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Mark Cuban: Why US hospitals "don't know their costs"
- sfn42 29d agoMaybe Mr. Cuban should put his money where his mouth is and buy a hospital
- elo2000 29d agoHe has done a lot for affordability with Cost Plus Drugs.
- cmiles8 29d agoWell he has done that on Rx drugs which is equally a hot mess. So he has credibility in this space. He’s not just some blowhard billionaire with an opinion. He’s really legit shaken things up in Rx and proven it’s a racket.
- inanutshellus 29d agoThat said... even though it reads like you're correcting him, you're simply reinforcing @sfn42's message...
- Xunjin 29d agobeg your pardon?
- inanutshellus 29d agoI appreciate the opportunity to clarify; I see I wasn't clear earlier. sfm42: "MC should buy a hospital and fix it!" cmiles8: "MC isn't some armchair pundit, he has improved similar areas!" cmiles8 sounds like he's criticizing sfm42 as though he thinks MC is just whining. However, the rebuttal reinforces the idea that MC really should buy a hospital and go fix it. MC has money, willpower, and a proven track record of improving this area. So go do it, Mark. Walk the walk.
- Xunjin 27d agoI see now, but I don't think buying a hospital is the solution here, a hospital by itself is just a single unit in a broken system, but that single piece is thousand times more complex than reducing drugs prices.
- heavenlyblue 29d agoWhat is Rx?
- Dusseldorf 29d agoPrescription drugs
- deleted 29d ago[deleted]
- nkurz 29d agoIt's the odd North American English "abbreviation" for a "prescription medicine". Where a "prescription medicine" is one that cannot be bought directly by a consumer and instead requires a medical professional to prescribe it: https://en.wikipedia.org/wiki/Medical_prescription https://en.wikipedia.org/wiki/Medical_prescription
- deleted 29d ago[deleted]
- altcognito 29d agoIt's a standin for "Prescription", but for more details check wikipedia: https://en.wikipedia.org/wiki/Medical_prescription https://en.wikipedia.org/wiki/Medical_prescription (used to be Latin for "Recipe", aka, here's how to make this medicine)
- makosdv 29d agoPrescriptions
- mananaysiempre 29d agoAn ASCII-friendly way to spell ℞, an R with a crossed right leg, shorthand for the Latin singular imperative recipe! “take (the following)!”, which is the conventional start of a prescription; by extension, something necessitating a prescription to buy.
- sfn42 29d agoRight, so if he's right then it would be great if he could do the same thing with actual healthcare right? He'd make even more butt loads of money than he already does, people would get more sensibly priced healthcare, everyone wins. Except the crooked and apparently incompetent existing healthcare execs, who don't deserve to win anyway.
- bluGill 29d agoThe question is can he do more? Or he is already at the limit of what he can oversee and attempts to do more will mean he can't oversee everything and so everything gets worse.
- inanutshellus 29d agoReminds me of the Surgery Center of Oklahoma which cause such a huge news buzz back in 2009ish for publishing packaged pricing. Brilliant move. (And they still do it!)
- adolph 29d agoI remember the Econtalk episode with the co-founder, "Keith Smith on Free Market Health Care" [0] 0. https://www.econtalk.org/keith-smith-on-free-market-health-care/ https://www.econtalk.org/keith-smith-on-free-market-health-c...
- goda90 29d ago> Mr. Cuban argued hospitals often rely on broader accounting methodologies that spread costs across services. Maybe they do this intentionally to avoid insurance refusing to pay for the most expensive but potentially necessary services.
- bluGill 29d agoThere is a real problem. There is a lot of overhead. You can use accounting to hide it in various places, but it still exists. I want a hospital large enough to handle disasters (think tornado destroys a large area), but that means there will be a lot of rooms that the hospital is making payments on but are never used.
- tekla 29d agoIt's funny because you're basically making the argument that it's not solely the insurance providers fault, but also equally the providers (which is what most reputable studies on why American health care is so expensive seems to point to). If a hospital doesn't know what it's own costs are, and are doing creative accounting to hide charges in random places, how the hell is an insurance company supposed to know how much reimbursement makes sense, and if a procedure should be done that costs $10K at this hospital vs $5K at another down the street with seemingly no difference in outcomes. So w/ the creative accounting, which both the provider and the insurance company knows everyone is doing, you get administrative bloat where both sides have massive billing departments dedicated to figuring out each others BS. And this bloat is a hilariously large amount of the reason why costs balloon. Both the providers and insurance companies are aligned in driving up costs. Hospitals probably will never get their act together in knowing actual pricing, but lying about it through creative accounting hurts everyone.
- MattCruikshank 29d ago> they don’t know what a bill of materials is for a hip replacement. Rather than identifying the actual labor, supplies, implants, overhead and other expenses tied to an individual procedure... How often is there a malpractice case for a hip replacement? I'm willing to bet that the costs of a malpractice case can be one, two, three, or even more orders of magnitude higher than all of those other expenses. Dwarfing any of those enumerated costs. Even cases that they win. Of course they're looking at the statistics rather than counting beans.
- tantalor 29d agoYou can do both!
- infecto 29d agoIs that not already baked into the cost of malpractice insurance?
- MattCruikshank 29d agoMy insurance premiums go up on their own. They go up more when I file claims. I'm betting the same is true of hospitals.
