Most hospitals run at profit margins well below 10%. Median operating margins are in the vicinity of 2% (https://www.modernhealthcare.com/providers/operating-margins...) And for the last few years, expenses have been growing faster than revenues (though the rate of growth of expenses has slowed.)

Whatever you imagine they're bringing in, they're not.

Nor is their job to maintain the long-term health of the country. That's literally the government's job.

[1] Those numbers have a historical reason behind them, which people are either ignorant of or choose to ignore. The short version is: hospital prices are set as a part of the negotiations with insurers. Insurers account for the vast, vast majority of dollars going into hospitals, so their business operations are built completely and entirely around insurance dollars. Uninsured patients register as barely more than a rounding error. So while, yes, being uninsured in this context sucks, hospitals aren't gleefully rubbing their hands and going "muahaha, $5K for stitches!" They don't expect to see that 5K, they don't rely on that 5K, and they're not trying to gouge that uninsured person who's almost certainly not good for that 5K. That person has just fallen into the crack(s) in our healthcare system, which are more complicated than "evil greedy hospital", or "evil greedy insurer."

No, it isn't. It's everybody's job. The government is a tool we use to delegate certain aspects of that job--and often it's a very bad tool to use and we should be relying on it less, not more. The idea that "it's the government's job" to do things causes all kinds of problems, because people think they can just let the government take care of it and not have to worry about it any more. You can't do that. Ultimately it is we, the people, who are responsible.

What a bizarre position. This distributed approach to the emergency health of nations hasn't worked out well in the current situation.

I can't see how it would suddenly start working better in the future under our current economic system either. Everything is set up under economic pressures such that inefficiencies are ruthlessly exposed and eliminated.

This maybe works out OK for creating new generations of electronic gizmos but it is catastrophically fragile for things like PPE as described in the article.

To avoid something like this in the future, the only options I can see are more government control or rethink how economic systems work.

I don't see how it's bizarre to recognize what the US Constitution says.

> This distributed approach to the emergency health of nations hasn't worked out well in the current situation.

In the US at least, what hasn't worked is waiting for centralized authorities to tell people what to do, instead of just doing obvious common sense things like social distancing and wearing masks. Not to mention allowing the FDA to prevent state and local health authorities from taking obvious common sense measures to develop tests, either on their own or in cooperation with private labs, when it was clear that the FDA and CDC didn't have tests ready.

> more government control

Would be a bad idea, since the more centralized authority controls things, the worse the consequences are when the centralized authority makes a mistake.

> rethink how economic systems work

What you call the "catastrophically fragile" economic system is a product of government control. So again more government control seems like a bad idea.

E.g., I had my vocal cords looked at; took only ~1/2 hour of an ENTs time, and is a (somewhat) common and non-risky procedure. $4,000. I have no way to justify that price — I highly doubt the ENT is making $8k/hr! It was one of the big reasons that drove me away from PPOs in general: completely opaque, expensive, retroactive billing. Going to the doctors puts you on the hook for near unlimited liability.

Now, Kaiser was a nice contrast; I had the opportunity to get my wrist operated on for RSI. Somewhat invasive, would require weeks of healing, not guaranteed to be successful (it had a ~50% success rate!): $300, priced out before the operation.

(Sadly, I'm no longer with Kaiser, as they were west-coast and the rent was too high.)

> As the drug industry has come back down to earth, the returns of the 46 middlemen on the list have soared. Fifteen years ago they accounted for a fifth of industry profits; now their share is 41%.

An example of a middleman firm is Express Scripts (a prescription management / negotiation firm) which had an operating income of $5B in 2017 on revenues of $100B. The parent company Cigna (NYSE:CI) handles a broader array of insurance things and had an operating income of almost $10B in the last twelve months but on revenue of $160B.

Medical billing in this country is insane and full of inefficiency. A little bit of each part gets collected along the way, and it adds up. I don’t even think ExpressScripts would have been counted in the methodology that The Economist was using (excess profits are considered a >10% return on capital) as part of Cigna.

[1] https://www.google.com/amp/s/amp.economist.com/business/2018...

https://www.kff.org/other/state-indicator/hospitals-by-owner...

“Profit” and “income” are two entirely different things. All businesses, whether for-profit or non-profit, aim to generate income (i.e make money) so they can further their goals.

