29 March 2017

Location, Location, Location [update]

One of the recent themes of these endeavors is that substituting capital for labor leads to covert side effects. Note, I did not say unintended or unanticipated. I said covert, and mean it. As the share of labor decreases, the need to ever more drastically cut out labor costs, in order to maintain capital return improvements, increases. Saving 10% on 80% of cost is vastly different from saving 10% on 15% of cost. That ole asymptote problem.

One of the long known glitches in the American form of healthcare is that a given billable item will have a different value, depending on the location where the item was delivered. It's also been long known that the doctor's office is, was, and will remain the least expensive. Full fledged hospitals, the most expensive. And with good (well, sorta) reason: hospitals have all that plant and equipment to amortize. See where this might be going?

Well, of course you do. Today's reporting puts some hard numbers to the problem. And their source is the Billionaire Boyking's pals, the corporate hospital.
When my wife fell on the ice a few years ago, she thought her wrist was broken. She went to see her doctor, who advised her to have an X-ray taken in the same building. Since her wrist was still crooked months later, she had a second X-ray done at an imaging facility nearby.

Afterward, her health insurance company sent the "explanation of benefits" for each X-ray. The initial one was billed at $1,200, while the second one cost only $100.

Figures don't lie, but liars figure. A couple of things are going on here. First, the hospitals seek to amortize all that plant and equipment they've bought. One way to do that is to exploit differential payments, which is further explained in the article. It's assumed that service "in hospital" will, some times, require further hospital service due to complications or further information gleaned from the initial procedure. This is the excuse used by anti-choice zealots to require clinics to be, or have immediate access to, full hospitals.

Second, corporate hospitals are vacuuming up physician practices to eliminate the competition. The wonderfully efficient free market in healthcare working its invisible hand magic. More like a handjob, if you ask me. Given a largely free hand to spend like drunken sailors, hospitals incur ever more fixed cost, in the belief they'll be allowed to charge whatever they want. And they do.

OK, Kim Jong-Don fix this:
"Across the country hospital systems are scouring the market in attempts to acquire physician groups," said Medical Billing Advocates of America in an article on its website. "This has contributed to increased costs so far, because some of the services and procedures that were formerly billed as doctor visits are now being billed as outpatient services -- even if it is the same office. In one year, this [facilities fee] added up to $1.5 billion more in charges to the Medicare program."

Medical Billing Advocates referred to this practice as "a real cash cow for hospital systems."

Of course not. Just put a stop to corporate hospital concentration. How about it Kim Jong-Don?

An older link, may have been offered up, which details the problem and a long standing solution.
In 1964, New York became the first state to enact a statute granting the state government power to determine whether there was a need for any new hospital or nursing home before it was approved for construction. In 1974, the federal government tied funding to CON programs. The 1974 federal Act required all 50 states to have structures involving the submission of proposals and obtaining approval from a state health planning agency before beginning any major capital projects such as building expansions or ordering new high-tech devices. By 1975, 20 states had enacted CON laws; by 1978, 36 states had enacted them. Eventually, all states except Louisiana enacted such laws.

No comments: