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Amazon/Berkshire/JP Morgan good or bad for healthcare?
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Amazon/Berkshire/JP Morgan good or bad for healthcare?
https://www.reuters.com/article/us-amazo...SKBN1FJ1NF

Not a lot of detail yet, but Amazon, Berkshire Hathaway and JP Morgan Chase are teaming up to control their healthcare costs. They will focus first on "technology." Shares of health insurance and pharmacy companies dropped on the announcement.

Congress has been reluctant to tackle health care costs. We have giant employers willing to.

Does this drive innovation?
Does it disadvantage smaller companies and individuals as more larger companies do this?
Does it reduce choice for employees if employers control health care like they did company towns at one point?
01-30-2018 12:19 PM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
In theory it will lower the pool of insurees paying into the current private insurance companies. I would assume that would make prices go up for those insurance companies. Those companies combined have something like 1 million employees...give or take. This is not a small thing.
01-31-2018 10:47 AM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
Is there ANY industry expertise brought to the table by any of them? If there is, I don't know about it.

At first glance this looks like UPS, FedEx, and Delta deciding they can build better airplanes than Boeing. Buying a lot of airplanes, knowing how to use them, and wishing they were cheaper to operate doesn't in any way give you the expertise required to build them.

I see two relevant outcomes from many possibilities.

If they fail, it means that the market is already delivering healthcare more efficiently than a few big companies can.

If they succeed, it means there is something drastically wrong with the market.

At this point, I am betting on the market being smarter than three non-healthcare companies with expense problem.
01-31-2018 11:36 AM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
Interesting that the stated goal is the partnership is non-profit (simply cutting their annual spending on employee health could have an enormous impact on the bottom line).

JP Morgan and Amazon have most of their employees in fairly tight geographic clusters which would permit them to buy clinics and hospitals if they so desired to control costs via vertical integration. That however doesn't work for Berkshire.

Berkshire knows property and casualty insurance but I don't think they have any health insurance holdings. Their biggest health property is a 19% stake in a company that primarily does dialysis, have a tiny stake in Johnson& Johnson and very small stake in one pharmaceutical company.

The easiest targets for cutting health costs in that you can make the biggest impact not that they are easy to solve are:
1. Operating overhead. Clinics and hospitals spend a great deal just getting paid between billing the many different health insurance companies and billing Medicare, Medicaid, and out-sourced VA work.
2. Supply chain. A friend worked for a company that sold orthopedic devices. Not unusual at all for him to have to leave church or dinner to retrieve an unusual product required for some sort of orthopedic surgery. The wide variety meant outside a few very commonly used products hospitals did not stock everything they needed. That inventory is held by either a wholesaler or a subsidiary of the manufacturer in facilities all over the country and delivered on demand by a representative who is paid a commission to convince doctors to use the product and receives a commission when they purchase (thus is happy to ditch a nice meal to deliver a weird shaped hunk of titanium to a hospital 30 miles away). My pharmacy occasionally changes supplier of some generics and has at times had inventory stocking issues.
3. Pricing. There is zip transparency in pricing. Someone sticks you in an MRI to scan your back that can be billed as three procedures (cervical, lumbar, thoracic). The price at the pharmacy for a drug varies by what insurance you have (if any) and what they need to collect from the customer rather than the insurer varies not just by insurer but by where you are toward meeting your deductible and even which plan you have from a specific insurer. The cost of a procedure varies by whether it is being done by a hospital, a doctor owned clinic, or a PA working for a doctor. The price varies by who is paying between Medicare, Medicaid, VA, and the various private insurers.

The simplest fixes they could do as a group, is to vertically integrate where they have high enough numbers of employees.

If they don't do that, then it would seem the next easiest solution is to jointly negotiate prices for products and services, provide employees with an app or access to a simple website to seek providers of the best prices, and then transition everyone into high deductible insurance plans with health savings accounts fully or partially funded by the employer.
01-31-2018 12:59 PM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 11:36 AM)Claw Wrote:  Is there ANY industry expertise brought to the table by any of them? If there is, I don't know about it.

At first glance this looks like UPS, FedEx, and Delta deciding they can build better airplanes than Boeing. Buying a lot of airplanes, knowing how to use them, and wishing they were cheaper to operate doesn't in any way give you the expertise required to build them.

