When I was a kid and even as a younger adult I went to the dentist’s office and other ‘providers’ and the amenities were clean and neat but often I was treated in a ‘ward’ environment.  And this was way after I’d left Jolly Olde England and the NHS (National Health Service.)  Today most providers I go to the office/clinic space is custom designed often with soothing art, music, video etc.  Now don’t get me wrong, Video/Music does help when you’re under the drill (having something probed etc,} and the video screens used for modern digital x-rays or other data reproduction are a boon as well. But why is every ‘provider’ the same.  Why did hospitals move away from wards to private or semi private rooms with the concomitant increase in capital and operating costs.  Why does my local hospital s soaring almost churchlike multi story lobby floored in granite with overlooking balconies and a Yamaha robo grand piano, and this is not the top end hospital in the region. 

It seems to me that what we have seen is a health care bubble, much like the higher eduction bubble (or the overall education system foam,) we’ve seen in the last thirty years….but I digress.

• As providers realized that they could attract more lucrative patients by setting up nice offices in nice parts of town the general price of HC (excuse the acronym) went up, in general the expectation in all for pay HC went up while the free clinics crashed.
• It’s mathematically obvious that 10% of 5,000 is a lot less than 9% of 10,000 and the cost of consumables etc are usually fully reimbursed by the payee because their price is a published known. So providers made more and more use of high cost consumables of one sort or another, and were not incentivized to keep the costs down even if their ‘profit’ was squeezed a bit.
• Medicaid and Medicare have managed to subsidize the lower end of the patient rainbow and pushed up the overall cost by pushing the higher end patients and providers into a different ‘market space.’
• Because the actual cost of HC is essentially invisible to the patient the steady spiralling cost was not noted by the high-end clients because they perceived (I think rightly) that they were receiving value for money.  BUT as the high-end pulled away the middle dependent ons insurance etc was stretched and the low-end fell away, the old-fashioned cheap equipment / methods / services they had used were rendered obsolete and replaced by the new much higher cost versions.

Add this and other mechanisms together and you have a bubble.  One that grew and grew, while people griped, tried to do something about it but failed.  For some reason we seem unwilling to change the basic underlying dynamics.  Is that because they are so complex and interlaced that people can’t be bothered to go beyond the simplistic.  Or do a lot of the bad things have attractive sides that would be lost if we made major changes? 

In the current system its impossible to figure out the trade-off between a private room and a ward.  Once that wasn’t true or as true.  We have the technology to make this problem go away.  I believe that with transparent pricing and costs wouldn’t we make different decisions.  Maybe not all the time, but maybe enough to break the back of the ridiculous inflation rate we see in health care.

I was listening to the Diane Rehm show this morning.  She had a panel discussion on Health Care, Obama Care and Health Care Costs.  They touched on a couple of issues that I find rather under discussed and it struck me as odd after a while that no one really dug in on the topics.

Here is Topic 1…

Why is it that the cost of a procedure or a piece of gear etc, varies according to who is paying?  If you’re lucky enough to be covered by a relatively old fashioned policy like I am you will see on your explanation of benefits that the Doctor, Hospital, Clinic, Dentist…(the provider) charged one price but the insurance agreed to pay another, the provider agreed to that and wrote off some or all of the rest and you paid your deductible plus some additional cost sometimes for one arcane reason or another. 

The Provider and the Insurer have some pre agreed price sheet that you never get to see.  (You never get to see any price sheet that I know of.)  Blue Cross Blue Shield apparently has one price sheet, UHC another, Medicare and Medicaid another, and the uninsured are hammered with the top line rate.  An uninsured person who cannot prove he/she can pay up front is charged a higher rate again, (at least that appears to be the game) and then the hospital hounds the near-victim for some ‘pittance fraction’ that in the end is still probably more than an insurer would have paid.

If there were an industry agreed to list of procedures etc (which has to be effectively in place.) You, a consultant, a doctor w/should be able to tell what services you require and you should be able to look up what those services cost on the web comparing various providers.  There should be various providers offering various prices and various deals, that you can work through and figure out what is the best value solution for you and your family quite quickly.

This way the insurance companies could reduce costs because they no longer have to individually negotiate prices, rebates, write-offs with each set of providers, the providers likewise can reduce costs for the reciprocal reason.

Administration costs are a huge part of the Health Care Expenses these days and to me this seems to be one of the myriad reasons why.

Health Care Costs are rising almost uncontrollably and the lack of a price comparison mechanism seems to me to be a significant issue.