A Pioneer in 'Flat-Fee Primary Care' Had to Close Its Clinics
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I had a long discussion with him about what he had seen. He made the statement that every company that he saw would increase their prices for any product that was being sold into health care by at least a factor of 10 over what they would sell the same product for to non-health care areas.
I, myself, have had other conversations with various people (in both drug companies and medical institutions) and it has been common for comments to be made as to the vast difference between drug production costs and the final retail sale prices (even taking into consideration all the development costs, I have seen some of these figures and they are, well ....).
Health care is as exorbitantly priced as legal consultations and representation and the value received is in many ways far less than what you would receive by going to Macca's.
In healthcare, though, how much people are willing to pay for a product is anything, if it's the one thing they need to stay alive, or to reduce chronic pain, etc.
Being intended for use on or inside a human body, we have higher expectations in quality and consistency. Unfortunately, these certifications can make the barrier to entry too high for good competition. Or they're locked into a supplier for whatever reason.
The problem with healthcare is the opposite: there is no free market and it's impossible to compete without huge investment and even then it's sometimes still impossible (patents, long approval periods etc.).
The problem is for sure not simple but a lot of basic healthcare services could be a lot cheaper if it was easier to get in.
2. Have you or someone you know in the United States ever "shopped around" or otherwise prepared in advance for an emergency through the provision of, say, catastrophic health care insurance, which promises to pay for emergency room visits? (Employer coverage can count here.)
To the extent that (1) is a small number, this question is a non sequitor. To the extent that (2) is large, even that small number is further mitigated.
There are lots of arguments about why it might be better to structure health care as a centrally-planned activity instead of a market-based activity. This isn't one of the good ones.
If just you're counting all issues it's obviously quite few. If you're weighting by potential costs then it's very high. Basically the more expensive and necessary a procedure is the less chance you have to shop around.
If I was to break down the costs of all medical procedures I've had over the past 30 years I'd say that almost all of it would be taken up by a single series of emergency surgeries.
Healthcare costs across the board - except in unregulated, uninsured spheres like plastic surgery, lasik, etc. - are extraordinarily high.
Therefore a free market system is feasible for everything else. Not that it's what we currently have as you point out.
Do you think (or the average person) knows enough to shop around? This stuff is complicated! I'm not sure I could make a rational decision between treatments that have different prices, but also different likelihoods of success, side effect profiles, and all that. This is even more complicated when you're paying for a diagnosis too, rather than just a treatment.
Lasik and plastic surgery are interesting because they're essentially commodities and the patient can easily evaluate the results themselves.
Do I think that education surrounding general health has diminished. I feel very strongly about this. There should not be as large of a chasm between my knowledge or ability to diagnose (i.e. is something serious enough to go to the doctor for) and the knowledge of a doctor/PA etc.
But yes, the average person deals with market economics every day and they're certainly smart enough to make decisions there.
> Lasik and plastic surgery
So are office visits, annuals, screenings, minor procedures (think stitches to Tonsillectomy). I.e. the bulk of medical service.
Doctors don't know prices. Typically, front-office staff won't know prices until they've talked to your insurance company. It's probably not possible to get prices from your insurance company except in the context of a very specific claim, which can only come from the doctor's office or hospital's office staff. A small difference in coding for the same issue/procedure can result in huge cost differences.
It might be possible to shop around for prices on particular surgical procedures (eg), but only after you've paid an unpredictable amount for diagnosis. And you may have to pay twice for diagnosis to make this possible.
Maybe the thing to do is to start treating insurance-hospital networks that do not disclose pricing as collusion. It certainly makes no sense to me that our system has individual patients having adversarial dealings with 2 huge institutions every time they need care.
100%, in theory at least.
See I'm vaguely poor--18421 before taxes last year, currently about 5000 before taxes this year--which means I can't afford to go see a doctor because "I'm not sure but I think this is more than a sprain", "that's weird this lymph node has just swollen to thrice it's normal size over night" or "hmm this is definitely infected"[1]. In fact anything that isn't 0-copay, which isn't much because I can't afford swanky insurance, is basically out of reach. ALSO because I'm 31 and spent my adult life insurance-less I have almost literally no idea how to even get myself care if I could afford it (I mean what do you just throw a dart at a phone book? walk into a hospital and keep asking nurses questions?)
