It goes without saying that modern healthcare is a financial anomaly, that mostly benefits one side. No other line of business operates in such a convoluted payment scheme. The system works for large hospital systems and insurance companies, but fails the people that it advertises to serve. We have observed the obesity epidemic to flourish without a robust counterattack necessary to combat this “pandemic.” If we mobilized our resources as aggressively for preventible disease as we did for COVID-19, we would be well equipped as a system to address the true problems that affect far more people than COVID-19 ever will.
Hospital systems have a unique way of collecting money which is perverted from any other transactional situation you’ve ever encountered. Most large hospitals are “non-profit organizations.” This gives them tax exemption status. Secondly, the itemized bill that the patient receives from the hospital is not at all what the hospital is paid by the insurance company. The hospital has negotiated, with each insurance company, a rate in which they will accept for payment. For instance, if a bill is $100,000 for the patient, your insurance company (depending on their market penetration in that area) may negotiate a 60% reduced payment schedule. Therefore, the insurance company would only pay $40,000, but if you were to pay out of pocket, you would owe the hospital the entire $100,000. Negotiations that the hospital and insurance company have agreed upon is not public information. When the hospital accepts a significantly reduced payment, they track the amount of “uncompensated care,” the delta between the actual amount and the negotiated amount throughout the year. At the end of the year, the hospital will submit this “loss” to the federal government for reimbursement through the Disproportionate Share Hospital program through the Centers for Medicare and Medicaid Services. In 2017, the amount of taxpayer dollars that were dispersed to these hospitals, collectively was $17,100,000,000 ($17.1B).
As the compensation for hospitals have kept pace or exceeded the rate of inflation, individual physicians have been suffering yearly decreases in reimbursement, forcing us to work harder for similar or decreasing wages. Because of this disparity, the lower paying specialties (but arguably the most important), like internal medicine, pediatrics, family practice have been unable to pay overhead for their individual offices. This has driven them toward hospital employment in order to maintain their practice and still receive a decent wage for the service they provide to the community. At this point, the federal government has gained control of our entire health care system based on “initiatives” they feel are important. Compensation for the physician is then tied to the “initiatives” that the hospital system believes are important. These initiatives are usually screening for certain illnesses that will continue to trap the patient in the hospital system and the hospital maintains the revenue stream from that one patient. If you do this on a large scale, this equates to a significant amount of money.
Now that hospital systems control the physicians, there is significant disruption in the patient/physician relationship. We now see them as a transaction, rather than a person. It has dehumanized the way that we originally started. There has been a significant increase in the number of administrators in hospital systems over the last 3 decades, far outpacing the growth of physicians. Health care costs have kept pace with the number of administrators that have been hired. Physicians salaries have slightly increased over the last 6 decades, but slower than the rate of inflation. This is not a sustainable system and it has become a real problem for patients.