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Comment by tptacek | Hacker News Reader

Whoah, that smuggles in an enormous assumption: that a dollar directed to a medical professional is automatically well spent. In reality, medical professionals in the US make drastically more money than they do in Europe and deliver way more procedures (they're often working on "RVU" scales that incentivize delivery of more procedures).

This is something that makes health care economics really difficult to discuss: everybody trusts their doctor and factors them out of the equation; the problem is every penny that doesn't go to their doctors and specialists. But that's not a valid analysis and your doctor and their support system is (after elder care) at the heart of US health spending.

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What makes it hard to discuss is everyone at every level is gouging for various reasons.

Like, for example, doctors are going to be paid more than foreign counter parts, but they also end up needing very expensive schooling. (Similar thing happens to dentists).

Go into the hospital, and you end up paying 10x the amount for any medication (Tylenol being a good example) because either the hospital has an agreement with a medical supplier for exclusive supplies or they are trying to make up for ER treatments.

Then there's simply the added layer of bloat on top of everything. Health insurance ends up hiring a large staff of people to try and reject all claims while hospitals hire patient advocates to appeal the denials for the patients. All that ends up being paid for somehow (usually a large chunk is from the patient's insurance principle).

And, much like funerals, slap on "medical" on any piece of equipment and you get to raise the price by 10x. A $10 stethoscope ends up costing $100 from a medical supplier. Or one I've personally seen, a "medical" pocket protector made from $1 in fabric costing $50.

The reason non-us healthcare ends up being cheaper is because the governments are running most everything rather than having 3 or 4 private businesses duking it out over cost. It eliminates a huge amount of redundancy in the system when a government builds the hospitals, pays the doctors directly, and is the only one negotiating with medical equipment providers.

I don't disagree and wouldn't valorize anybody in the field† (though: of all the entities, I come closest to respecting Pharma's role and, if those companies were well-behaved, could make a pretty coherent argument for why they should be making much more money given what they produce).

But it remains important to get a picture of where the money is going, and the real picture disrupts a bunch of narratives.

Even in your comment: you're handwaving past physician comp and overdelivery!

† writ-large, I mean; I know some awesome doctors

> Even in your comment: you're handwaving past physician comp and overdelivery!

I'm really not. I'm simply pointing out exactly why they have such an oversized salary. It costs a ton of money to become a physician. In order to survive, they initially need a pretty sizable salary.

After the loans are paid off, that salary can't go down, there would be a revolt if it did.

Over delivery is really just a general attitude of wanting to test everything to make sure nothing is missed. I have a hard time faulting them over that.

IMO, the way to address this problem is addressing the cost of education for physicians. There's no reason getting an MD should cost $500,000, and yet it does.

And, of course, the best way to do this is to make medical school publicly funded and tuition free. A lot of small hospitals close down because they can't afford regular doctors. It's also next to impossible for a doctor to setup a private clinic.

That won't fully solve the current salary bloat, the only way to really address that is expanding the number of doctors being trained.

Sure it could. Physician compensation, RVU billing, upcoding, and overdelivery aren't facts of nature. In fact, a lot of these problems are caused by Medicare regulation; we deliberately restrict the supply of physicians by underfunding residency slots, which is something the AMA lobbied to do.

But when institutions try to take these problems on, like when Blue Cross (IIRC) went after anaesthesiology upcoding abuses, industry lobbyists spin people up to think that insurers are demanding surgeons wake people up in the middle of operations. It's a real problem. People understand so little about how our system works that they will vociferously take the side of practitioners who are screwing them over.

(Everybody is screwing everybody over; I'm not taking a side, except to point out that Table 19 of the NHE makes a pretty stark statement about where the money is going.)

I did _not_ make that assumption. I specifically called out the possibility that some hospital care may not be necessary. Regarding hospital care, the two sentences describing hypotheticals where spending is or is not improvable specifically included clauses:

> and if good data suggested that people aren't in hospital unnecessarily

> if ... some significant share of patients could be served just as well through less expensive clinical services, maybe that's too much

I don't think they were insinuating that _you_ were making that assumption, but rather that your line of reasoning must necessarily make that assumption if brought to fruition

It seems like you've been referring to "Hospital Services", which was 31% of all healthcare spending in 2023, and "Physician and Clinical Services", which was 20% of all healthcare spending in 2023, according to the CMS spreadsheet. But this is made up of revenue to the hospital or doctor's office, not just compensation for the medical professionals. These numbers include all the administration/dealing with insurance that has to be done at the hospital or physician office, as well as rent, malpractice insurance, drugs provided at the hospital, imaging costs and almost everything else that pays for capital spend, etc. The fees at the point of service basically have to account for all the bloat in the system, which of course includes some overdelivery and bloat inside the hospitals and clinics. But I really don't think this builds a case (like you seem to be doing) that doctors and nurses need to be squeezed in order to reduce US health care costs, especially when total healthcare expenditure has grown much faster than clinician pay over the past decades.