As a result any[2] health care I receive is going to be a result of some one else calling an ambulance for me. Which will leave me in exactly no state to be comparison shopping.
[1]true stories
[2]well I did manage to get on some anti depressents and counseling last year by crying at the good people at my student health center for an hour or so, only after some one pointed out that generics for chronic conditions are covered by my insurance (a fact which does not actually appear in the policy packet but is only mentioned in small print on a PDF comparing the different plans) and the first month of counseling being covered by my student activity fees.
Every other developed nation has less of a free market in health care than the United States, and every other developed nation seems to do better on this front than the United States does.
It could well be that you're right, but the examples of other nations make this an extraordinary claim requiring extraordinary evidence.
Or we could just stop experimenting on our vulnerable populace and just choose a system that works better and adopt that. It may not be perfect, but perfect is the enemy of the good.
Generally what you're referring to is government run healthcare. This isn't "less" free market, it is no free market, (at least for the non-rich). So it's in a different realm.
I can agree that this like infant mortality is much better in a lot of countries. But this doesn't change the the U.S. pretends to have a "market" for medical services when the prices aren't set by government but only by providers and insurance companies. The people who are required to make free markets work, the consumers, have very little power in negotiation. Hence, it's not a free market.
Apples, oranges.
But the free market that we should have will likely never exist given political pressure. Single payer it is.
Nope. It's not government run in a number of those countries. Although I do not mean to include them in my comment, but even Canada's health care industry is not government run.
And Canada does on a large scale what Medicare does in the U.S. it is a single point of negotiation. This may be good or bad depending on how well medicare is run.
Many are saying that medicare should just be expanded to cover all people, prices should go down.
No, it's not; this is evident from all the other countries without free markets in healthcare that provide universal access and equal or better overall outcomes and far less cost (per capita, and even as a share of GDP) than the US, without anything more of a “free market”.
We're just kind of stuck in a local maximum in a poor area of the search space. In order to see a much better maximum, we'd have to move to an entirely different area of the search space.
No; a free market has been _proved_ to be good at providing healthcare in the US. What you folks have now is an utterly corrupt cartel.
Any elective procedure. If I want to get laser eye surgery done, the price has dropped to 1/10th of what it was when the procedure first debuted. Likewise for common plastic surgeries.
Dental care is also interesting, there is actual competition for many cosmetic procedures, although there is of course a price floor, Dentists compete based on reputation and presentations of previous quality work to justify higher prices.
Same thing for eye glasses. Eye glasses range from $50 to $500, insurance distorts this a little bit, but the market is generally quite competitive. If you want hand made frames from a local artists, they are as available as $50 mass produced frames. Likewise many lens materials exist, from $20 plastic lens all the way up to $300+ fancy coated materials with some really cool properties (oleophobic lens coatings!).
There is also an interesting market for customer requested lab work. If I want to get basic blood work done, I can walk into clinics that specialize in it and request blood work for a fraction of the price my doctor can order it at!
Finally DNA testing is another example where an incredibly complex technological process can now be, quite literally, ordered off of Amazon, and mailed off to a processing center.
Meanwhile if I break a toe, I get a giant rubber flat sandal from the doctor that is billed at $200, that same boot can be ordered online for under $30!
Negotiation is easier when you have some time to negotiate. Most do.
Naturally, it's sold to the public as 'safety' or other BS.
When people are totally removed from the cost, people aren't being exploited. Removing people from the cost increases the cost.
Law, politics, and economics are hard, and they sometimes involve considering multiple factors. We shouldn't allow ourselves to be goaded into an unprincipled anti-intellectual stance by people trying to expedite their own solution.
Everyone agrees that the economics of health care in the US are bad. I don't know anyone who is happy with this state of affairs. Everyone feels like the other parties are out to screw them. Docs feel that they get fleeced by facilities and insurers, insurers feel that they get fleeced by beneficiaries and providers, etc. I had a medical device manufacturer as a client for a while and they too felt that the industry was unfair to them and that they had to set high prices to try to survive.