- infecto 29d agoOf course, that’s how insurance works. My point was there is no calculating needed. You know the risk for each doctor by their malpractice premium.
- MattCruikshank 29d agoEvery prospectus I've ever read, "Past performance is no guarantee of future results."
- infecto 28d agoNot sure what you are trying to say? Yes past performance of investments is no guarantee of future results. It’s a pretty good gauge among other factors for measuring risk in insurance though. Imperfect yes but pretty darn good. Going back to the original comment, your not wrong that hospitals are thinking about malpractice in cost (or should be) my point was that it should be fairly measurable in the base case and tail cases should be few and covered by other riders or self insurance.
- jqpabc123 29d agohe said that if he bought a hospital, he would operate it like a startup, strip out unnecessary overhead And then he would charge whatever the market would bear in order to maximize return on his investment. "Running it like a business" *is* part of the problem. Health care is not just another business. Once you're in the hospital, it's a little late to go price shopping. And with your life on the line, do you really want to choose the low cost provider?
- seidleroni 29d agoHe didn't charge "whatever the market would bear" for prescription drugs. Also there is obviously a huge difference between urgent/emergency care vs more routine procedures. If you're getting a routine colonoscopy every few years, it may be feasible to shop around.
- jqpabc123 29d agoHe didn't charge "whatever the market would bear" for prescription drugs. His prices are fairly comparable for his limited selection of cheap generics compared to other mail order options. Also, his pricing is cash only --- no insurance. But dispensing drugs is not really comparable to "health care". Running a hospital comes with a lot more unknowns and risk. If he has it all figured out, why hasn't he bought a hospital? Let me guess --- it's not a good investment. If you're getting a routine colonoscopy every few years, it may be feasible to shop around. Have you actually tried this? Most won't give you a fixed price up front because of the potential for things to go wrong.
- mixdup 29d agoThe thing is he'd find a lot of the "unnecessary overhead" is necessary to deal with the payers in the system. You need a massive billing organization to make sure insurance actually pays you. You need a massive compliance organization to make sure Medicare pays you (and that you don't kill your patients and get sued) If you reformed the whole system you could trim a lot of hospital overhead, but it's a systemic problem. More overhead and waste is happening in the insurance companies which is what needs to be cleaned out first, then you can start dealing with providers' overhead that exists to serve the rest of the system
- deleted 29d ago[deleted]
- bluGill 29d agoJust be careful. While hospitals need to do better, a large part of what I want from a hospital is to be over prepared. Just in time is good, for a lot of things, but there needs to be a large buffer of things in inventory at a hospital just in case there is a large disaster. (this is hard - blood expires and people don't like to hear about their donation being wasted even though wasted blood means no doctor had to decide which person didn't get blood for lack of supply)
- mixdup 29d agoIt's not even about inventory of individual items (like blood or enough scalpels) it's that they need to have every expensive machine. They need x-ray machines and MRI machines and proton beam cancer treatment and that stuff adds up very quickly. That's why a trip to the ER for stitches can cost five figures in the US, because a large amount of that bill is covering the hospital's cost to be ready not just for the stitches but also car crashes or mass shooting events or whatever
- lumost 29d agoThen why does the expensive treatment cost 7 figures? Estimating hospital costs is hard, but a quick glance at many buildings/offices would tell you that they are by no means struggling. We overpay for healthcare because we must pay, and it has institutional and natural bottlenecks which restrict availability and choice.
- mixdup 29d agoBecause they are going to allocate as much as they can to that service that is actually using those advanced facilities. The stiches patient in the ER is carrying some load for the cardiac surgery suite just not as much as the person who actually has quadruple bypass. Plus that is just part of it. They're also covering uncompensated costs across the whole system
- bluGill 29d agoEven if you only have stitches you want the ER to have those machines just in case the doctor looks at your injury and says "wait, this isn't the standard routine thing everybody has we need to get you into the expensive machines". Probably this will never happen - the doctor will always look and see the standard routine things that everybody has and you don't need the rest.
- wjnc 29d agoThere is no one way of doing cost attribution. So, at scale, there is no such thing as one perfectly calculated cost per product. Hospitals are outliers compared to more regular firms in that they produce tens of thousands of procedures / products. In the Netherlands we’ve standardized products for billing and negotiation purposes but still most negotiation is on a higher level than price per product. Tl;dr Mr Cuban is right, but I think hospital accounting nears P/NP-level complexity
- josefritzishere 29d agoThis feels like misdirection. My understanding from providers is that insurance underpayment is the cause of price inflation. Ex. They bill $100, get paid $10, so over time they increase the billing to $200 to collect actuals.
- inanutshellus 28d agoCustomer/Doctor/Insurance is the classic blame triangle.
- gumby 28d agoClay Christiansen (the “The Innovator‘s Dilemma”/disruption guy) once pointed out to me that hospitals were subject to the same disruptive pressure that kills successful companies. He gave an example (this was 25 years ago) of heart attacks: people used to get bypasses that needed an entire operating team and weeks of hospitalization. But then angioplasty and stents were invented, a treatment you could get and be home the same day, and that could even be done in outside clinics. But while they handled most cases, the hospital still got the rare but super serious ones. So they had these big expensive facilities and staff but not enough “business” to support it. Just like the steel minimill they lost their cost structure but couldn’t see it as it was happening.