Profit is Not Bad for Your Health

 

Some people see profit as a bad thing. I see profit as an incentive to do things right and to please the customer. This is certainly true when it comes to your healthcare.

House Democrats do not understand this principle. Their new Medicare For All bill asserts “a moral imperative . . . to eliminate profit from the provision of health care.”

Bill Hammond, writing in The Wall Street Journal, says the legislation specifies that federal health funding – virtually all health funding if the bill were to become law – may not be used for “the profit or net revenue of the provider.” He says that makes it even more radical and less realistic than Senator Bernie Sanders’ bill in the Senate.

Hammond tells us to ponder that scenario: “It one stroke, the House bill would sweep away the business model used by the vast majority of doctors in private practice, 28% of hospitals, 705 of nursing homes, and countless clinics, outpatient surgery facilities, dialysis centers, home-care agencies and more. The bill doesn’t detail an enforcement mechanism, but it seems to mean that thousands of providers would either have to reorganize as nonprofits or shut down.”

This is just the beginning of what government-controlled healthcare looks like. Every aspect of healthcare will be decided by bureaucrats in Washington instead of by your doctor. Do you think they will hesitate to save money at the expense of your healthcare? Do you think for one minute they will hesitate to deny you care they deem unnecessary or too expensive, no matter what your doctor says?

Profit is a good thing when it motivates doctors and hospitals to provide the best care possible to attract more customers. As long as the playing field is level – as long as there is transparency in pricing and the freedom for patients to choose – such competition for profits will drive prices down and quality up. Profits are only a bad thing when there is no competition.

Hammond says eliminating profit from an entire sector of the national economy would be unprecedented. He says a look at what’s happening now in the state of New York gives us an example of why this leads to dysfunction.

The New York hospital industry has been 100% nonprofit or government-owned for more than a decade. Hammond says this is a byproduct of longstanding, unusually restrictive ownership laws that squeeze for-profit general hospitals. The last of these closed its doors in 2008.

A report last year from the Albany-based Empire Center is quite revealing. The state’s healthcare industry’s financial condition is chronically weak, with the second-worst operating margins and highest debt loads in the country. There is no evidence that expunging profits has reduced costs. New York’s per capita hospital spending is 18% higher than the national average.

Despite several famous Manhattan flagship institutions, the overall quality of New York’s hospitals is poor. They only scored 2.18 stars out of five on the federal government’s Hospital Compare Report – last out of 50 states! Furthermore, they fall short on accessibility for the uninsured. They only spent 1.9% of revenues for charity care in 2015, a third less than privately owned hospitals nationwide. So the charge that “for-profit hospitals don’t do their share of charity work” is false.

Lastly, the Medicare For All bill in the House would also blow up the patent system for prescription drugs. If a manufacturer won’t agree to an “appropriate price” for its product, federal officials would be empowered to abrogate the patent and assign another company to make the drug. That policy would surely undermine pharmaceutical research and development of new, life-saving drugs. If this bill passes, it will be the patients who will be paying the steep price – with their health.

Transparent Medical Prices

 

You’d never buy a car without knowing the price. We compare prices every day for the food we eat, the clothes we wear, the hotels we use and the planes we fly. But when was the last time you compared prices for medical treatment?

It’s difficult to find out the cost of medical treatment. But that’s about to change. The Trump administration is sounding out the medical industry on requiring hospitals, doctors and other healthcare providers to publicly disclose the secretly negotiated prices they charge insurance companies for services, according to Stephanie Armour and Anna Wilde Mathews of The Wall Street Journal.

The idea is to put more purchasing power in the hands of patients (consumers) in an effort to lower medical costs and insurance premiums. Hospitals and insurers typically withhold specific prices for medical services as closely held secrets through confidentiality agreements. This puts consumers at a disadvantage when trying to compare prices.

The first step in this move by the Trump administration is the Department of Health and Human Services (HHS) seeking public comment on whether patients have a right to see the discounted prices in advance of obtaining care. Rates could potentially be posted on public websites, where consumers would check the negotiated price of a service before they pick a provider. If effective, it would lead to lower copays and/or deductibles.

With the growth of Health Savings Accounts (HSAs), patients have more control over their medical expenditures, and increased transparency of prices would make them more informed consumers of medical treatment. They would also have more incentive to save money because the unspent dollars are theirs to keep.