With so many people in the U.S. receiving their care on differing bases, it's hard to really get a single, strongly-motivated group to coalesce and push some real change through. Every employer negotiates their own contracts; some are good and some are bad, depending on how much your employer cares about benefits and such. Some people have state-provided care through Medicare or Medicaid. Others have to pay private (which is where things get really bad).
With everyone's experiences on such a deeply personal issue differing so widely, unification is difficult. Mix in a little political brou-ha-ha and it becomes nearly impossible. I'm sure that fracturing is part of the game by the insidious elements that lie underneath the covers, but it is a reality we must recognize and address legitimately.
On top of that, medicine is one of the largest industries in the U.S., and changes to that structure threaten to disrupt the employment of many people. There is no surer way to get a political position dismantled (and its elected purveyors destroyed in the next election cycle) than to threaten the livelihoods of a meaningful portion of the constituency.
Changes to the regulatory structures impacting all of this should be carefully considered, and I would hope that we at least run them through the "intellectual paces", as it were. Let's not jump on each other's backs with silly accusations for not acquiescing quickly enough.
> which happened from union demands
Explain????
And with all that we have a shortage of doctors in the US.
So, supply, demand, cost, working lifetime to make up those costs, hours, volume of paperwork to deal with insurance, even more for Medicaid, malpractice insurance and now the shift to EMR.
Doctors pay is the most justified thing in the medical industry. Until we have an excess supply of doctors that isn't going to change.
The other costs in medical are where the story really is.
> Explain????
Company provided health care became a standard thing from union demands years ago. Never allowing individuals to tax deduct insurance costs removed insurance from the consumer market, purchased for millions of people without any choice from the employees about who provides it and this became the primary mechanism for paying for health care.
Individuals are 2 steps removed from the costs of care, so what do they care if a hospital stay cost $30,000 if $29,000 is covered?
That's how your costs rise. Medical costs haven't been even remotely participating in the free market for decades.
Similarly that that the mechanics of surgery aren't considered a manual skill practicable in a largely assembly line fashion.
Apparently, everyone gets artisanal health care, regardless of the level of complication (or not) of their condition.
Nothing wrong with doctors at all, but curious that this field above all others is so resistant to the methods of industry which have worked so well to reduce costs in every other field.
Because biology is complicated.
And increasingly, first contact will not be with an MD or DO (there's several paths, nurse practitioners, physicians assistants, etc).
Also, improved outcomes (due to fewer errors) also improve costs, as patients won't have to come back due to complications as often.
If a school opened up with the goal of training people to diagnose and treat cold and flu symptoms, so that the graduates could diagnose those symptoms and their severity, then recommend a course of care or call in a prescription...here are the potential barriers.
1. Insurance companies wouldn't pay for it at all because those graduates would lack any type of professional credentials.
2. Those graduates wouldn't actually be allowed to call in prescriptions, also due to lack of credentials.
3. Getting credentials approval would require a lot of money to push things through the process, if at all. Then the school would have to be setup in an effort to recoup those costs. The school would be setup with the goal of making money most likely and everything else in the process would have to happen before the school even became feasible.
Assuming all of those things happen, then insurance companies would largely decide whether or not to even pay for those services and people who had companies that wouldn't...would not likely go to those providers. If they did pay for them and the pay was too low to justify the time commitment of dealing with the insurance companies, additional costs would be involved in terms of staff to deal with billing and followup. (Insurance companies often deny on first request, requiring rebilling).
When it comes to cash flow, insurance changes at the beginning of every year can cause payments to be delayed for up to 3 months which becomes a huge problem for office leases and payroll. Between all that if the compensation isn't high enough, it disincentives people to go into the field at all.
The alternative is pure private pay and allowing individuals to decide, this care is good enough for me. Which would require signing something indemnifying the practitioner from legal recourse since they wouldn't be able to get malpractice insurance. If that care costs more than the co-pay at their regular doctor...they will have no reason to choose it. And even with private pay, those same practitioners still wouldn't be able to call in prescriptions.