I see two relevant outcomes from many possibilities.

If they fail, it means that the market is already delivering healthcare more efficiently than a few big companies can.

If they succeed, it means there is something drastically wrong with the market.

At this point, I am betting on the market being smarter than three non-healthcare companies with expense problem.

I don't know that they can fix it but the market is not working either. Our annual health care spending per person is $2000 more per year than any other country. $5100 more than Canada which has a larger percentage of their population in rural areas, which are supposed to be harder to deliver services to.

We spend almost 18% of GDP on health care. Sweden at nearly 12% is next closest.

There simply isn't a true free market in health care in the US. If the drug or medical device you need is on patent, it is under a monopoly. If you live in rural America, if you don't like the price at the local hospital you are looking at an hour or more drive. The supply of specialists is constrained. My father-in-law doesn't like his oncologist but he would have to drive 70 miles one way to see another on a weekly basis and that would mean if he needs hospitalization in the future his alternative wouldn't have privileges.

In Little Rock, you need a neurologist about a third aren't accepting new patients and many of the remaining aren't accepting anything but migraine patients.

Many providers will not even reveal their prices for services, you cannot have a free market where the price is a secret.
01-31-2018 01:28 PM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 01:28 PM)arkstfan Wrote:  
(01-31-2018 11:36 AM)Claw Wrote:  Is there ANY industry expertise brought to the table by any of them? If there is, I don't know about it.

At first glance this looks like UPS, FedEx, and Delta deciding they can build better airplanes than Boeing. Buying a lot of airplanes, knowing how to use them, and wishing they were cheaper to operate doesn't in any way give you the expertise required to build them.

I see two relevant outcomes from many possibilities.

If they fail, it means that the market is already delivering healthcare more efficiently than a few big companies can.

If they succeed, it means there is something drastically wrong with the market.

At this point, I am betting on the market being smarter than three non-healthcare companies with expense problem.

I don't know that they can fix it but the market is not working either. Our annual health care spending per person is $2000 more per year than any other country. $5100 more than Canada which has a larger percentage of their population in rural areas, which are supposed to be harder to deliver services to.

We spend almost 18% of GDP on health care. Sweden at nearly 12% is next closest.

There simply isn't a true free market in health care in the US. If the drug or medical device you need is on patent, it is under a monopoly. If you live in rural America, if you don't like the price at the local hospital you are looking at an hour or more drive. The supply of specialists is constrained. My father-in-law doesn't like his oncologist but he would have to drive 70 miles one way to see another on a weekly basis and that would mean if he needs hospitalization in the future his alternative wouldn't have privileges.

In Little Rock, you need a neurologist about a third aren't accepting new patients and many of the remaining aren't accepting anything but migraine patients.

Many providers will not even reveal their prices for services, you cannot have a free market where the price is a secret.

I keep hearing health care is more expensive in the U.S. What I don't hear is that we have more choice in health care than most other countries.

Your father-in-law does have the choice to seek treatment elsewhere, but it isn't practical for him. In a socialized system, he would not have any choices at all.

The facilities that oncologists use are in competition to attract the best doctors. The better doctors are able to command more money. Again, the freedom of the market in this case drives prices up. There is no state-defined salary for an oncologist.

Medical equipment enters the same situation. Product A and B are in competition for sales. Doctors will choose what they believe to be the most effective product, and the market will raise the price of that product. In a socialized system, the price to be paid would be fixed, and there would be little incentive to build a better device if the single buyer won't pay for it.

So yes. Health care costs more here. It costs more for two basic reasons. One, we have a free market where we can choose to buy the better product. And two, people with the choice will almost always pay anything to stay alive. It differs from all other markets where cost/benefits are the normal decision metric. The cost/death evaluation is inherently different. Couple that with a relatively free market for health care, and prices get driven up.

Higher medical prices here is NOT a bad thing. It is a natural market consequence.

Trying to "fix" it is tilting at windmills.
01-31-2018 01:47 PM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 01:47 PM)Claw Wrote:  
(01-31-2018 01:28 PM)arkstfan Wrote:  
(01-31-2018 11:36 AM)Claw Wrote:  Is there ANY industry expertise brought to the table by any of them? If there is, I don't know about it.

