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The Healing American Healthcare Podcast
The Healing American Healthcare Podcast

Episode 9 · 11 months ago

The Cost of US Healthcare & Hospitals

ABOUT THIS EPISODE

Ed Eichhorn discusses the exorbitant cost of healthcare as well as hospital care in US and what needs to change for it to not be such a financial burden for the American people. 

Want to join our mailing list? Text HEALHEALTHCARE to 22828 to get started. And be sure to go to healingamericanhealthcare.org to learn more about the Healing American Healthcare Coalition™.  

Hello, this is at Ikorn.I'm the founder of the healing American healthcare coalition and I am a coauthor ofhealing American healthcare, a plan to provide quality care for all while saving onetrillion dollars a year, that I wrote with Dr My Cushinson. I wantedto explore with you some of the issues about our high cost of care andthe United States and what we need to do to improve healthcare. You know, bringing down the cost of healthcare in our country is not going to beeasy, but it's really important for us to think about doing that. Ifyou've been following the complications in our healthcare system or you're an advocate for achanging our healthcare system, you know that there are really four things that weneed to try to accomplish. First of all, we need to reduce thecost of healthcare. The cost of healthcare in our country is about nineteen percentof the GDP. We are twice as expensive as the average cost of theother members of the Organization for Economic and cooperative development of the UN. Infact, in some cases, if you...

...look at our data on public costversus private insurance cost, our public cost on a per capita basis is higherthan the costs spent by other nations for all of their healthcare. So reducingthe cost of healthcare is really an important thing that we have to undertake.Second thing is we really need to have universal healthcare. All of those othernations of the world do have universal health care systems and we don't. Approximatelytwenty million Americans have no healthcare coverage and another forty million Americans have an adequatecoverage or they're under and short, and that means sixty million Americans, arealmost twenty percent of our population, do not have access to good quality healthcare. Now that factor in itself raises the cost of health care because they, as a group, tend to avoid healthcare unless they are really, reallysick. So instead of seeing a physician if they have a stage one cancer, they wait until they have a stage four cancer, which greatly increases thecost of their care and greatly diminishes the...

...opportunity for them to actually survive thecare because of the difficult nature of the disease as it has matured in theirbodies. The third thing is our health care system is very bureaucratic. Justbilling for healthcare in the United States is extremely high. Generally speaking, wespend about two hundred forty dollars per person for every man, woman child inour country for hospital billing alone. If you compare that number, which isaround two hundred forty dollars a person, with a country like Japan, theyonly spend fifty dollars a person for their billing, which is less than threepercent of their cost. So we really need to make a healthcare less bureaucratic. Now, one statistic in this area that I like to cite is forevery physician working in healthcare in the United States, there are sixteen people atwork in healthcare. Half of them have no patient contact of any kind.That's the bureaucratic part of our health care system. In fact, over thelast ten years the number of medical billers...

...in the United States has grown fromSeventyzero to a hundred and seventy thousand people. And when employment surveys look at theUnited States today, one in nine Americans works in healthcare, whereas tenyears ago it was one and twelve. So we need to figure out howto make it less complicated for billing and if we do these three things,lower the cost of care, provide care for everyone and make care less bureaucratic. We should improve our longevity statistics, because right now they are not verygood. Our average life expectancy in the United States has dropped by a fullyear during two thousand and twenty as a result of the pandemic. It's droppedfrom seventy eight point eight years to about seventy seven years. But for AfricanAmericans it dropped by over two and a half years, and so for thelast ten or twelve years we have generally lagged the other nations in the Organizationfor Economic and cooperative development by at least three and a half years and insome cases by as much as seven years.

If we are able to do thefirst three things we need to do, we ought to have better quality careand we ought to be able to extend the life expectancy of all Americans. So let's talk about call for a few minutes. Hospitals are about thirtytwo percent of the cost of care in the United States, and that's abouta trillion dollars a year. And the hospital market is not uniform. Aboutsixty percent of the hospitals are private, nonprofit hospitals, twenty percent are ownedby governments and another twenty percent are for profit companies. If you look atthem in terms of rural hospitals versus hospitals that are in cities, rural hospitalsare under a great deal of pressure. Six hundred of them are in financialdifficulty and at least two of them close every month. When a hospital closesin rural America, it has a great economic impact on the community that ithad served because more often than not it's the largest employer in the community,so that doctors and nurses in that community,...

...who are also consumers in that community, may go to other parts of their state or their country for employmentonce that facility closes. So it creates a great deal of economic pressure inthat community and it also affects longevity and the quality of health care because thepeople who live in that community, in order to get a health care thatthey need, will have to drive perhaps two hours to go to the nearesthospital. So there is a crisis in healthcare for a world America. Nowthere's a similar crisis in inner city hospitals because cause of the population that theyserve and the amount and type of insurance that their customers have. Much likerural hospitals, they will have a lot of Medicare and Medicaid patients in theirfacilities and also people who are uninsured, and that puts financial stress on theoperation of that hospital as well. So when you back out of that pictureand look at our hospitals, where, broadly there are about threezero hospitals inthe United States out of the approximately five...