That is the industry that has been created by removing health care from the free market.
More movement in that direction could lower health care costs, or at least improve utilization.
> The Birth of Employer-Provided Health Insurance
During World War II, the federal government was wary of post-war inflation. The administration saw the terrible devastation hyperinflation wreaked on post-World War I Germany and they were determined to hold it at bay through wage and price controls which they instituted during the war. In reaction to the wage controls, many labor groups planned to go on strike en masse. In order to avert the strike, in a concession to the labor groups, the War Labor Board exempted employer-paid health benefits from wage controls and income tax. https://www.zanebenefits.com/blog/part-1-the-history-of-u.s....
> Company provided health care became a standard thing from union demands years ago.
I have heard that for years and I can't see anything that wasn't really the Federal Government's plan to stop all wage increases. Yes the Unions got mad and were going to strike but that was because the federal government was going to freeze all wages. Hardly a Union fault.
How is this interpreted?
The "number of years" argument doesn't explain it. For most doctors, it is comparable to someone doing a PhD - maybe a year or two longer on average. PhD's don't get paid anywhere near the amount doctors do.
Having a shortage of doctors is most consistent with insufficient reward to attract more entrants.
Granted there are specialities like dermatology that derive their compensation more from severely limiting the size of the specialty training programs, and the work itself is not as stressful as I'm claiming doctors in general have to bear.
All this said, yes of course they're all overpaid. But the way we got here makes perfect sense, and if we're going to change it there must be a new way to aid them that is just as impactful.
Knowing several doctors, it is not that hard to explain.
And frankly, most of your answer is merely a reflection of the status quo, but not why that status quo exists.
Look at most developed countries and I wager you'll see less stress in becoming a doctor. Are they providing lower quality of service than US doctors?
And not all doctors work highly stressful jobs. All the PCP's I've had had a comparatively relaxed lifestyle compared to people like surgeons. Sure, they get paid less, but still get paid a lot. In my company I know plenty of engineers who work longer hours with greater stress (roughly 10-12 hour days and then being on call on top of that - PCP's are usually not on call). Their pay is a lot lower than that of a PCP.
I'm not saying they don't deserve to get paid a lot. Just that the "number of years of training" is not a good justification for it.
However, your statement about the doctor shortage. For some cases, like PCPs it is due precisely because they dot get paid nearly as Wells's you intimate. OTOH in general the supply of doctors across the board is carefully metered my the medical community. We could easily turn that dial up if we wished. They don't like that for various reasons, including watering down their pay.
If patients are looking for open heart surgery, brain surgery, or something else that's life-and-death? It's amazing how quickly people start looking for "one of the best surgeons in our state." And I don't blame them! If somebody is going to saw open your skull and stick a scalpel in your brain, you want the medical equivalent of a respected senior Google engineer, and not a fly-by-night outsourced IT subcontractor.
Similar issues apply with rare or weird medical conditions. In these cases, front-line doctors might see a condition once in their career. But there's a specialist somewhere that deals with those conditions all day long. If you ask your regular physician to try to diagnose something weird, you may wind up getting expensive tests like an MRI, whereas a specialist might instantly recognize that an MRI is useless.
I agree that it's silly in general though.
That's a key statement.
So these same people charge less for the same product in other fields.
Why?
The reason has to do with the construction of the healthcare industry. Lots of regulations. Lots of middlemen. Laws designed to destroy innovation. Very little transparency for costs and outcomes.
Or the reason has to do with the fact that the people that need these treatments are willing to pay any price for it because their life literally depends on it.
I don't see why regulations, and laws "designed to destroy innovation" (i.e. keep people safe from bogus drugs) are a bad thing. (Of course lack of transparency and middlemen are bad). Almost all of the regulations in the medical industry are for ensuring people are safe, and do not succumb to drugs that are no more effective than a placebo.
I think one of the main reasons why the price is artificially inflated is because of the patent laws in this area. Capitalism itself has various safeguards to ensure that the cost does not get too high for people to buy it, and to ensure that monopolies do not grow, but it seems that we have actually created laws (patent laws, mainly) that circumvent these safeguards.