At first glance this looks like UPS, FedEx, and Delta deciding they can build better airplanes than Boeing. Buying a lot of airplanes, knowing how to use them, and wishing they were cheaper to operate doesn't in any way give you the expertise required to build them.

I see two relevant outcomes from many possibilities.

If they fail, it means that the market is already delivering healthcare more efficiently than a few big companies can.

If they succeed, it means there is something drastically wrong with the market.

At this point, I am betting on the market being smarter than three non-healthcare companies with expense problem.

I don't know that they can fix it but the market is not working either. Our annual health care spending per person is $2000 more per year than any other country. $5100 more than Canada which has a larger percentage of their population in rural areas, which are supposed to be harder to deliver services to.

We spend almost 18% of GDP on health care. Sweden at nearly 12% is next closest.

There simply isn't a true free market in health care in the US. If the drug or medical device you need is on patent, it is under a monopoly. If you live in rural America, if you don't like the price at the local hospital you are looking at an hour or more drive. The supply of specialists is constrained. My father-in-law doesn't like his oncologist but he would have to drive 70 miles one way to see another on a weekly basis and that would mean if he needs hospitalization in the future his alternative wouldn't have privileges.

In Little Rock, you need a neurologist about a third aren't accepting new patients and many of the remaining aren't accepting anything but migraine patients.

Many providers will not even reveal their prices for services, you cannot have a free market where the price is a secret.

I keep hearing health care is more expensive in the U.S. What I don't hear is that we have more choice in health care than most other countries.

Your father-in-law does have the choice to seek treatment elsewhere, but it isn't practical for him. In a socialized system, he would not have any choices at all.

The facilities that oncologists use are in competition to attract the best doctors. The better doctors are able to command more money. Again, the freedom of the market in this case drives prices up. There is no state-defined salary for an oncologist.

Medical equipment enters the same situation. Product A and B are in competition for sales. Doctors will choose what they believe to be the most effective product, and the market will raise the price of that product. In a socialized system, the price to be paid would be fixed, and there would be little incentive to build a better device if the single buyer won't pay for it.

So yes. Health care costs more here. It costs more for two basic reasons. One, we have a free market where we can choose to buy the better product. And two, people with the choice will almost always pay anything to stay alive. It differs from all other markets where cost/benefits are the normal decision metric. The cost/death evaluation is inherently different. Couple that with a relatively free market for health care, and prices get driven up.

Higher medical prices here is NOT a bad thing. It is a natural market consequence.

Trying to "fix" it is tilting at windmills.

You cannot have a free market when the consumer cannot discover the price. Period. It is an impossibility.

You also cannot have a free market when there is constraint on the number of people permitted to compete in the market. Since 1997 Federal law has capped how many residency positions Medicare will fund and there are not a great deal of privately funded positions so we are short of physicians with gap growing because there are not enough residency positions. We have increased medical school positions without increasing residency a similar amount so last year 500 medical school graduates were left unable to pursue licensing because they could not find a residency.

You are also mistaken about what other countries do.

Finland for example. You are "stuck" with a primary care physician for 6 months. After 6 months you are free to switch to any primary care physician you choose who is accepting patients. When I was on a PPO plan the only way I could switch during the calendar year was if my doctor closed, I moved away, or my doctor stopped accepting my insurance.

Last time I was at my doctor's office I heard the receptionist tell someone on the phone that Doctor X was not accepting any new United patients at the time and Doctor Y was not accepting any new patients at all. That's no different from most "socialized" medicine nations where the providers are privately owned businesses and choose how many patients they will accept at any given time.

Really no different than the thousands of companies that exist solely off government contracts for services that have been privatized.

Now in the UK you have a near complete single provider system which is a different animal.
01-31-2018 04:08 PM
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Post: #8
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
You are also not considering the impact of our tort system. Malpractice insurance is a huge cost for many specialties and expensive for all. Extra tests run because of lawsuits add a huge amount of non-value added costs. The worker's comp system has driven out a huge amount of costs by getting rid of most of the lawsuits.

We also have an insurance system where the insurance companies are motivated not to pay meaning providers and insurance companies have a lot of employees adding no value, just shifting cash flow from one entity to another. We aren't regulating that and its getting worse.

