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- Hacker News
- This 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.
- Customer/Doctor/Insurance is the classic blame triangle.
- he 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?
by jqpabc123 - He 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.by seidleroni
- The 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
by mixdup - Maybe Mr. Cuban should put his money where his mouth is and buy a hospitalby sfn42
- He has done a lot for affordability with Cost Plus Drugs.by elo2000
- Well 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.
by cmiles8 - There 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
by wjnc - Reminds 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!)
- I 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-c...
by adolph - > 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.
by goda90 - It'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.
by tekla - There 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.by bluGill
- > 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.
- You can do both!by tantalor
- perhaps, but insurance companies are very good at figuring this out and in turn amortizing the costs out.by bluGill
- They are insured against such risks and with that the insurance costs will be another fixed post on the expense list.by Leonard_of_Q
- Malpractice insurance is less than 1% of revenue for all medical specialties except the one that is dangerous and used routinely.by marbro
- Is that not already baked into the cost of malpractice insurance?by infecto
- There is a financial product known as malpractice insurance in which the outsized cost of a malpractice case is spread out over a risk pool of people with similar risk exposure.
In any case, this cost is not directly part of the "hospital's" cost of service since the surgeon is most often a semi-independent contractor who bills the patient "professional charges" that are separate from the hospital's "technical charges."
by adolph - Another problem is that one hip replacement is not the same as another. Differences in patients, complications arise, it's really hard to say you're going to need exactly X syringes and Y feet of gauze and Z liters of blood and which and how much of certain drugs for anesthesia, not to mention with procedures that involve prosthetics you may need multiple on hand, the first one you pick may not fit so you need to go to the second one but you have burned that first one
Finance guys think you're going to turn hospitals into walmart and make it up on ruthless efficiency and volume but it's not that kind of business. There's so much unknown going into any one situation that it makes this "transparency" hard to do. Plus, people want the best and whatever they need to survive so the "consumer" doesn't want transparency
And then you layer on top the huge amount of uncompensated costs from uninsured and denied coverage. It's why a single national payer system actually makes sense, if you can keep the fraud from running amok. We really should just pay for outcomes and spread the actual cost over the entire system
by mixdup - Just 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)by bluGill
- To make it more concrete: the lack of hospital capacity is one of the major reasons why COVID lockdowns lasted for so long after vaccines were available. Hospital capacity numbers were what politicians and bureaucrats were watching to determine when and how to ease lockdowns. If we had more excess hospital capacity, the lockdowns would have ended sooner.
When hospitals routinely operate at 120% and a major crisis doubles what we ask of them, people don't get the treatment they need.
I'm sure most of us have stories of friends or relations who needed hospital care during COVID and received less care than they normally would have received outside of the crisis.
by bryanlarsen - The costs of “hospital overpreparedness” should still be clearly understood (and should probably be funded by taxpayers and not by people who need elective procedures).by jt2190
- It'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 whateverby mixdup
- Clay 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.
by gumby