Largely the end user does not pay full price and relies on negotiation by an insurance company.
Have you seen what doctors charge these days? Those are all fake numbers.
That would only explain emergency procedure costs.
Everyday healthcare costs that are not life-or-death are also extremely high.
Almost all of the regulations in the medical industry are for ensuring people are safe
Are tax laws that benefit employers and lock employees into healthcare plans there to keep people safe? How about laws that prevent companies from selling insurance across state lines? Allowing companies to confiscate unused FSA money at the end of every year?
And even then, there are many regulations and laws that I'm sure are ostensibly to keep people safe in the short term - but they have the negative effect of stifling innovation that could bring down costs and make people safer in the long run. Look at the disastrously-slow pace of the FDA drug approval process that has continued for decades.
No. It also includes maintenance medicine.
If I stop taking my asthma medicine, my quality of life would rapidly deteriorate and I would sooner or later have to be admitted to A&E for an asthma attack. So my life depends on those medicines. The same for people with Depression, Chronic Pain, Severe Vitamin Deficiencies, etc.
> How about laws that prevent companies from selling insurance across state lines?
That seems extremely logical given how much variation in local law exists in North America.
> but they have the negative effect of stifling innovation that could bring down costs and make people safer in the long run
could. Given the sheer amount of bad science in medicine at the moment (e.g. refusing to publish negative studies), it is not likely. Medicine is difficult, and where we have rushed drugs through we have an extremely poor track record (Such as, a type of SRIs being prescribed, that later was discovered to raise the incidence of suicide among adolescents. In this specific instance this was known before it went on market, but the papers were not published).
There's a culture of bureaucracy and incompetence in the medical industry that is unbeaten even by government.
And make no mistake: when the state intervened those markets people died like flies from starvation. Just look at Venezuela, that was a rich country 20 years ago.
If you want to learn something about state protection in the drug market, see "Dallas buyers club" movie.
I was mainly replying to conflation of extra middle men etc. for increasing costs. That's nonsense.
On the flip side, without some sort of oversight, reporting, and rational tort-enforcement, I'm sure the slimiest of vendors would overtake the market.
Things like whether a regulation is well targeted, whether the costs it imposes are reasonably related to the benefit it provides and so on are much more interesting.
I did several weeks of physical therapy for back pain. The PT suggested that I get a TENS Unit for pain. She said, "It costs about $800, but don't worry, your insurance will cover it with no copay to you."
Additionally, the pad refills were free and paid by insurance (they stop being adhesive after so many uses). And so for several months I had sales rep calling me once every few weeks, asking if I needed more pads. Again, it cost me nothing, so I'm sure this is a useful service for senior citizens who otherwise might run out--but I'm also positive that this guy was massively upselling the stuff to insurance, or he would not have been so persistent.
I spoke later to my parents, who also had one, and asked them where they got theirs. They said they paid about $50 at Wal-Mart. A cursory look on Amazon reveals similar pricing.[0]
I don't care how much more effective the professional-grade one is, I doubt it could be 20x more effective, and yet it is 20x the price.
[0]https://www.amazon.com/s/ref=nb_sb_noss_2?url=search-alias%3...
Then I found that if I went to Walmart I could buy metformin and carvedilol for $4 each, and I could get simvastatin for $8.50 if I used a GoodRx coupon.
I was also paying a $20 copay for a 120x50mcg bottle of fluticasone propionate nasal spray. I have since found out that I can buy a 5 bottle pack for $35 from Amazon, with no involvement from insurance.
They may keep a few things underpriced so that they can have pharmacists offer the cheaper version and create the impulse/illusion that the chain is looking out for their best interest.
Perhaps just stop trying to figure this out from scratch, look at any of N countries where healthcare is just a solved background issue?
Yes there are issues with people overusing services that don't have an associated cost for usage, and many similar issues.