And as Arkstfan says, there isn't much transparency in prices.
01-31-2018 08:42 PM
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RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 04:08 PM)arkstfan Wrote:  
(01-31-2018 01:47 PM)Claw Wrote:  
(01-31-2018 01:28 PM)arkstfan Wrote:  
(01-31-2018 11:36 AM)Claw Wrote:  Is there ANY industry expertise brought to the table by any of them? If there is, I don't know about it.

At first glance this looks like UPS, FedEx, and Delta deciding they can build better airplanes than Boeing. Buying a lot of airplanes, knowing how to use them, and wishing they were cheaper to operate doesn't in any way give you the expertise required to build them.

I see two relevant outcomes from many possibilities.

If they fail, it means that the market is already delivering healthcare more efficiently than a few big companies can.

If they succeed, it means there is something drastically wrong with the market.

At this point, I am betting on the market being smarter than three non-healthcare companies with expense problem.

I don't know that they can fix it but the market is not working either. Our annual health care spending per person is $2000 more per year than any other country. $5100 more than Canada which has a larger percentage of their population in rural areas, which are supposed to be harder to deliver services to.

We spend almost 18% of GDP on health care. Sweden at nearly 12% is next closest.

There simply isn't a true free market in health care in the US. If the drug or medical device you need is on patent, it is under a monopoly. If you live in rural America, if you don't like the price at the local hospital you are looking at an hour or more drive. The supply of specialists is constrained. My father-in-law doesn't like his oncologist but he would have to drive 70 miles one way to see another on a weekly basis and that would mean if he needs hospitalization in the future his alternative wouldn't have privileges.

In Little Rock, you need a neurologist about a third aren't accepting new patients and many of the remaining aren't accepting anything but migraine patients.

Many providers will not even reveal their prices for services, you cannot have a free market where the price is a secret.

I keep hearing health care is more expensive in the U.S. What I don't hear is that we have more choice in health care than most other countries.

Your father-in-law does have the choice to seek treatment elsewhere, but it isn't practical for him. In a socialized system, he would not have any choices at all.

The facilities that oncologists use are in competition to attract the best doctors. The better doctors are able to command more money. Again, the freedom of the market in this case drives prices up. There is no state-defined salary for an oncologist.

Medical equipment enters the same situation. Product A and B are in competition for sales. Doctors will choose what they believe to be the most effective product, and the market will raise the price of that product. In a socialized system, the price to be paid would be fixed, and there would be little incentive to build a better device if the single buyer won't pay for it.

So yes. Health care costs more here. It costs more for two basic reasons. One, we have a free market where we can choose to buy the better product. And two, people with the choice will almost always pay anything to stay alive. It differs from all other markets where cost/benefits are the normal decision metric. The cost/death evaluation is inherently different. Couple that with a relatively free market for health care, and prices get driven up.

Higher medical prices here is NOT a bad thing. It is a natural market consequence.

Trying to "fix" it is tilting at windmills.

You cannot have a free market when the consumer cannot discover the price. Period. It is an impossibility.

You also cannot have a free market when there is constraint on the number of people permitted to compete in the market. Since 1997 Federal law has capped how many residency positions Medicare will fund and there are not a great deal of privately funded positions so we are short of physicians with gap growing because there are not enough residency positions. We have increased medical school positions without increasing residency a similar amount so last year 500 medical school graduates were left unable to pursue licensing because they could not find a residency.

You are also mistaken about what other countries do.

Finland for example. You are "stuck" with a primary care physician for 6 months. After 6 months you are free to switch to any primary care physician you choose who is accepting patients. When I was on a PPO plan the only way I could switch during the calendar year was if my doctor closed, I moved away, or my doctor stopped accepting my insurance.

Last time I was at my doctor's office I heard the receptionist tell someone on the phone that Doctor X was not accepting any new United patients at the time and Doctor Y was not accepting any new patients at all. That's no different from most "socialized" medicine nations where the providers are privately owned businesses and choose how many patients they will accept at any given time.

Really no different than the thousands of companies that exist solely off government contracts for services that have been privatized.

Now in the UK you have a near complete single provider system which is a different animal.

