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Comment by a2tech | Hacker News Reader

Reading threads like this really hammers home most of HN have never worked in health care. Hospitals BARELY make their budget. 1% over cost of doing business is considered a really good year for my institution.

Also if I never have to hear people complain about bloated admin budgets in education and healthcare ever again it’ll be too soon. Those admins aren’t sitting around on their thumbs—they’re dealing with the ridiculous legal and administrative system the insurance companies and government have created. Those people are absolutely critical for the institution to exist.

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This seems to be highly bifurcated, like so much in the US, between the haves and the have-nots. But overall I don't think it's fair to say "Hospitals BARELY make their budget." As usual, the whole system is broken. There are some hospitals with a wealthy customer base with full-ride insurance who can bill obscene amounts and profit massively, and then there are some hospital systems with uninsured and underinsured customer bases who are just scraping by.

I looked up my local hospital network, UCHealth (Colorado, there are many UCHealths it would seem), and their EBITDA in 2021 was 16.6%. Mayo Clinic posted 1.2 billion dollars in _operating profit_ in 2021, and also have a gigantic investing arm with several billion dollars under management.

Then we look at networks like Spectrum in Michigan, who posted only a 3.6% margin, or Henry Ford, with a negative operating margin offset by investment income, and it becomes clear that _some_ hospitals barely make their budget while _others_ rake in dollars.

It’s the same economics that create food deserts in some places and Whole Foods in others. Or how banks don’t exist in poorer neighborhoods despite being profitable on others. There is no incentive to allow one to subsidize the other. It happens with health networks that are mission based but otherwise, not usually. Try balancing out your research with the taxpayer funded public hospitals, it’s a train wreck.

> bill obscene amounts and profit massively

Profit how? Your 2 examples of UCHealth and Mayo Clinic are both non-profits.

Non-profits generally use substantial income in excess of revenues for expansion, just like many for-profit organizations. Excess revenues can also be absorbed in salary and other compensation or cost increases, usually top down of course. The main difference is that non-profit organizations are prohibited by law from making distributions to owner-shareholders. They can spend excess revenues in any number of other ways, starting with the furniture for example.

How badly is the entire industry mismanaged if hospitals have to charge thousands-to-millions of dolllars for treatments? There is no possible way that is just barely supporting facilities+medical staff+reasonable administration+liabilities if other countries can do it at tiny fractions of our price.

Instead, the story as I've heard it seems to be similar to education: massive administrative overhead permitted by fundamentally broken insurance billing.

Sure I may not know healthcare but they really need to fix their shit.

I agree it needs a reboot but it’s highly politicized and the things they reform usual cause more and more administrative burdens and thus costs.

The sad truth is labor in America is incredibly expensive. Healthcare is extremely labor intensive. And everything else is expensive too. We don’t pay the came cost from the source for things like drugs, medical supplies, etc. A thing that cost $100 in another country costs $1000 in the US. That’s from the manufacturer who can control what price they charge. It’s capitalism doing it’s thing. But we also have a ton of middle men. Insurance, brokers, wholesalers, distributors, and on and on. All of who need a margin of profit and maintains some level of administration overhead. So when people here say administrators and too bloated and over paid, it’s really the supply chain that is deep and prices that are uncontrolled.

Even parts of this thread exemplifies how difficult it is to get agreement on what the problem/solution even is. People are complaining that healthcare is too expensive others saying nurses need to be paid more or have hospitals increase staffing. These ideas are in complete opposition.

Hospitals have been paying 4x staff rates for travel nurses for multiple years now, though.

I’ve never seen that even before the pandemic. 1.5x-2x is normal for all the usual reasons a contractor cost more. Taxes, benefits, agency that needs a margin, etc.

I’m guessing if you’ve seen that is hyper localized to some place/issue.

1.5x isn't a real increase in staff rates if all it accounts for is taxes and benefits that the employer covers for regular employees anyway. It is like certain government employees who complain about being paid too little when the actual cost of their compensation in many cases is through the roof.

The situation is so bad that regulation or standard practices encouraging employers to document compensation figures instead of quasi-mythical salary figures would do a lot of good to reduce confusion in this area.

All in, it's still averages about 20-30% more expensive in a normal operating environment (before pandemic and all the subsequent issues). This is significant on the largest expense line item and considering it's controllable to a degree.

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