I agree that the figure includes administration costs. CMS won't tell you that US physicians are paid 2x-3x more than they are in Europe, but OECD numbers will. CMS won't tell you about upcoding and overprescription, but the Dartmouth Atlas will. Meanwhile: the CMS picture will at least tell you that the majority of spending in our system is in on the provider side, and not in either prescription or insurance.

Again: I'm not out on a limb with these claims. I'm literally just remembering things Jonathan Gruber told Derek Thompson on a podcast, then looking up and bookmarking the numbers to confirm them. Many of the most popular message board narratives about healthcare disintegrate in the face of even these simple CMS numbers!

> and deliver way more procedures

Diagnostic imaging companies - each of the big ones (Siemens, GE, Philips) offer in-house financing for MRI, CT, etc., that they advertise to physicians. They also all offer specialist consulting help to facilitate you getting a CoN (Certificate of Need) for your facility. Hell, they also will help you find other physicians in your area who'd like to go in on setting up a DI facility (and will assist with spinning up the practice).

We then find that physicians who own a DI practice (or a share in one) refer their patients to diagnostic imaging at rates several standard deviations above other physicians and at rates that are "statistically improbable" when correlated to underlying ICD-10 diagnostic codes.

Upton Sinclair comes to mind ("It is difficult to get a man to understand something, when his salary depends on his not understanding it").

My favorite statistic is that there are more MRI machines in Massachusetts than there are in all of Canada.

Is that a good thing or a bad thing? MRI machines are expensive, but very useful for certain conditions and with zero radiation exposure. We see a lot of affluent Canadians coming to the USA as medical tourists for imaging procedures and elective surgery due to long queues at home.

It's an indicator. By many accounts, the US drastically overuses imaging. For instance: it's not unlikely that a patient presenting with persistent back pain will be imaged quickly in the US. That imaging service is itself expensive and a cost driver, but far worse are the procedures the imaging results drive, most of which wouldn't be prescribed over the border in Canada. We do not on the whole get better results for back pain here!

Another example, though with a less comical indicator than the MRI thing: at least up until recently, hernia repairs in Europe were all inpatient procedures. The US innovated on laparoscopic hernia repair that's done outpatient. This is by itself a very good thing! But the knock-on result is that the US now delivers way more hernia repairs; we do medically unnecessary hernia repair because we made it so easy to do.

None of these are my insights; they're just things you learn about if you read and listen to podcasts about the problems with our health care economics.

Hey! You got it right!

It's almost like I wasn't commenting in bad faith or out of ignorance in the first place.

RVU is presumably "relative value units": <https://medicalbillingservicereview.com/rvu-explained/>.

> medical professionals in the US make drastically more money than they do in Europe and deliver way more procedures

Do you have a source on that? I ant to understand how that works. The US is ludicrously inefficient per dollar spent, so how does that work?

By us compensating medical professionals more and allowing them to perform more procedures.

It's weird to see people startled by this claim because it's a pretty basic and accepted one!

It’s not purely a bad thing per se if it attracts doctors who excel and are the best.

However, it seems now more like straight-up profiteering the past decade or two by doctors as a whole but it’s harder to point a finger at. In contrast with “Big Pharma” the profits are fairly centralized and easy to point a finger at.

Personally I’ve for a while believed the biggest issue with wealth inequality in the US isn’t primarily due to billionaire class, but rather the millionaire class and “managerial class”, though I’d include doctors in that list. Most CEOs would also be in that list.

Doctors via the AMA keep salaries artificially high, just the same as similar tactics used by land lords using software to jack up rent prices.

Your claim here, were you to try to make it, would have to be that American doctors are across the board 2-3x better than European doctors, and that European pts are getting drastically fewer procedures than they need.

(I think we agree though).

Specifically for doctors, that seems a reasonable point or question. I know intimately from my PhD studies that some procedures performed widely in the US aren't that effective (meniscectomies in particular). Though that's gotta be balanced with procedures that are helpful that Europeans don't do enough.