I can accept your points on the residencies and the insurance restrictions.

You are right that prices are not transparent. I still contend there is a reason for that. People don't shop for health care by price. They shop for the result.

I want my arm to work. I want my back to quit hurting. I want to stay alive.

That's what people are purchasing. They aren't purchasing the medical services and supplies. They are purchasing the result.

I don't know how you change that.
01-31-2018 08:47 PM
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Post: #10
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 08:47 PM)Claw Wrote:  You are right that prices are not transparent. I still contend there is a reason for that. People don't shop for health care by price. They shop for the result.

I want my arm to work. I want my back to quit hurting. I want to stay alive.

That's what people are purchasing. They aren't purchasing the medical services and supplies. They are purchasing the result.

I don't know how you change that.

It all depends on context - no one will Google the nearest three hospitals to see which one is having a Sunday Funday special with at least four starts on Yelp if a relative has a heart attack. If you need a flu shot, you're more inclined to look online to make sure a provider isn't trying to rip you off. Urgent or life-saving care will always be pricey because good health services simply cost a lot of money and people will always be willing to do whatever it takes to pay for life to your point, but with preventative care prices are driven down when they're posted for all to see.
01-31-2018 09:56 PM
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Post: #11
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 08:42 PM)bullet Wrote:  You are also not considering the impact of our tort system. Malpractice insurance is a huge cost for many specialties and expensive for all. Extra tests run because of lawsuits add a huge amount of non-value added costs. The worker's comp system has driven out a huge amount of costs by getting rid of most of the lawsuits.

We also have an insurance system where the insurance companies are motivated not to pay meaning providers and insurance companies have a lot of employees adding no value, just shifting cash flow from one entity to another. We aren't regulating that and its getting worse.

And as Arkstfan says, there isn't much transparency in prices.
News today in Arkansas is that the company handling pharmacy benefits in Arkansas for Blue Cross (CVS something or other) is reimbursing pharmacies at below the wholesale cost of certain drugs.
In theory one might think that well that's good because the pharmacies can refuse to stock the drugs until the wholesaler drops the price.
Problem is Grandma needs the refill today. So the pharmacy has to either stock it and sell at a loss or Grandma can take her business to CVS (well in a few places in Arkansas) or Grandma can start ordering the medication online (from a CVS owned company).

That creates an interesting dilemma because it smells like CVS using the management contract to handle reimbursements to gain market share by squeezing its competitors in the retail market.

If it were a truly independent company handling the benefits it just looks like a business dispute.

The tort system is a double edged sword.
Years back there were dire predictions that we would not have anesthesiologists because the malpractice claims were going out the roof.
Their Board tasked a group of highly regarded members to comb through malpractice claims in coordination with malpractice carriers and identified a number of issues that could be addressed. Two fairly inexpensive changes (one was keeping an O2 monitor on patients, don't recall the other) and some procedural changes were suggested.
The Board declared their recommendations to be "the standard of care" which meant deviation would essentially be evidence of malpractice.

The number of anesthesia related deaths and injuries plummeted and 20 years later it was possible to buy malpractice coverage as an anesthesiologist for less than the price 20 years earlier without adjusting for inflation.

So that was good.

But the downside is that typically juries when they find someone at fault for a car wreck or malpractice or that loose step on your front porch they add up the injury costs (medical costs) and then give some related amount for pain and suffering or in some cases as punitive damages.

If medical costs rise 10% then you can certainly expect tort costs to rise a similar amount even though the other factor usually used, lost wages, has not been rising much at all the past 15-20 years.

I also wonder how much of "defensive medicine" is a way to justify to yourself ordering extra tests from your own lab or own imaging machines to make more money. I'm not doing it to increase my income, I really need it to protect myself from malpractice claims. I tend to suspect it is a little of both.
02-01-2018 10:36 AM
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Post: #12
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(01-31-2018 08:47 PM)Claw Wrote:  
(01-31-2018 04:08 PM)arkstfan Wrote:  
(01-31-2018 01:47 PM)Claw Wrote:  
(01-31-2018 01:28 PM)arkstfan Wrote:  
(01-31-2018 11:36 AM)Claw Wrote:  Is there ANY industry expertise brought to the table by any of them? If there is, I don't know about it.

