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RIP off in healthcare

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ggmon
2/21/13 12:42 PM
A nice read to know why healthcare is so costly.
Am I the only feeling that its a RIP off and there is no law to prevent such exorbitant price.

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bi...

Few excerpts
$283.00 for chest x-ray where as medicare would only pay $21
$15,000 for blood test . Medicare would pay only few hundred

"We spend two or three times that much on durable medical devices like canes and wheelchairs, in part because a heavily lobbied Congress forces Medicare to pay 25% to 75% more for this equipment than it would cost at WalMart."
WikiPost
2/21/13 12:43 PM
NorthStar2020
2/21/13 12:58 PM
Medicare, how much ever anybody hates it is one of the most efficient organizations in the world with just 2-3% overhead costs, operating at a gigantic scale.
We should target for Medicare prices, not hospital prices and not insurance negotiated prices.
MilleniumBuc
2/21/13 1:03 PM
Wow. No wonder we are screwed. The sad reality from the following 2 paragraphs:

"Recchi’s bill and six others examined line by line for this article offer a closeup window into what happens when powerless buyers — whether they are people like Recchi or big health-insurance companies — meet sellers in what is the ultimate seller’s market."

"... the American health care market has transformed tax-exempt “nonprofit” hospitals into the towns’ most profitable businesses and largest employers, often presided over by the regions’ most richly compensated executives."



Might as well say it. Healthcare (Profit and Non-for-Profit) will push the price as high as you can for a very simple proposition: How much are you willing to pay to live without pain - or even further - to remain alive. I support capitalism, supply and demand, but there is a line that has to be drawn on the price of lives.
dshibb
2/21/13 1:13 PM
NorthStar2020 said:   

Medicare, how much ever anybody hates it is one of the most efficient organizations in the world with just 2-3% overhead costs, operating at a gigantic scale.
We should target for Medicare prices, not hospital prices and not insurance negotiated prices.



I don't consider low overhead a big achievement when it's probably the single most defrauded entity on earth. The value of the estimated fake transactions is staggeringly high in the 10s of billions of dollars a year.

Once you add that to the cost of Medicare 'overhead' you get a very different percentage. Furthermore, once you compare that to an insurance carriers overhead(which admittedly is also high in waste) who has a fraction of the fraudulent claims you get a very different picture.
dshibb
2/21/13 1:30 PM
ggmon said:   

A nice read to know why healthcare is so costly.
Am I the only feeling that its a RIP off and there is no law to prevent such exorbitant price.

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bi...

Few excerpts
$283.00 for chest x-ray where as medicare would only pay $21
$15,000 for blood test . Medicare would pay only few hundred

"We spend two or three times that much on durable medical devices like canes and wheelchairs, in part because a heavily lobbied Congress forces Medicare to pay 25% to 75% more for this equipment than it would cost at WalMart."



There would be no way for a medical provider to charge $15,000 for a blood test if the price was shared prior to it being performed and people didn't have a 3rd party pay for practically all of it which causes people to not care about the price.

Also, for almost all of Medicare reimbursements the price is set at a positive percentage to contribution margin and a way negative to profit margin. What that means is that let's say for x procedure I need y widget/service/etc. Y costs me $100k and is a fixed cost. I then estimate that I'll get 100 x procedures out of that over it's useful life. That means before taking into account any other costs associated with x procedure I need to at least average $1,000 per x procedure just towards paying for y. Now let's say some entity comes along representing 30 of those procedures and says, "We can only give you $300 towards that machine". Now, since the cost is already sunk you still don't refuse the payment you just have to shift a higher contribution margin onto the remaining 70 people. 30*$300=$9000. That means that the remaining 70 need to make up for the other $91,000 in cost. $91,000/70= $1300 each. Now had all 100 people been under that same umbrella organization and the price was set at $300 a person in contribution margin towards y than the y would never be bought and no one would receive the procedure because $300*100=$30,000 way less than the cost of acquiring y.

That my friends is basic cost shifting accounting 101. It's no different than airlines trying to charge business traveler flights more than for pleasure travelers to make up for their losses except in healthcare it's much, much worse.
dshibb
2/21/13 1:36 PM
MilleniumBuc said:   

Wow. No wonder we are screwed. The sad reality from the following 2 paragraphs:

"Recchi’s bill and six others examined line by line for this article offer a closeup window into what happens when powerless buyers — whether they are people like Recchi or big health-insurance companies — meet sellers in what is the ultimate seller’s market."

"... the American health care market has transformed tax-exempt “nonprofit” hospitals into the towns’ most profitable businesses and largest employers, often presided over by the regions’ most richly compensated executives."



Might as well say it. Healthcare (Profit and Non-for-Profit) will push the price as high as you can for a very simple proposition: How much are you willing to pay to live without pain - or even further - to remain alive. I support capitalism, supply and demand, but there is a line that has to be drawn on the price of lives.



That is just blatantly incorrect. My sister has worked high up in exclusively hospital healthcare consulting for the last decade. Hospital balance sheets are among the most disgustingly bad wastelands you've ever seen. Most of them have been forced into all kinds of cost shifting, staff reductions, cost increases, etc. to stay afloat.

I mean seriously think about it straight for a second. Do you really believe that a $15,000 cost for a blood test at a non profit hospital(where a substantial portion of it's funds likely come from rich benefactors who donate annually) is done out of greed or out of desperation?
cristinaaaron
2/21/13 1:44 PM
There is so much fraud in medicare that they justify the reimbursement rates.

There is no way that it is possible the true cost of a chest xray is $21 when the process normally involves 30min of time for an xray technician with a loaded salary of $80k/year ($50k pay + $30k benefits), cost for device time, facility cost, and billing cost. The only way this reimbursement rate is feasible is if a high percentage of claims are fraudulent (which they are).

Sure, the normal cost for these procedures is inflated, but the medicare cost is artificially low because a huge percentage of procedures which medicare pays are in actuality not done.
dshibb
2/21/13 1:52 PM
cristinaaaron said:   

There is so much fraud in medicare that they justify the reimbursement rates.

There is no way that it is possible the true cost of a chest xray is $21 when the process normally involves 30min of time for an xray technician with a loaded salary of $80k/year ($50k pay + $30k benefits), cost for device time, facility cost, and billing cost. The only way this reimbursement rate is feasible is if a high percentage of claims are fraudulent (which they are).

Sure, the normal cost for these procedures is inflated, but the medicare cost is artificially low because a huge percentage of procedures which medicare pays are in actuality not done.



But don't tell that to the people that buy into the unbelievable bull$hit that Medicare prices are true prices of healthcare. They just want to ignore that so they can prefer to think bitterly that the difference is all greedy people screwing them.
stanolshefski
2/21/13 1:54 PM
dshibb said:   

NorthStar2020 said:   

Medicare, how much ever anybody hates it is one of the most efficient organizations in the world with just 2-3% overhead costs, operating at a gigantic scale.
We should target for Medicare prices, not hospital prices and not insurance negotiated prices.



I don't consider low overhead a big achievement when it's probably the single most defrauded entity on earth. The value of the estimated fake transactions is staggeringly high in the 10s of billions of dollars a year.

Once you add that to the cost of Medicare 'overhead' you get a very different percentage. Furthermore, once you compare that to an insurance carriers overhead(which admittedly is also high in waste) who has a fraction of the fraudulent claims you get a very different picture.



Medicare also doesn't even cover the cost of many medical procedures, so the rest of us not on a government health care plan have to pay higher rates.
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