They are ill discoverers that think there is no land, when they can see nothing but sea. (Sir Francis Bacon)
From Medical Coding and Billing, via Barry Ritholtz and Tim O’Reilly:
Original here; Part One here.
The authors really missed the reality of the situation within the healthcare industry.
Hospital charges are so high because, on average, most hospitals receive payment at around 30%-35% of their charges from insurance and government payers. Knowing this, charges are inflated to unrealistic numbers. This is just a game played by the insurers having to feel like they are getting a deal and the hospitals needing to make money. Unfortunately, the patients without coverage suffer.
Treating patients on an outpatient basis is almost always cheaper for the patient, insurance and provider. Yes the providers get a higher margin because they are not having to provide continued care in an inpatient setting, but if you look at reimbursement, outpatient procedures cost insurers and patients less and yeild higher returns for hospitals. The authors did not mention the fact that many procedures that used to be highly invasive with lengthy recoveries are now completed in outpatient settings with much quicker recovery times. Finally, every year Medicare is mandating more and more procedures be performed and billed on an outpatient basis due to reduced costs and improved clinical outcomes for patients.
Another big piece the authors glanced over is the administrative costs and inefficiencies due to poor or no technology supports. Electronic health records are a good start, but payers are just going to start using those to have greater visibility to the service provided in attempts to deny more procedures, which will keep admin costs high. Many more technological advances are need to reduce paper work, managed patient flow and turnover more effectively and track clinical outcomes even after a patient is discharged.
Finally, the healthcare system is controlled and driven by the insurance companies (who are making billions) while the providers are often handcuffed and struggling to break even. This is counterintuitive as the people providing care have to run lean to survive while the insurance companies hedge risks through actuarial analysis to pad their pockets. Say what you want about physician pay, but no one seems to care that insurance company execs make millions often based on denying access to care for the patients they are supposed to be providing for. The introduction to medical loss ratio standards is a good start, but even that only partially protects patients and does nothing to address the issues with the relationships between the providers and the insurers.
The authors hit the areas where costs are high without actually addressing the underlying issues driving those. The initial myths dispelled are somewhat compelling, but their “angelic truths” are merely financial and media views of the healthcare landscape from people on the outside looking in.
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