But every damn country in the world has been adjusting the parameters of healthcare such as per-visit costs, healtcare budgets vs. queue time, expensive treatments vs death-panels etc for usually at least half a century now. These are solved problems.
which in the end results in nothing getting done as the problems cannot be agreed to. so its mostly hyperbole to claim it is a solved problem. even in nations with free healthcare problems exist, it just depends on what you want to ignore as a problem
There is no magic solution. I do agree that the US should look to other countries for ideas though.
I keep twisting the thermostat a bit but I consider building heating to work in the "solved problem" sense
Public healthcare will never be perfect.
The insanity is forcing patients to compete for health plan coverage. We'd all be better off with a single payer system and locality based dutch-auctions for figuring out who provides the care.
Also, can I please have Dr. Watson (or similar) take actual inputs and determine if further tests are necessary to confirm or reject a diagnostic result? I still want an actual doctor to make the final check on the results, but I'd rather have an algorithm make the guesswork less dependent on one person knowing -everything- (that's what computers are for).
It was widespread until insurance companies forced them out of the industry.
I wonder if the problem with losing their big employers was that it changed their patient demographics too sharply and suddenly.
On top of that I don't know if this applies to CR as much as other European countries, but homogeneous populations really are easier to care for and create actuarial tables around than the stew of the US; when people bring Sweden with its <50 million pop of white people with very similar ancestry to prove their method might work, they ignore how medicine and the whole industry actually is practiced (and needs to be practiced). Let's wait 20-30 years now that they've taken in 1.5 million refugees from a very different background who are projected to grow 3x faster than the current population before we start trying to emulate unproven theories.
(And modern medicine is not yet at a level where ethnicity is a relevant factor when deciding treatment options.)
[0]: By highly conservatives by the way, to fight the rising social democrats
Perhaps OP was refering to the fact that the decendets of slaves in America are MUCH less healthy than the rest of the population.[1]
[1] http://archive.independentmail.com/features/columnists/what-...
The Czech Republic places 33rd by life expectancy, behind the US by just half a year [2], so if the health care in Czechia is on the level of a 3rd world country than so is the US'.
[1] https://en.wikipedia.org/wiki/Demographics_of_France#Before_... [2] https://en.wikipedia.org/wiki/List_of_countries_by_life_expe...
They are trying to sell users on the fact that they are a tech company just as much as a medical service. But from what I saw they have a "Body scanner" (glorified scale that also gets height, O2 and pulse) and a bunch of iPads built into the walls.
EDIT: Also wanted to mention their trickery with pricing. They bill annually. The rep will tell you that they have a special promotion where you can sign up for the monthly plan if you sign up shortly after your tour. But the "monthly" plan still requires you to pay an early termination fee of 50% of the remaining annual balance.
If you are relatively young and/or healthy, that's all you would really need.
As a result, their patient population likely gradually dwindled.
I was a proponent of dpc at one point but, now enrolled in a high deductible plan myself, i don't see as much need for it personally. I'd rather take the money and throw it into my health savings account and use it when i need to.
As far as I see it, schools should teach enough to keep you in a good baseline health and doctors are available if something comes up. What is done in a normal annual check up?
Edit: I pay for the additional blood panels
I guess a minority by population. I needed to make an appointment a couple years ago and the woman on the other end of the phone didn't really believe me that I didn't know where my medical records would be (in the past 10 years I'd had some stitches and a tetanus shot).
I think for growing kids it's probably a good thing -- if nothing else to be sure you're on schedule for various vaccines.
As an adult, I have regular dental care but I do not see an MD unless I am sick or injured. And "sick" does not include colds/sore throat -- there are good OTC meds for that.
For most people, if you feel "normal", aren't gaining or losing weight unexpectedly, don't tire more easily than normal, your blood pressure is OK, etc. your health is likely fine.
Disclaimer: I'm extrapolating from personal experience of a handful of countries, this of course doesn't necessarily apply to all of Europe.
I think the former stems from annual checkups in childhood.
Some insurance providers/employers, I suspect for preventative reasons against the latter category above, have started incentivizing annual physicals, so this may shift, but the whole US healthcare system is in such flux I wouldn't put money down on any outcome.