Naturally, this move is opposed by the American Hospital Association. They say, “Disclosing negotiated rates between insurers and hospitals could undermine the choices available in the private market.” Consumer advocates, however, praised the idea. “If this rule goes forward, it will be a huge step toward true pricing transparency and will finally allow patients to really see what their costs will be before a service – something that has rarely been possible before,” said Caitlin Donovan, director of outreach and public affairs at the National Patient Advocate Foundation.

The comment period closes May 3rd. Administration officials could move to issue a final rule mandating the disclosure of negotiated rates after that. They say the authority for requiring price disclosure stems from the 21stCentury Cures Act enacted in 2016, which makes blocking of health information illegal under penalty of up to $1 million, and from regulations stemming from federal privacy law.

Imagine shopping for medical treatment like you shop for the best deal on a hotel. Online comparison-shopping is currently available from a variety of websites including Trivago.com, Hotels.com, Expedia.com and others. Some day we should be able to do the same thing when you want to get your knee replaced.

Of course, the lowest price is not necessarily the best deal. Quality will always be able to demand a higher price.  The best doctors and hospitals should be worth more. But price transparency and competition should lead to higher quality and lower prices among all providers. Hospitals and insurers may scream and deny any benefits to this change, but patients should be the winners in the end.

 

(For more on this subject, see my earlier post Transparency Lowers Healthcare Prices.)

Should Teens Have Confidential Time With the Doctor?

 

The teenage years are a difficult time of transition from childhood to adult. Physical and emotional changes occur rapidly and many teens suffer from lack of self-confidence and insecurity. This is nothing new; indeed it has been happening since man first inhabited the world.

But now there is a push from some to allow teens the privacy of confronting these issues with their doctor – without a parent in attendance. In an age when schools can’t give an aspirin to a child without parental permission, this is a radical change.

Brianna Abbott, writing in The Wall Street Journal, says, “Adolescent-health experts and doctors are stepping up efforts to increase teenagers’ access to confidential health care and help them develop skills to navigate their own health care. Groups such as the American Academy of Family Physicians, the American Academy of Pediatrics and others have long pushed for adolescents to have individual time with their doctors, but these recommendations are unevenly practiced, pediatricians and adolescent-medicine specialists say.”

Abbott describes how this works: “When Hannah Regan was about 14 years old, her family doctor in Kentucky started a new routine. During checkups, the doctor would ask Hannah’s mother to briefly step out of the exam room, Then, in private, Hannah would discuss a questionnaire she filled out about smoking, drinking, mental health and other sensitive issues. There were awkward moments, she says, but she appreciated the time alone with her doctor.”

The implication of this change is that doctors know what’s best for your son or daughter and you should trust them to steer your child in the right direction – both medically and morally. The authority for this change comes from academic medical institutions such as the American Academy of Pediatrics and the American Academy of Family Physicians.

As a parent, should you support this change? Can you trust your child’s physician to share your moral convictions? The answer should be a firm No!

The American Medical Association (AMA) was the largest organization of physicians in the United States when I became a doctor forty years ago. I trusted they would represent the best medical opinions and share my moral convictions regarding medical treatments. I was wrong.

I soon learned the AMA supported abortions and organizations like Planned Parenthood that provided abortions. They encouraged homosexuality even though the homosexual community was being devastated by the AIDS epidemic. They promoted condoms for prevention of sexually transmitted disease but never suggested abstinence outside of marriage would be more effective. They chose the path of political correctness rather than suggest any sort of moral convictions. (Today the AMA represents only about one in four American doctors.)

These are the same people who want you to trust them to provide your teenager with the best medical and moral advice. You cannot trust them to suggest abstinence from sexual activity when a birth control pill will prevent the only medical problem they’re concerned about. You cannot believe they will object to things like alcohol, marijuana, or other substance abuses except in excesses that will cause obvious harm to their health. Doctors are much more tuned in to disease treatment than prevention.

Parents who are willing to cooperate in this push for teen confidentiality are abdicating their parental responsibility. It may be much easier for them to let the doctor talk about sensitive issues but the result may not be what they expect.  Doctors can’t be expected to be parents. They especially can’t be expected to keep secrets from parents that may impact the health of their child. Parenting is a tough job – but no one else should be asked to fill your shoes. Take the time to really be a parent. If your teenager has more trust in the doctor than you, you’ve got work to do!