At first glance this looks like UPS, FedEx, and Delta deciding they can build better airplanes than Boeing. Buying a lot of airplanes, knowing how to use them, and wishing they were cheaper to operate doesn't in any way give you the expertise required to build them.

I see two relevant outcomes from many possibilities.

If they fail, it means that the market is already delivering healthcare more efficiently than a few big companies can.

If they succeed, it means there is something drastically wrong with the market.

At this point, I am betting on the market being smarter than three non-healthcare companies with expense problem.

I don't know that they can fix it but the market is not working either. Our annual health care spending per person is $2000 more per year than any other country. $5100 more than Canada which has a larger percentage of their population in rural areas, which are supposed to be harder to deliver services to.

We spend almost 18% of GDP on health care. Sweden at nearly 12% is next closest.

There simply isn't a true free market in health care in the US. If the drug or medical device you need is on patent, it is under a monopoly. If you live in rural America, if you don't like the price at the local hospital you are looking at an hour or more drive. The supply of specialists is constrained. My father-in-law doesn't like his oncologist but he would have to drive 70 miles one way to see another on a weekly basis and that would mean if he needs hospitalization in the future his alternative wouldn't have privileges.

In Little Rock, you need a neurologist about a third aren't accepting new patients and many of the remaining aren't accepting anything but migraine patients.

Many providers will not even reveal their prices for services, you cannot have a free market where the price is a secret.

I keep hearing health care is more expensive in the U.S. What I don't hear is that we have more choice in health care than most other countries.

Your father-in-law does have the choice to seek treatment elsewhere, but it isn't practical for him. In a socialized system, he would not have any choices at all.

The facilities that oncologists use are in competition to attract the best doctors. The better doctors are able to command more money. Again, the freedom of the market in this case drives prices up. There is no state-defined salary for an oncologist.

Medical equipment enters the same situation. Product A and B are in competition for sales. Doctors will choose what they believe to be the most effective product, and the market will raise the price of that product. In a socialized system, the price to be paid would be fixed, and there would be little incentive to build a better device if the single buyer won't pay for it.

So yes. Health care costs more here. It costs more for two basic reasons. One, we have a free market where we can choose to buy the better product. And two, people with the choice will almost always pay anything to stay alive. It differs from all other markets where cost/benefits are the normal decision metric. The cost/death evaluation is inherently different. Couple that with a relatively free market for health care, and prices get driven up.

Higher medical prices here is NOT a bad thing. It is a natural market consequence.

Trying to "fix" it is tilting at windmills.

You cannot have a free market when the consumer cannot discover the price. Period. It is an impossibility.

You also cannot have a free market when there is constraint on the number of people permitted to compete in the market. Since 1997 Federal law has capped how many residency positions Medicare will fund and there are not a great deal of privately funded positions so we are short of physicians with gap growing because there are not enough residency positions. We have increased medical school positions without increasing residency a similar amount so last year 500 medical school graduates were left unable to pursue licensing because they could not find a residency.

You are also mistaken about what other countries do.

Finland for example. You are "stuck" with a primary care physician for 6 months. After 6 months you are free to switch to any primary care physician you choose who is accepting patients. When I was on a PPO plan the only way I could switch during the calendar year was if my doctor closed, I moved away, or my doctor stopped accepting my insurance.

Last time I was at my doctor's office I heard the receptionist tell someone on the phone that Doctor X was not accepting any new United patients at the time and Doctor Y was not accepting any new patients at all. That's no different from most "socialized" medicine nations where the providers are privately owned businesses and choose how many patients they will accept at any given time.

Really no different than the thousands of companies that exist solely off government contracts for services that have been privatized.

Now in the UK you have a near complete single provider system which is a different animal.

I can accept your points on the residencies and the insurance restrictions.

You are right that prices are not transparent. I still contend there is a reason for that. People don't shop for health care by price. They shop for the result.

I want my arm to work. I want my back to quit hurting. I want to stay alive.

That's what people are purchasing. They aren't purchasing the medical services and supplies. They are purchasing the result.

I don't know how you change that.

I would argue that virtually no one really shops results, that is they don't go into the very obtuse scorecards available online to determine who is the best ortho to see for knee surgery nor the best cardiac surgeon for a bypass.

