Hacker News Reader

Comment by onychomys | Hacker News Reader

Hospitals are having a surprisingly tough time of things. I work for a very famous hospital in a small town in the American midwest, and we've (our IT department, that is) laid off all our contractors and the rest of us have mandatory furloughs coming up too. They're doing everything they can to not let us go, but some of us will probably end up getting sacked. And this is maybe the richest and most well-connected hospital in the entire world! Turns out that when you cancel all elective procedures (not only non-essential surgeries, but things like allergy testing and pediatric audiology work etc.), you can very quickly go from a billion dollars in the black (last year) to an estimated billion dollars in the red (this year). Just brutal.

View on HN

Will be very interesting to watch financial reports from health insurers. Premiums are the same, despite (almost) everyone consuming less health services.

Can Covid costs (at current patient levels) make up for the loss of other claims? I'm doubtful, especially since some Covid costs are evidently borne by the federal government. The suffering of hospitals is circumstantial evidence that insurers are paying out less overall.

No, the covid costs are actually not terribly high.

The other thing is that as millions of employees get laid off, millions of health insurance premiums stop getting paid.

> as millions of employees get laid off, millions of health insurance premiums stop getting paid.

Failure mode of a system where healthcare is tied to employment -- works as long as people keep shuffling around, shatters when a systemic black swan comes along.

And no, cobra doesn't address it. It's just a patch. Anyone actually pay cobra for more than a month or two? You quickly realize just how expensive employer group plans can be for an individual.

> shatters when a systemic black swan comes along

Well, whatever colour the swan is, a pandemic is no any unprecedented crisis. It's frankly more predictable than large scale earthquakes, but many people simply didn't give a shit to plan for it in advance.

>a systemic black swan comes along

Nassim would like people to stop saying this. I view him as an authority on the subject.

https://mobile.twitter.com/nntaleb/status/124494673873917952...

Although surely a lot of those procedures will just get pushed back until after the pandemic?

Meanwhile there may be costs stemming from complications where the treatment was delayed.

ACA requires insurers to refund premiums if they do not spend at least 80% of the premiums on healthcare. See here for more details:

https://www.cms.gov/CCIIO/Resources/Files/Downloads/mlr-repo...

My stepfather is a doctor and reports the same. Unless you are actually swamped with COVID-19 cases, the lockdown is having the perverse effect that people are going to the hospital less often. Diseases in general are spreading less now, fewer accidents are happening, fewer elective procedures, along with a general fear of going to the hospital in general (presumably for fear of catching COVID-19 from someone there). He's seen fewer hours and staff cuts come from the situation.

My fiancee is a veterinarian, and it is the same there.

* Absolutely no overtime for hourly employees (the salaried doctors, of course, do 18-hour shifts) * Doctors in elective departments (dermatology) are furloughed * They've all but confirmed the techs will have layoffs

For-profit hospitals are a stain on the American healthcare system.

I worked for one of these facilities years ago, and elective surgery was the only thing the administrators cared about.

It's not just for-profit hospitals, non-profits are very focused on elective surgery as well. Why? Because elective surgery is the money maker for the business. Healthcare systems typically have profit margins between 1-4% with 4% being on the high side. For comparison SAAS businesses typically have profit margins of 70-95% [1]. 1 - https://www.lightercapital.com/blog/calculating-gross-margin...

Just out of curiosity, is your comment about "for-profit hospitals" a non sequitur?

Your parent comment refers to the Mayo Clinic, which is neither "for-profit" nor "a stain on the American healthcare system".

The existence of for-profit healthcare is reasonably why hospitals have to shut departments in the middle of a pandemic to handle balance sheets. If for-profit healthcare didn't exist, I really don't see how the total amount of money going into a hospital would decrease right now.

You are conflating “for profit” with private. Most good hospitals are non profit, but private institutions.

To help you understand how this could decrease revenue - my annual checkup is postponed by 6 months. This is true for everyone who had an annual checkup scheduled.

I agree. but the existence of for-profit healthcare is largely why the US is the only country without public healthcare.

This is a common misconception about health care. Most countries have a mix of private/public funding a mix of private/public run health care. Canada is almost all non-profit charity hospitals, but other OECD countries use for profit hospitals. For example:

>...The study, released Tuesday, compared the universal health-care systems of Australia, France, Germany, the Netherlands, Sweden and Switzerland, and looked at the presence of for-profit hospitals and for-profit health-care insurers in each of these countries. ... The study found that for-profit health-care insurers and for-profit hospitals are found in all six countries. This is in contrast to Canada, where similar for-profit insurance is not allowed, and where only a small number of private, for-profit hospitals exist.

https://www.ctvnews.ca/health/for-profit-care-can-exist-in-a...

Sure, but in all of those countries health care insurers are incredibly tightly controlled and the state is still by far the biggest insurer. Which is why the state can and will fund hospitals directly after this crisis.