...thousand that we have that either breakeven or lose money every year. Well, how we address that? Because atthe same time, the hospital segment part of it makes seventy six billiondollars a year and there's a great change in the hospital market that Congress isbeginning to try to address. There are two things that hospitals are doing toimprove their ability to leverage their insurance negotiations with payers. They are horizontally andvertically integrating. What I mean by horizontally integrating is they are buying other hospitals, could be a nonprofit or for profit hospital. Most of this is occurringin the nonprofit sector. They will buy competitors or other hospitals so that theynow have a block of hospitals and what they will claim is this is goingto be more efficient and cost less, and what they mean by that isit will cost less for them to opera rate. But over the last tenyears, as these hospitals have come together...

...in this way, their average billingto private insurance has got up between twelve and seventeen percent a year, largelybecause of their bargaining position. For example, if they are in a state wherethey've done this, like they have in New Jersey, where there's fourlarge hospital organizations, when they negotiate with the payers, they can say no, no, no, we don't want to lower price, we already havea million of your patients being covered in our hospitals and we need to increaseour prices. And the Insurance Company doesn't have a lot of leverage and needsto coverage, so usually the prices go up. The other thing that they'redoing is their vertically integrating. About sixty percent of all the primary care doctorsin the United States work in a group or they work for hospital, andwhen doctors go to work for a hospital, that means the hospital can change thebilling for the services that they provide. They can build a facility fee,which they're allowed to do, but that increases the cost of care becauseevery time you go for a colonoscope or...

...whatever it is, that doctor mightprovide within the scope of practice. The cost for that go up because ofthe facility fee. As I mentioned, a Colonos could be. The pricefor doing that in a practice that's been acquired by the hospital could be asmuch as a hundred sixty percent higher than it was before. Hospitals are alsobuying imaging centers and they raise the price of an Mr I as well.The average price for an MRI, depending upon the cept code, could beabout three hundred and fifty dollars. Well, in a hospital that could be athousand dollars when they're done with the additional fees they're allowed to charge.So how do we bring those costs under control? Well, I think whatwe need is we need a pricing structure that's uniform pricing structure for every hospital. Under the trump administration they wanted to have, which I believe we nowhave, ability for you to see the price in any hospital for any servicethat they may charge, and that's a good thing to have, but Ithink we should be controlling those prices so that private insurance prices would start ata specific level. Perhaps a hundred and...

...forty percent of Medicare currently those pricesrange from a hundred and seventy percent of Medicare to two hundred thirty percent ofMedicare, but I think we should establish a price level at which hospitals wouldbe able to compete. Now Anti Trust aspects of the government are looking athospitals now and whether or not they would allow them to continue to grow andbuy other hospitals, and I think we should let them buy on their hospitals, but control the prices that hospitals can charge. That way, when theycombine, their combining to lower administrative cost not just to increase pricing. Andif we did that sort of thing, a couple of things would happen.One, rural hospitals would actually get paid more to the hospitals that are acquiringother hospitals could also acquire inner city hospitals and help to build up their revenuebase because the insurance base that they might receive would be a little bit higher. So I think that would help stabilize the hospital industry while lowering its costs. Another thing that we should do in...

...hospitals is we should lower the costof drugs that are ad ministered there. Hospitals do increase the cost of drugsand supplies that they provide to in patients and I believe they should be controlledto be only a ten percent markup on any drug or supply that they mightbuy. One example of this is, in fact, hip replacement that wasdone in a teaching hospital in New York City. The person was forty nineyears old and worked in healthcare as an actuary. This patient got the billand it was eightyzero dollars and he thought that was too high. So hewent to his insurance provider and said Gee, this sounds like too much money,and the insurance provider said, well, that's our contract with that hospital,that's what the charge is. So he went and got the hospital billand found that exactly which hip replacement hardware had been installed during his surgery andhe found out that the provider of that who manufactured it, charge the hospitalone sixteen hundred dollars for that implant.

His hospital bill reflected a charge oftwenty threezero five hundred dollars just for the implant itself. Hospital should not beallowed to do that. They should be allowed to mark up these materials fortheir inventory and cost only. Steven Brill and his book Americans Better Pill charteda number of hospital bills and he found that when you received a tile allin the hospital, you could be charged as much as the wholesale cost ofthe whole bottle of TAILEANL and this simply shouldn't be if we were able toconstrain these costs within the hospital environment, I believe that we would be ableto bring the cost of hospital care down in a significant way while improving thefunding of hospital care in rural America and in inner cities. So that isone area of cost reduction. In future podcasts I will talk about pharmaceutical costreductions that we should consider, reducing the cost of waste in our system andreducing the cost of bureaucracy. And if...

...we do all of those things together, we would be able to reduce the cost of care in our country byapproximately a trillion dollars. So until we bring up this topic next time,stay well, continue to use mitigation. We are masks, Wash your hands, keep yourself separate from other folks, buy six feet or so and whenthe vaccine is available for you, go out and get yours. Thanks andI'll see you next time.

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