Profit is when you take that income and distribute it to shareholders. The main difference between for-profit and non-profit companies is that non-profits cannot do this.

The distinction of “non-profit” means a lot less than most people assume it does.

Basically it's hard to reconcile the fact that hospitals are "non-profit" while also charging what seems excessively for everything.

I haven't looked through financial statements of one of these hospitals, but does anyone else have any experience with doing so and do they actually see that hospitals do need to charge those enormous amounts for everything to run effectively or to survive?

Non-profit does not mean volunteer. It doesn't mean they don't make money. It never has. Non-profits are businesses. They operate like businesses. Any impression you had that they do anything differently is a misconception.

It is common for people to equate the word "profit" with "making money", and therefore mistakenly assume that "non-profit" must mean they don't make money. But the word here is specifically referring to the ownership of the organizations net-assets: all assets belong to the business itself, rather than it being the equity of shareholders.

Non-profit only means that the company must use it's property for its own organizational goals, and it does not have owners that the property can be distributed to.

> I haven't looked through financial statements of one of these hospitals, but does anyone else have any experience with doing so and do they actually see that hospitals do need to charge those enormous amounts for everything to run effectively or to survive?

From a link someone else posted elsewhere in the comments:

> Median operating margins reached 1.7% in 2018

https://www.modernhealthcare.com/providers/operating-margins...

If you have the procedure codes that were billed you can likely look up the Medicare reimbursement rates for them. Private insurance would pay more than that, but not orders of magnitude more.

He billed 4K. The contracted rate he got from an insurer is significantly below that. A huge chunk of that disappeared to malpractice insurance before he got to paying the rest of his overhead.

He saw, as another poster said, maybe 15% of that.

Have you seen the lavishness of the modern US hospital? The art pieces, high vaulted ceilings on every floor, solariums, gardens, decorative architecture... These things are not free. They are very, very expensive! And at the same time, they are fucking worthless in regards to making people healthy. I pay my insurance because I want to be healthy, not so the hospital I go to looks pretty. They are marketing machines that live outside their means, and I should not owe them $5k for stitches. It's fucking insane, and it's greed to use those massive markups on people who are in life or death situations. It's equivalent to wartime profiteering.

Check-in with security: Yes, because this is 'Merica and it has actually become necessary to do a preliminary screen to make sure you are not a raving nutjob.

Check-in with receptionist: Enter you into the system, until this point is hit you are not even at the hospital as far as the system is concerned.

Talk to nurse assistant: No, this is not just an assistant for a nurse, but rather a term used to describe someone who has a particular level of training and commensurate duties. A CNA can take vitals, ensure that they have the proper records for you (e.g. records say vi is a 45 year-old white male and we have a 60 year-old Latina, maybe we need to double-check things.) This is also the first real step in the triage process where someone with medical background can make a quick decision as to whether or not you need to be seen quickly or can wait.

Talk to nurse: Ok, now we actually start doing more fine-grained examination and diagnosis. Chances are this is where the real diagnosis and treatment was decided, but you don't need to know this.

Talk to doctor: Now someone who is very busy will take a few moments to examine you and make a decision. The nurse you talked to earlier put markup on your chart indicating what she noticed and found as well as possible standard treatments for same so the doctor was able to confirm that it was horses and not zebras and then sign off on the treatment.

In a hospital all of that process you think of as inefficient does not give a shit about you or your time, it is trying to maximize the value and impact of the time that really matters in a hospital: the attention of doctors and RNs. The process may have been inconvenient for you, but it means that the people who matter at that hospital only spend their time where it is needed and trivial tasks or downtime are handled elsewhere in the process.

Evil greedy medical industrial complex?

I think most of the issues in the US medical situation come from everyone trying to profit as much as possible.

We're suggesting the hospital giving him 1 dollar per mask instead of 10 cents during the crisis, that's an extra 90. 98 cents compared to the Chinese prices.

I guess my proposal makes it a bit less. With the 10 year contract, assuming that the demand spike only exists in the first year, it would be an extra 90 cents - savings of (9 years * 2 cents / year) = 72 cents per mask. This could be "fixed" by extending that contract for a few more years.

$1 is an absolute bargain.

$0.10 is vastly below the cost of manufacture and only being promoted by people who mean harm.

https://www.youtube.com/watch?v=VGDUqBLtyNM

DIY can save money. I've used superglue for this in the past.