Yet I will agree people think they are shopping result. If their neighbor is doing well after knee or heart surgery then they want to see that doctor. They gravitate to the clinic or hospital with the advertising that best convinces them they are the best.

People shop for the perception of results rather than actual results.

I think there are four viable fixes.
1. Single provider. The system the UK uses and the VA uses. My take. Not a fan. It isn't a system where innovation is easy to do and the people with a mind to innovate are cut off from being rewarded for their innovation. My understanding is some of the best changes to come out of VA have been via partnerships between VA and teaching hospitals where VA pays a doctor to provide services so many hours but their primary job is teaching and thus tenure and ability to secure employment at even better places is tied to their research and papers published. Single provider would require a staggering outlay to acquire clinics and hospitals required to meet needs.
2. Single payer. Little known by most in the US, but most single payer systems are multiple single payers. For example in Canada, each province administers the local plan, in Switzerland each Canton. Canada with a 10th of the population of the US doesn't think they can handle administration on a national basis. We have the framework, it's not Medicare but Medicaid where states like the Provincial governments have some leeway in how their programs are run and a little bit in coverage. Clinics and hospitals are mostly privately owned just as most Medicaid providers a privately owned but there are some state or local government owned hospitals and clinics in the system, generally teaching hospitals and those located in low population density areas or low income areas where private enterprise has declined to compete. Not the best fix, better than what we have but a solution that would be incredibly hard to find support for.
3. Blended payer. We sort of have this now. The Federal government handles people age 65 and up, those needing dialysis and those eligible for Social Security disability adjudicated disabled, also the VA system. The states handle those in the worst poverty and those in poverty adjudicated disabled but ineligible for Social Security disability benefits under Medicaid and children in low income families ineligible for Medicaid via CHIP. What is missing from the blend is the healthy 35 year old who is fully employed struggling to find an affordable plan. Medicare and maybe Medicaid as well ought to be able to offer an alternate plan that is based on premiums rather than tax subsidy. Could be an intriguing option for smaller employers enable to effectively spread risk in group plans.
4. Singapore plan. This is my favorite because I've been using a high deductible plan with an HSA for several years. Under this there is no mandate to purchase insurance, there is however a mandate to participate in a health savings plan with a certain percentage of income. You get what is essentially a catastrophic health insurance plan that doesn't kick in until a very high deductible is met. When you die once your last medical costs are paid, the balance of your account passes to your heirs as an unrestricted inheritance. Everything below that, you pay out-of-pocket either directly out of pocket or via an HSA. Kid needs an athletic physical, you can choose between your pediatrician or the urgent care clinic advertising them for $35. Need some stitches from doing yard work? Pick your poison, pay a lot of your HSA to the local ER, pay your primary care doctor, or pay an urgent care clinic. More importantly, your doctor wants you on medicine for your elevated blood pressure and prescribes the newest on patent drug, once you see the real cost after going to your local pharmacy and then checking online for a better price you are more motivated to ask your doctor if there is a cheaper generic that will work. You actually see what things cost. When my preferred migraine medication was still on patent, my doctor agreed to write me two prescriptions. One for the drug that usually didn't make sick and one for a generic that would make sick about 3 out of 5 times. I took the cheaper drug at night and on weekends when I wasn't going to miss work from the side effects. It doesn't do anything to help you on figuring the cost of a heart bypass but it gives you greater control of your money for the normal routine crap. It's my preference.
(This post was last modified: 02-01-2018 11:26 AM by arkstfan.)
02-01-2018 11:23 AM
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Post: #13
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(02-01-2018 10:36 AM)arkstfan Wrote:  
(01-31-2018 08:42 PM)bullet Wrote:  You are also not considering the impact of our tort system. Malpractice insurance is a huge cost for many specialties and expensive for all. Extra tests run because of lawsuits add a huge amount of non-value added costs. The worker's comp system has driven out a huge amount of costs by getting rid of most of the lawsuits.

We also have an insurance system where the insurance companies are motivated not to pay meaning providers and insurance companies have a lot of employees adding no value, just shifting cash flow from one entity to another. We aren't regulating that and its getting worse.

