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Why are Medical Costs So High?

In Time magazine’s March issue  Bitter Pill: Why Medical Bills Are Killing Us Steven Brill gets to work on answering the ever elusive Why are Medical Costs So High?  The 21,000 word article is longest article in Time Magazine history that can boiled down to simply there is no free marketplace in health care.  We think everything in this country is a free market but is there a free market when one needs to got to an emergency room or a free market when one must take a cancer pill?  According to Howard Dean the singular reason is to get away form the current fee for service system where providers get paid per procedure and not per patient.
Here’s an eye opener: “Insurance Companies are not really the problem they run pretty terribly. They process claims, a lot of us think they process claims and fairly consistently but they are increasingly at the mercy of hospitals which are consolidating buying a doctors practices. We should tax profits on so-called nonprofit hospitals and put that money back into the system.  We should control all the prices for prescription drugs because if I have a monopoly a cancer wonder drug I can charge anything I want for them that’s obviously not a free market and it’s completely two different uses you see this article once you follow the money.”
 

Transcript of the video:
“This is not a free-market. You don’t get health care because you want it. You don’t wake up in the morning and gee I love to go down to the emergency room today. You enter that market and will you know nothing about the products of you being asked by no choice of those products. Hi I am Steve Brill I’ve got the cover story this week in TIME Magazine looking at the health care debate from a very different perspective.  Everybody focuses on who should pay for the exorbitant cost of health care and that I decided to do was ask for more fundamental question which is why does  health care cost so much.
I look behind the bills and trace the bills all the way back to who’s getting what money is making what profits and the results are really surprised one of the things I found that everybody in the healthcare industry knows about that that nobody else knows his something called the charge-master. The charge master is a internal listing each hospital of the thousands of different items that they charge and nobody could explain it to me. Indeed would be hard to explain for example why would you charge $77 for a box of gauze pads? You can buy for a dollar at the drugstore. why would you charge thousands of dollars for CAT scan it really isn’t cost you anything?
It’s emblematic if you will, of the irrationality of the higher healthcare system because no one can explain the cost no one tries to and the only people who are guaranteed surefire to pay to be asked to pay the charge-master prices are the poorest people who don’t have health insurance.
Real profit makers are way hospitals markup very expensive drugs that you get. If you have cancer to have pneumonia but they’re making thousands of dollars on these drugs and drug companies in turn making still more thousands of dollars.
Obamacare  does very little to solve any of these problems and just probably why you got to Congress I’m it doesn’t do anything to control the prices of prescription drugs or medical devices CAT scan. In fact if anything it will increase the profitable the players in the market by making equal insurance and therefore more people are in the marketplace with the funds from insurance companies to buy all these products.
 
Insurance Companies are not really the problem they run pretty terribly. They process claims, a lot of us think they process claims and fairly consistently but they are increasingly at the mercy of hospitals which are consolidating buying a doctors practices.  See Provider Consolidation Info-graph – “The proliferation of hospital mergers and hospitals’ appetite for buying doctors’ practices—in part to assure a steady stream of patients to fill hospital beds—could create local monopolies that raise prices without increasing efficiency. ‘Historically,’ says Deloitte’s Mr. Keckley, ‘hospital consolidation hasn’t reduced costs.’”
We should tax profits on so-called nonprofit hospitals and put that money back into the system.  We should control all the prices for prescription drugs because if I have a monopoly a cancer wonder drug I can charge anything I want for them that’s obviously not a free market and it’s completely two different uses you see this article once you follow the money.”
The ACO (Accountable Care Organization) referenced in our  post NYU Beth Israel Merger and ACOs are models encouraged in Obamacare in fact as examples of Provider capitated reimbursement that Howard Dean is in favor of.  An ACOI cordiantes patient care and provide the full range of health care services for patients. The health reform law provides incentives for providers who join together to form such organizations and who agree to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to the ACO.
The fee-for-service system has evidentially driven costs by incentivizing volumes of added procedures.  The ACO model is built on par excellence hospitals such as Mayo Clinic where there is team of providers are financially incentivized  for  patient care coordination outcomes and high quality of care.   The ACO’s payment would be tied to achieving goals that improve health care and save money. Members of the ACO would divvy up that payment.   Today’s payment system, investments in providing better care are doubly penalized. If a hospital hires a nurse to follow up with patients after they are discharged in order to reduce readmissions — for example, to help patients with diabetes improve blood sugar control — it must pay for the nurse, which is typically not reimbursed by insurance companies or Medicare, and it loses revenue by preventing the readmission.

Congress included ACOs in the health care law as a way to rein in Medicare spending. That federal program pays for health care for people 65 and older and the disabled. The federal government estimates ACOs could save the Medicare program up to $940 million over four years. Medicare recently began testing this system with 32 pilot ACOs in 18 states, including one in the New York City area – Bronx Accountable Healthcare Network.

Some have pointed to ACO Model just as a pro-merger supporting argument with the FTC.  These significant mergers create market dominance and therefore limit competition and drive up health care dollars.  And yet Hospitals operate on thin profit margins and cannot afford to lose market share therein lies is the conundrum.

Note: At  time of this article MVP and Hudson Valley Health Plans  announced a merger – Hudson Health Plans joins MVP.  Hudson Health Plan, the Medicaid managed care organization based in Tarrytown, will join the MVP Health Care group of companies, the two nonprofit health plans jointly announced today.

“Size and diversity of offerings are important for health plans in the new world of the health insurance marketplaces. A 55-year-old person would like to join a health plan that can continue to cover him when he turns 65. Likewise, if someone is no longer eligible for Medicaid, she might prefer to buy a commercial product from that same insurer. Together, MVP and Hudson now can cover people through all of life’s stages and changing needs.

In the coming months, Millennium Medical Solutions Inc will host seminars and will share information you’ll need to know as the countdown continues to October 1st.   Please contact us for immediate information on how to implement these initiatives for your group-specific needs at info@medicalsolutionscorp.com or  Call (855) 667-4621.
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