Search for “tissue adhesive” or “liquid bandage”.

The difference between you and a doctor for little things like stitches that causes the $5k price tag is a couple of hours of study, credentialism, beurocracy and malpractice insurance. Only the couple of hours study is actually needed and you can do that yourself pretty easily with the internet.

I seriously can't believe I have to say this.

With the Healthcare situation in the US, it's basically past the point of just saying "go to a doctor, don't diy." Now it's just better to give out accurate information for diy people to do it safely.

And it’s somewhat how it’s still is in some fields of it primarily cosmetic, elective surgery (including LASIC and the likes) and dentistry.

There are plenty of countries where the majority of the health care is provided by private firms even if the state picks up the bill or part of it including almost all countries with universal healthcare.

The US is pretty much unique in costs and distribution of burden and it’s not because of the free market approach to healthcare.

When 9 out of the 10 most profitable hospitals in US aren’t even private/for profit you can’t simply claim that the investment firm or HMO that owns the hospital tries to suck out as much profit as possible for their shareholders.

P.S. I don’t agree that regulations are the problem anyone who thinks that you somehow would get better results with deregulating healthcare is likely very wrong, the entire system in the US is however broken and not because of simply campitalism.

Stitches are very easy to administer. Nobody needs a uni degree to stitch up a wound. They need lots of practice.

It is impossible for a reasonably free market to charge $5,000 for 3 stitches; because an independent doctor would set up next door with a sign saying "Stitches; $4,500!" and drive home in his Lamborghini every day. The hospital and the independent doctor would then start undercutting each other until the margins were no longer outrageous and they have to think a bit before dropping their prices any further.

If a hospital can get away with charging $5k for 3 stitches, any market freedom has long ago been exorcised.

How exactly do you measure the profit of a non-profit?

Non-profit is a misnomer - not for profit is a more apt phrase. While they can't operate with the intent of generating profit, they're perfectly allowed to actually generate profit from various activities. With the intention that the profits from that activity will be a revenue stream that funds loss-making activities elsewhere which support their nonprofit mission (such as issuing grants). Hence it's kept on the books as net assets.

[1] https://smallbusiness.chron.com/non-profit-accounting-defini...

They have to reinvest their profits back into the business that can be grants but can also be increasing pay to their staff or expanding their operation.

Two thirds of US hospitals are NFP (public, community, university etc) or government hospitals.

Ironically the more money they make and the bigger they are the higher prices they tend to charge because they can negotiate higher rates with the insurance providers.

The US system is simply broken the US healthcare has a huge problem with uncompensated care which is one of the primary reasons why most hospitals lose money on primary care.

This means that hospitals are “forced” to extract as much money as possible form insurers so your healthcare costs do not only incorporate the risks of all policy holders for your specific provider but also the uncompensated care costs of the hospitals.

The insurers then extract as much money as they can from their clients which primarily are business which don’t seem to care that much as they can often write of much of that cost as operating expenses.

This pretty much causes a cycle of inflation that is unsustainable under normal circumstances and will utterly brake the entire systems under extremes like the current pandemic.

Also that kind of emergency care is quite rare. It's a very small part of the healthcare system and mostly confuses the discussion.

> Because that would be the worst imaginable PR.

You're wrong. "Bad PR" has not worked at all to encourage the healthcare industry to fix medical billing on its own. See this article for an example:

https://www.nytimes.com/2017/03/29/magazine/those-indecipher...

It's literally impossible to comparison shop healthcare, and I've tried. You can't properly diagnose yourself, for the same reason a doctor can't properly debug your code. You have no idea how treatment is going to be coded (and you'd have to be an expert to understand the codes and their implications, anyway). Hospitals will only tell you their inflated "list prices." Your insurance won't tell you anything about what they've negotiated with the hospitals in your area until you've been billed, since they consider that information proprietary.

Most healthcare is to solve real health problems (from mild to extremely serious). People won't decide to live with those problems unless they're forced to, so they can't opt out of the system until it's fixed.

Indeed this is true.

The solution to this, though, is to make it required for hospitals to post their prices, as well as to make it illegal for hospitals to give preferential rates to insurance deals.

But not trivial to implement correctly. What exactly is the menu of procedures, and who standardizes (and updates) it? It would be much harder to comparison shop if there were a million entries (and every hospital offers a subset). Can hospitals select their patients, e.g. post great prices & outcomes by only accepting patients under 50 (or just with few other health issues)?

