Stanley Feld M.D., FACP, MACE Menu


Why The Resistance To A Logical Solution To Repairing The Healthcare System?

Stanley Feld M.D.,FACP,MACE

A key question to ask is how the insurance industry determines the price of the insurance coverage. I will discuss this question in detail in the future. A hint is, price is determined by an archaic, non scientific, administrative cost overloaded system. In my opinion many of the disease cost modeling is bogus. Disease burden could be very straightforward, scientific and logical.

All the discussions by health policy experts are not challenging the escalating health insurance cost directly to solve the key question. In my view the only expert who is challenging the present system in a logical and civil way is John Goodman. Until we face the issue we will make little progress in Repairing the Healthcare System. The insurance industry is going to have to face the facts unless it wants a single party payer system with the government being the payer. If they continue to overload premiums and segregate risk, the insurance industry will be reduced to a 3-6% broker at best. Many healthcare insurance companies will go out of business.

The second important issue deals with the escalating hospital costs. No one is demanding that we understand how a hospital services fees relates to the hospital cost of providing those services. The fact is that many of the prices for hospital services are arbitrary and have built in excesses that cannot be proven to be warranted. One cannot get a direct answer from a hospital administrator. In fact the hospital administrator does not know how they arrived at the price. Why? The pricing is buried is so much opacity and hearsay that most times it is impossible to discover the prices’ origin. Looking at the pricing of neighboring hospitals does not help because one hospital copies the other hospital’s prices. What you can find out is if the hospital is making a profit. If the hospital is making a profit the hospital administrator assumes they are charging the right prices. If the profit is minimal or less then last years’ profit then the hospital administrator has to raise the price. This is not a very effective way to manage a business.

If the hospital buys a new piece of equipment or information system it adds it to the price of hospital services even if the equipment or information technology saves it money and reduces its cost.
In order for the healthcare system to work, price shifting has to stop, inflating costs has to stop, and arriving at true cost per service has to be determined. If we are on a single payer system it will not matter what the hospital costs are. It will received a fixed, deeply discounted payment from the government no matter what the costs are. Finally, the hospital systems will be forced to increase its efficiency or perish.

It seems to me, that rather than reducing costs through efficiency and fees, both the insurance companies and the hospital systems are shooting at the goose that has laid their golden eggs. They had better wake up soon.

No one wants a single party payer run by the government with all the bureaucracy and inefficiency that will follow. We see what has happened in countries that have a single party payer. They are all moving back to an insurance model because a single party payer system does not work for their citizens.
The definition of a universal health care system is not necessarily synonymous with a single party payer system. Universal healthcare could mean a guarantee of health insurance coverage at a fair price for all. I think that is what Governor Schwartzenegger and Governor Romney were trying to construct. However, the manipulation of the political process by secondary facilitator stakeholders has contaminated the policy. The secondary facilitator stakeholders, insurance industry and hospital systems do not want to relinquish any control even though their control is not working. These facilitator stakeholders had better get smart soon or they will have nothing to control.

The role of government should be to enact rules and regulations for the benefit of the people it governs. Then, let private enterprise and private innovation be creative and compete for the business of the people. This is the market driven economy that has made the United States great. Sam Walton did it with Wal-Mart and Sam’s. Sears and J.C. Penny have never recovered. Target and Costco came along and are now giving Wal-Mart a run for their money to the advantage of the consumer.

This can happen in healthcare. We can promote the innovative and competitive spirit of America. We better do it before we get into a bigger mess with a single party payer system that will result in less quality care, less access to care, and escalating cost to all of us.

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