More broadly though, I believe what's occurring with doctors is also happening across the board in other professions. Landlords as an aggregate are charging more than if fair, and the median landlord isn't a billionaire or Blackrock but probably part of the professional managerial class (PMC) [1]. No idea if landlords as a whole are charging 25% or 250% more for rent, but rent seems to have outpaced inflation by a fair bit.

Similarly others here mention doctors owning portions of diagnostic imaging companies who go on to request unnecessary imaging. That's the PMC enrich-yourself-first mindset. Historically it was the local landed nobles.

Repeat that across more fields and professions and you see that the middle and lower classes will be squeezed much more by PMCs than by billionaires, IMO. For example, it'll be some VP at Google who's pushing to raise the cost of YouTube premium rather than Sergey Brin or the Youtube CEO. Another VP who's figuring out how to move software to a never-ending subscription, etc. Though it'd be hard to split out the effect of say PMC's vs corporate profiteering. Perhaps they are part of the same effect.

1: https://en.wikipedia.org/wiki/Professional%E2%80%93manageria...

I mean, if the argument is that exogenous supply constraints are the root of most of our economic problems, and that the economy is rigged for the upper-middle class and the billionaires are just along for the ride, we probably share a lot of politics, but either way: my point on this thread is just: start with the total picture of where money in our system goes.

A lot of people think most of it is going to insurers and pharma companies, which is the literal opposite of what's happening.

Yeah agreed the issue with medical costs in the US isn’t primarily pharma or insurers.

It’s just easier to blame them companies because they’re more centralized. Easy to point and say “look at the billions in profit”. Doctors as a whole are likely make many billions more in profit but it’s harder to see and understand that.

You know if the damn prices were not so hidden behind paperwork electronic or otherwise between the provider and insurance company, together with well disseminated facts about cost, and outcomes we could let market forces sort this out so poor service + high cost is mediated somewhat ...

Ideally the provider would bill the patient only without recourse to any insurer. The patient if satisfied could ask the insurance to pay. This way the bill "is out " in the sunlight, and providers have no way to get paid unless customers are happy. At bare bones it aligns provider with patient through a bill like anything else. Adversarial patients ... are another thing for later ... but i want people to start seeing US medicine up front rather that stuff that goes on behind the scenes.

I realize ppl get all kinds of paperwork now including sometimes bills ... but c'mon it's one thing if it's FYI after the fact" because it was all submitted to insurance yesterday anyway ... or ... this is it; the bill is due ... approve it ... or else ...

Physicians in the US are paid, on average, more than 2x what Physicians in Germany make and more than 3.5x what Physicians in France are paid [1].

[1] https://www.statista.com/statistics/1094939/physician-earnin...?

Similar ratio for nurses too. Nurses in the UK are on 26k GBP a year and a nurse in a US hospital is generally making no less than $80k USD

I'm a bit confused.. are people suggesting that the poor pay in the EU is a _good_ thing? These aren't lawn maintenance or car mechanics here. We're talking about saving peoples lives. I would think the people in the EU would feel a bit of shame for paying them so poorly..

[disclaimer] my wife works in pediatric cardiology and saving kids lives seems worth a hell of a lot more than a software jockey job. The dead baby days are the worst and make a rough merge or code deployment appear as trivial as they really are. The EU should be ashamed of paying their people so poorly. None of that is to say that our system isn't broken and wasteful. It certainly needs fixing. But paying critical care givers less is a really bad suggestion.

Income equals expenditure. They are one and the same.

I had an endoscopy done, 15 minute procedure where they put you under. The bill came and the anesthesiologist charged $980 for those 15 minutes. And there was a gastroenterologist and two nurses in the room as well. While I understand that my life was literally in that professional's hands for those 15 minutes (i truly do get and respect that) I don't think "affordable healthcare" is compatible with billing almost a grand for 15 minutes of work. Whether my premiums pay it, or my taxes pay it, or I pay out of pocket, as long as people are charging $4k an hour, it's not going to be affordable. Simple as that.

You aren’t paying for the 15 mins. You are paying for the 20 years that got them qualified and the couple of times per year when shit gets wild and they do more than read the news.

Over paid? Yes. Worth their pay and 10x more when it goes bad. Yes.

I don't think anesthesiologists are worth $400k+ per year. I simply do not.

So is Germany. But they pay less. And their outcomes aren't worse. So we're overpaying. Probably more precisely: we're unnecessarily restricting the supply of physicians, which is the same thing.

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