If you have time to listen to the podcast, it can be very eyeopening.

Huh?

The question I answered was about "people who are literally passed out and bleeding out on stretchers to price shop"

I agree that medical billing is a corrupt disaster.

If they can do it, why the fuck can't doctors do the same? The system is so obviously rotten.

It took years to find that almost every facility nearby does the tests he orders for no copay at all. But Beth-Israel doesn't see a problem with charging literally over a hundred dollars after insurance for a blood draw.

I guess a very big and very evil problem for another time, but our health care system is a house of cards.

No one hates their food stores that I'm aware of, even though that demand is at least as inelastic as for healthcare.

Also, I would like to point out that the vast majority of medical issues are not emergencies.

Maybe there is a reasonable argument that ambulances, and emergency rooms should be highly regulated. But, fortunately, the vast majority of medical issues do not involve going to an emergency room.

Before the government got heavily involved in healthcare in the 1960s, healthcare was cheap.

Edit: requested cite: https://www.thebalance.com/causes-of-rising-healthcare-costs...

Feel free to make a moral case against Reagan's decision if you feel like it.

I bought a 383 big block engine for my dodge, and a friend of mine was helping me move it into the garage. I tripped and fell on top of the block, making quite a gash in my eye socket. Lucky I missed my eye. Still have a scar! Sadly, the block turned out to have a crack in it and was not salvageable.

That's still more than most Americans could easily afford. And that's for stitches.

Healthcare was cheaper before Reagan interfered in the health care industry to artificially inflate costs to the financial benefit of his buddies.

That's just one.

EDIT: There are also separate osteopathic graduate schools and foreign med schools (Caribbean) that aren't limited by the AMA and still funnel thru the same match program.

I had a few of my undergrad bio and chem labs with a Vietnamese doctor who came to the US, I always tried to be in his group whenever possible because he had the most insight into the Industry as a result of his transition.

Apparently, because he was educated and practiced in Vietnam he was forced to have to repeat the entire process to enroll into Medical school. I'm not sure if was on loans or doing it on his own, but he must of have been determined to make it happen, because I'd probably do the same as your colleague if forced to do it all again.

He was an older guy, I was 18 or 19 so anything over 25 was 'old' to me but I think he was in his 30s while we were in our 2nd year courses.

With all of the polemics surrounding COVID19, I think the least we should do is take away the power of the AMA-like Institution to determine how many medical students can be enrolled into any program and make any necessary accommodations to ensure it happens.

Making the current medical staff do the equivalent of an understaffed, under supplied death march has to make reason prevail regardless of our stance.

Private and Public medicine is an issue to come back to, but being short staffed in a pandemic is suicidal--Italy recalling retired medical staff was alarming, but also highlighting that a Public Medical system is not yielding the panacea many suggest, either.

And for anyone asking for a source on the AMA's practices look at his, I remember reading this in 2005 as I was in school, and being schooled and trained as if I wanted to take MCAT because of the looming shortages caused by retiring boomers, even though I had no interest in Medicine:

https://usatoday30.usatoday.com/news/health/2005-03-02-docto...

"Competition and Monopoly in Medical Care" by Frech

https://www.amazon.com/Competition-Monopoly-Medical-Care-Fre...

(I'm pretty sure that's not what the person you were replying to is going for - but it is a very problematic piece of the regulatory environment which is unique to hospitals)

The attachment of medical insurance to employment is another.

If you don't already know at least a few of these, you're probably a student or not interested.

Nobody knows all the regulations, and asking for a list seems a bit clueless.

What's clueless is to use the word "regulations" like it's some incantation.

Healthcare is heavily regulated because medical care is not usually something you can restitute after the fact. If you sell me a defective widget my life doesn't depend on I can get my money back or sue you to get it back. If a doctor sticks a defective medical widget in my body and I die, I can't really do much about it afterwards.

I'd prefer that doctor's certifications have some sort of regulatory oversight. I'd also like medical widgets to be regulated so there's stringent QA and manufacturing process qualifications.

Couldn't we say the same thing about the owner of this factory? He could gear up and then pay unemployment for laid-off workers after the crisis ends; he did it once.

I am also not a fan of our health-care system, but...it's complicated.