I don’t know if there’s a ‘tendency’ to use outside hospitals, but thank goodness Kaiser patients have that option if Kaiser physicians deem it necessary.
My understanding is some are advocating for universal health care insurance/one payer, which is not the same as Kaiser’s model, which is an integrated care model. Here’s how they describe that:
We serve our members using a unique business model that combines health coverage and care delivery into one coordinated experience. Unlike a traditional insurance company, we are a membership-based, prepaid, direct health care system. That means our members — whether they come to us through employer-sponsored or individual coverage, Medicare, or Medicaid — pay dues to access care and services that are coordinated across inpatient and outpatient settings, pharmacy, lab, imaging, and other ancillary services.
They can do this because the physicians and other HCPs are employees, Kaiser owns the hospitals and labs, etc. This is not what government provided Medicare is (which is sometimes held out as what a proposed single payer model might look like here).
That’s how Medical Insurance works. They all make more money if we don’t use it as much. My experience with Kaiser was that they worked at this by strongly promoting preventative care. Some companies work at it by denying coverage unless you call and complain. Or by having so few providers you can’t find care. Sounds like Kaiser may be moving in that direction too given the story above.
Of course, I’m the one who thinks health care is broken worldwide. No matter what your model is. Most doctors want to care for their patients and see them thrive. Most people want to not be sick. Most insurance companies want to make a lot of money. But that’s what we are stuck with now here.
To back up @eyemgh’s point, the US spends more than $40 billion a year IIRC on three surgeries: meniscus tears, rotator cuffs, and lower back pain. Clinical studies show that one gets the same results on average from a sustained course of physical therapy for each of them – I think there are probably a small percentage of folks who only get the good result after a surgery but on average the much cheaper course of sustained physical therapy does just as well as surgery (and after surgery you need to have PT anyway). But, our insurers pay for less PT and pay for the surgery. With just these three procedures we are probably paying close to $40B a year for unnecessary surgeries.
I believe I saw other studies showing that even after a surgery or treatment was found that was once considered best medical practice was shown in clinical trials to be worse than another surgical or other treatment, many doctors persisted in using the old technique even after they had clearly been informed of the change in best practice. One of my clients (an insurer) started kicking surgeons who used outdated procedures out of their panels.
Neither medicine nor health insurance is my field but I have consulted for almost every part of the health care system (hospitals, doctors, insurers, pharma, clinical trials companies (CROs), etc.). Massive amounts of poorly spent money and distorted incentives.
I’ve also worked with insurers and providers in other countries and was on the board of one such company. Most of the OECD countries have a two-tier system: 1) a basic system that is universal (like the NHS) and it is often public (though a couple of countries let you choose between public and private for the basic care; and 2) a private supplementary system of insurers and sometimes hospitals or providers. The latter is for expats, and is a perk for execs or the otherwise wealthy. It enables the privately insured to use the basic system when they want/can but lets them go more quickly if they use the private system. My sense is that most countries have considerably better care (preventative and basic care) then the US – which shows up in the statistics showing that the US places between 20 and 30th in health outcomes but pays almost twice per capita what a number the other countries pay and more per capita than any other. Where the US shines is for the top 5% or 10% – we get the latest procedures and drugs and tests whereas other countries often delay approving the latest.
Yes, it seems that Kaiser pushes the less expensive preventive care to try to prevent more expensive care later. It may also work better for Kaiser than for other insurance companies, if people stay with Kaiser longer term because they like their physicians. In contrast, people with non-Kaiser insurance are likely to have to switch insurance companies when they change jobs, so there is less incentive for other insurance companies to try to limit future costs by having more less expensive preventive care now. (Many large employers offer Kaiser and some non-Kaiser insurance – but the non-Kaiser insurance is not the same at different employers, so someone who continues with non-Kaiser insurance at a new employer often has a different insurance company from the previous one.)
Of course, non-Kaiser physicians and medical groups can have their own motivations, in that they may be quicker to recommend more expensive higher revenue options (e.g. the surgeries mentioned in post #164).
I remember reading an article a number of years ago that said that a huge amount of money could be saved it every insurance company and Medicare used the same coding system. I don’t know if things have changed since then, but a broken arm in one company was coded differently than a different company or Medicare. Back then, if every company used the same system it would have saved billions of dollars because if would have eased the paperwork at the Dr.'s offices. I don’t know if things have changed, but it seems that simplicity would help. The paperwork must be a nightmare.
