number of patients who use those services. That on it's face seems to bring into question the claim that they are net-negative (whether that's due to legislation or other means).
- arcbyte 3y ago
  Hospitals are required by EMTALA[1] to treat all emergencu patients to the point of stabilization. So it only makes sense to charge whatever insurance is available because there is no turning them away. Im not sure if there are regulations applicable to hospitals that prevent them from refusing to accept medicaid patients for elective procedures. Certaibly there are lots of surgery centers that do refuse medicaid. Also lots of doctors dont take medicaid/medicare. Its within their right to do so. [1]: https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_...
  - bumby 3y ago
    You're right with regard to emergency treatment; so in the case of the withdrawal patient that holds. But hospitals are not required to accept any insurance, including medicare/aide (they are termed "non-participating"). So I don't think the premise holds in the knee-replacement scenario. So, to be generous, maybe there's a case that if a hospital gets a bulk of its revenue from the ER, it's a better business case to accept Medicare. But I don't believe that's the case for most hospitals, so it still leads me to question the premise that medicare is a net negative (or else we'd see a lot more 'non-participating' hospitals).
- gniv 3y ago
  At least on paper they are net-negative. If you look at a Schedule H of IRS Form 990 they report huge shortfalls from Medicare/Medicaid. This I think helps them claim "community benefit expense". Example Form 990 (search inside for Schedule H): https://my.clevelandclinic.org/-/scassets/files/org/about/financial-statements/form-990-ccf.ashx?la=en https://my.clevelandclinic.org/-/scassets/files/org/about/fi... See also page 8 of this pdf: https://www.aha.org/system/files/media/file/2023/10/Results-from-2020-Tax-Exempt-Hospitals-Schedule-H-Community-Benefit-Reports.pdf https://www.aha.org/system/files/media/file/2023/10/Results-...
  - bumby 3y ago
    Thanks for sharing that. Do you happen to know how they calculate the "community benefit expense" that creates the shortfall? My understanding is that medical billing is inflated so they can anchor a high value to help in their negotiations with medical insurance. I'm wondering if this is the medicare adjusted value (i.e., what medicare says the procedures are worth) or the artificially inflated value?
someguydave 3y ago
So you are suggesting that costs are primarily set by how much the government is willing to pay, and are completely independent of medical production?

gniv 3y ago

I think you are right to be suspicious. For example, back when I lived in the US and went for a checkup at a big hospital in NY: first there were greeters at the entrance of the building, then a greeter on the right floor, then a small army of receptionists, then a nurse, then a PA, then the doctor. All these are expenses. Are they necessary? Here in France there is, maybe, a receptionist that sends me to the office where the doctor does everything, including billing. (Frankly, both ways seem a bit extreme.)

edmundsauto 3y ago
I believe it is common for the greeters to be vounteers
RHSeeger 3y ago
> Here in France there is, maybe, a receptionist that sends me to the office where the doctor does everything, including billing. If the doctor is making an order of magnitude more for their time than the receptionist, it's far more effective to have more receptionists for the work either of them could do.
- gniv 3y ago
  In principle yes, but the overhead of having an extra person is big. The extra effort done by the doctor is small, especially since a lot of stuff is automated and works well (like appointments and integration with the state insurance). Yes, I was surprised too.
- Jensson 3y ago
  The trick is to pay doctors less, a country can easily lower doctor salaries by educating more doctors, there is no lack of people who want to be doctors.
  - RHSeeger 3y ago
    As I understand it, "educating more doctors" in the US is a lot more complicated than it sounds. There's a number of different organizations involved, each setting their own limits for their "step" of the process; and there's motivation to not increase the throughput.