And as Arkstfan says, there isn't much transparency in prices.
News today in Arkansas is that the company handling pharmacy benefits in Arkansas for Blue Cross (CVS something or other) is reimbursing pharmacies at below the wholesale cost of certain drugs.
In theory one might think that well that's good because the pharmacies can refuse to stock the drugs until the wholesaler drops the price.
Problem is Grandma needs the refill today. So the pharmacy has to either stock it and sell at a loss or Grandma can take her business to CVS (well in a few places in Arkansas) or Grandma can start ordering the medication online (from a CVS owned company).

That creates an interesting dilemma because it smells like CVS using the management contract to handle reimbursements to gain market share by squeezing its competitors in the retail market.

If it were a truly independent company handling the benefits it just looks like a business dispute.

The tort system is a double edged sword.
Years back there were dire predictions that we would not have anesthesiologists because the malpractice claims were going out the roof.
Their Board tasked a group of highly regarded members to comb through malpractice claims in coordination with malpractice carriers and identified a number of issues that could be addressed. Two fairly inexpensive changes (one was keeping an O2 monitor on patients, don't recall the other) and some procedural changes were suggested.
The Board declared their recommendations to be "the standard of care" which meant deviation would essentially be evidence of malpractice.

The number of anesthesia related deaths and injuries plummeted and 20 years later it was possible to buy malpractice coverage as an anesthesiologist for less than the price 20 years earlier without adjusting for inflation.

So that was good.

But the downside is that typically juries when they find someone at fault for a car wreck or malpractice or that loose step on your front porch they add up the injury costs (medical costs) and then give some related amount for pain and suffering or in some cases as punitive damages.

If medical costs rise 10% then you can certainly expect tort costs to rise a similar amount even though the other factor usually used, lost wages, has not been rising much at all the past 15-20 years.

I also wonder how much of "defensive medicine" is a way to justify to yourself ordering extra tests from your own lab or own imaging machines to make more money. I'm not doing it to increase my income, I really need it to protect myself from malpractice claims. I tend to suspect it is a little of both.

One thing I didn't mention is the regulation of doctors. State medical boards don't deal very effectively with bad doctors. Obviously you don't want to lightly take away someone's livelihood, but the 80/20 rule applies to malpractice. A few doctors generate the bulk of the claims. There were a series of articles in the Atlanta paper a couple of years back on some doctors who had multiple really bad stories who only got a slap on the wrist.
02-01-2018 02:06 PM
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Post: #14
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(02-01-2018 02:06 PM)bullet Wrote:  One thing I didn't mention is the regulation of doctors. State medical boards don't deal very effectively with bad doctors. Obviously you don't want to lightly take away someone's livelihood, but the 80/20 rule applies to malpractice. A few doctors generate the bulk of the claims. There were a series of articles in the Atlanta paper a couple of years back on some doctors who had multiple really bad stories who only got a slap on the wrist.

Very true. Know of a doctor that was fired from a clinic supposedly it was just "a personality conflict" but rumor was he had been attentive to potential drug interactions on several occasions. Few years later fired at another for over-prescribing opioids before we ever had heard of there being an opioid epidemic. Straw that ended him there was gave a heavy load to a person with severe COPD and just quit breathing enough to live given their health condition. I picked up his trail when I was working on a case where a patient was traveling a long distance to see him and getting a lot of pain meds, just struck me weird to drive past so many clinics to see the guy. That's when I started checking on the doctor's past. Last I had heard he got a six month license suspension, followed by six months of having a supervising physician looking over his cases and no prescriptions without approval of another physician. After that ended he was to be restricted from writing prescriptions for any narcotic but he could apply to have that lifted after two years of the restriction.
02-01-2018 03:16 PM
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Post: #15
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
One thing I like about the Swedish “no fault” malpractice system is that it becomes a single collection point for data about bad docs. You start screwing up and the system catches you.
02-01-2018 06:33 PM
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Post: #16
RE: Amazon/Berkshire/JP Morgan good or bad for healthcare?
(02-01-2018 06:33 PM)Owl 69/70/75 Wrote:  One thing I like about the Swedish “no fault” malpractice system is that it becomes a single collection point for data about bad docs. You start screwing up and the system catches you.

Was not aware of that. Very smart idea.
02-02-2018 11:41 AM
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