Medicare in the US kind of works like that: basic insurance (but not providers) that is universal for the age 65+ (part A, B, and D), but with a private supplementary system (supplement / Medigap plans) or an option to take a complete private plan (part C / Medicare Advantage).
Yes, they recognize there is the potential to make a lot of money in a slow-growth industry by ruthlessly cutting costs. In many ways, they are trying to approximate the Indian model of medicine. The only exception is that they are pocketing the profit.
I have an acquaintance/friend that was in the top management of our local hospital about 10 years ago. They since moved away from the area. I remember that one of her jobs was to reduce (quite aggressively) the number of ICU beds as a cost cutting measure. She did that successfully and was promoted. I remember asking her what if there is a terrible flu year, and her response was something along the lines of “don’t worry there’s plenty of ICU beds in the area that we can transport patients to if needed” (for 10K a pop as it turns out, and under the assumption that bad flu would only hit our city and none of the neighboring ones). Then Covid hit and we kept hearing the percent of occupancy of ICU beds as a metric to determine whether schools should be remote etc. and I couldn’t help thinking that after many hospitals drastically reduced their ICU beds it wouldn’t take that much to fill them up. Can anyone point to any research and/or articles that look into the effect of cost-cutting measures (and profit increasing) in hospitals pre-pandemic and its effect on local communities during and post pandemic? Please and thank you!
Oh and BTW, this friend/acquaintance is not a doctor nor had much experience with health care before her hospital management stint. I don’t know if that is pertinent information or not; I would assume it is but I could be wrong.
Cost cutting is not the only issue trying to be addressed in the ER article above, or in other settings where there might be a shift from physicians to NPs and/or PAs…the physician shortage is very real in many parts of the country so it does make sense from that perspective to bring in more NPs and PAs because all these healthcare settings do need to be staffed
I wouldn’t call healthcare a slow growth industry. CMS projects the industry to go from 4.3 trillion in 2021 in the US to $6.1 trilliion in 2028…much of this growth is coming from an aging population. US Healthcare Industry 2023: Sectors, Trends & Statistics.
Yes, a national excess supply of hospital beds was highlighted as a wasteful utilization of healthcare resources. since it adds fixed costs that are never recouped. This was recognized 25 years ago and resulted in the closure of many smaller hospitals nationwide, especially in rural areas, as reimbursement rates were curtailed and lucrative hospital procedures were moved to outpatient centers. A lot of healthcare experts complained at the time that closing too many hospitals jeopardized the ability to provide care in the event of a national emergency. They recommended keeping a safety net, but they were ignored.
I think the article was trying to say that private equity groups are intentionally hiring APPs not emergency physicians to save money, NOT because they can’t hire qualified emergency physicians. Clarksville, TN is less than 1 hour drive from Nashville and Vanderbilt University Medical Center. Vanderbilt has an EM residency which graduates 13 doctors/ year. Emergency medicine residents are having increasing trouble finding jobs after they graduate. Many are now working in urgent care settings instead of hospital emergency departments. As a result, the popularity of emergency medicine as a career path has recently plummeted, causing a huge drop in emergency medicine residency applications among US medical students.
I also see similarities between the private equity companies keeping any savings for themselves (and their investors) and the PBMs who keep many of the rebates they negotiate from drug companies for themselves and their investors (and don’t pass those savings on to the employers and/or insured people).
True, @ucbalumnus, although Medicare is only one insurer, albeit one with a fair bit of clout. In most of the other countries, the state health insurance is a monopsonist (monopoly buyer or almost as the public health system dwarfs the private one) and hence has a lot of market power. For example, drugs are probably the most rapidly increasing cost. In a country with universal health insurance or universal health care, they can negotiate with the credible alternative of keeping a new drug out of the country. In the US, while Medicare is not monopsonist, it is still prohibited from negotiation with drug companies. So, the negotiating leverage sits with the companies to a large extent.
Moreover, private insurance companies in the US have a short-term incentive to lower costs but actually have a longer-term incentives for costs to increase. The ACA requires that insurers at least 85% (I believe) of premiums needs to be spent on medical expenses (implication, profits are at most 15% or premiums). Insurers can grow profits by cutting costs – a strategy that can work for a while – or by letting costs and premiums grow and collecting 15% of the growing premiums. Hence insurers actually have an interest over time in health care costs increasing.