>Sure, but in all of those countries health care insurers are incredibly tightly controlled...

Insurance companies in the US are also "incredibly tightly controlled". Regulations even specify amounts that can be spent on patient care, administration etc. Health insurers are the only segment of the health care sector in the US where profits are directly limited.

>Which is why the state can and will fund hospitals directly after this crisis.

I don't think that has anything to do with it.

It does have a lot to do with it, as it directly nullifies the issue the OP was talking about.

When I mean incredibly tightly controlled, I mean effectively price controls, and very stringent ones at that, and all of them have the state as the main insurer anyways, while AFAIK the US does not insure anyone directly.

>...AFAIK the US does not insure anyone directly

The government provides health insurance to many people. 44 million people are insured by Medicare. 74 million people are insured by Medicaid. Over 1 million veterans get their health care provided by the government run VA medical system.

As I pointed out, most countries have a mix of private/public funding a mix of private/public run health care. Lots of people seem to be under the misconception that universal health care coverage is only possible in a Canadian or UK type health care system.

What?

Even non-profit, publicly funded hospitals are feeling the squeeze. Most are paid on a fee-for-service basis. If you cancel all your elective surgeries, there goes a huge chunk of funding. Yet you still need to pay salaries and other overhead.

It's not like non-profit hospitals are suddenly immune to the realities of economics.

Publicly funded healthcare does not work the way you think it does. There is a budget allocated to healthcare every year, if one year the hospitals don't have enough money to cover expenses but that there is still money left in the coffers (for example, due to less electives), then they will end up getting the money they need to operate.

Were it not for for-profit healthcare, the US would almost certainly operate this way.

There are probably 170 different versions of public systems. I think you're making the mistake of assuming they all operate the same way.

In both public systems I've been a part of, yes there is a hospital budget, but it's paid out through procedures. Don't have anyone in the hospital? No payment.

Sure, but what I'm telling you is that in the event of a major event that means that the amount of procedures goes down drastically which means the healthcare budget is not depleted, but that hospitals need to money to deal with a pandemic, the state steps in and will fund the hospitals.

My parent comment does not mention Mayo Clinic. I'm mainly talking about hospitals that operate only for profit.

Apparently many US hospitals are formally non-profits but operate very much in a corporate logic. What did mayo do with its bn profit last year that Op mentioned?

Mayo earns $12bn per year.

As contrast, a hospitals in Germany for a whole year cost €105bn, with an average total cost per stay (including operations etc ) of 4500€.

https://www.destatis.de/DE/Presse/Pressemitteilungen/2018/11...

Non profits just make profits in a different way. Either the money goes to the leadership or into an endowment or new buildings or something else. Don’t confuse non profit with not greedy or not profitable. They are basically the same as for profit hospitals as far as cost goes.

The differences between the two aren't what you think.

Aren't they going to end up over-burdened soon, at least in some departments, due to all of the deferred surgeries and the like?

Yes.

My wife works at an orthopedic office as a PA and they're talking about how they'll probably have to work weekends just to catch up with the backlog of surgeries.

IT security in hospitals is already lacking in general. Cutting all this staff is going to expose them to even worse situations. Obviously they can't make money they don't have magically appear but these layoffs will end up making things even worse.

Same thing is happening in Australian hospitals, dentists, etc etc. All elective procedures are banned to keep the hospitals empty so suddenly a lot of income is gone. Everything is closing down.

I was in the hospital for a procedure a few weeks ago and it was empty. I saw maybe three people who weren't staff the entire time.

Hey onychomys, I am doing some research about the state of Tech and how it’s integrated into the healthcare system, and the insurance providers. Would it be ok if I asked you a few questions?

Hey, sad to hear that healthIT is not getting a better safety net. I am in healthtech startup and some sales were let go but the business is still up so development goes on. I was hoping that hospitals would get better funding after such a crisis and especially things like electronic or personal medical records for telehealth could get a strong support...but not the case as it seems.

I work for a large healthcare org. We just had a hiring freeze and have to work hard to justify extending existing contracts with our contractors. At the same time, I am unsure how this will long term impact the org. Utilization of most services is down but we did have to buy a lot of ventilators/etc; also, I imagine health insurance membership will decline.

I’m guessing this is Mayo Clinic?

We may disagree on political solutions, but I hope at this point everyone will acknowledge that in a society with otherwise so much wealth, health care shouldn't be that dysfunctional.

This is kind of depressing.

Nebraska? The only Midwest place I could imagine with the best hospital in the world would be close to Warren Buffet.

Mayo Clinic in Rochester, MN?

This is correct.

A friend of mine works in a finance dept at Mayo and is getting furloughed. FTE not a contractor.

Quick edit: since he's been working there for the last 18ish months he has made it clear how poorly run and awful that place is to work for, sentiment is from way before covid.

I would imagine OP is talking about the Mayo Clinic.

Reply on news.ycombinator.com