Where Have All the Doctors Gone?
- Thread starter somarco
- Start date
Interesting article and I agree with most of what was said here. But I did notice a few things that struck me as not right. And keep in mind that I have been a carrier rep my whole life, working with medical management people, including my RN wife who ran a medical management department in a health plan.
The first is that this problem was in large part created by the AMA. The second is some of the examples appear to be questionable. The lady with swollen joints appears to be what I would expect. The doctor who relocated to NE and could not find a doctor to accept the wife as a patient appears suspect. As does the MRI in NYC. I have asked people in our medical management department, and they have also find this to be suspect.
Just me 2 cents
The first is that this problem was in large part created by the AMA. The second is some of the examples appear to be questionable. The lady with swollen joints appears to be what I would expect. The doctor who relocated to NE and could not find a doctor to accept the wife as a patient appears suspect. As does the MRI in NYC. I have asked people in our medical management department, and they have also find this to be suspect.
Just me 2 cents
- Thread starter
- #13
I majored in economics and finance (and insurance) in college. I have seen nothing to justify this concept.
Health insurance has a surprisingly thin margin, typically around 4%, and virtually no difference in a for profit company vs a non-profit company like KP and some of the Blues.
Not for profit carriers do not typically have higher expenses even though there are more fingers in the profit pie.
Nonprofits have salary costs, just as for-profit businesses do. Thus, they may pay reasonable compensation to anyone providing services (like employees). Nonprofits are allowed to make a profit, but they must be funneled back into the organization's activities.
Last edited:
- Thread starter
- #14
@LeeV I will agree . . . there are a number of things that seem overstated or there are missing pieces. Certainly "big government" shares some of the blame for rising health care costs.
We have similar backgrounds and a different way of analyzing these kind of hit pieces. One that jumped out is the article was "researched" by AARP and came to the conclusion that someone, other than a carrier, was to blame.
Another being, they call out CVS Health and Amazon but neglect to throw UHC in the mix. Seems a bit disingenuous to me.
We have similar backgrounds and a different way of analyzing these kind of hit pieces. One that jumped out is the article was "researched" by AARP and came to the conclusion that someone, other than a carrier, was to blame.
Another being, they call out CVS Health and Amazon but neglect to throw UHC in the mix. Seems a bit disingenuous to me.
Last edited:
Warning others than somarco reading this. This is probably more information than many on here care to read and goes well beyond what most insurance agents would even remotely care about.
Back when I taught some health administration courses to undergrad and masters students studies we used textbooks stated that for profits charged more, got reimbursed at a higher level, and had higher expenses in part due to dividends and having to pay taxes, bonuses to physicians, top execs, etc. (but they were also expanding faster by acquisitions, had easier access to capital for that, etc.).
Teaching entrepreneurship some of what is taught in upper level classes address how Venture Capitalists buy low, cut expenses, cut anything not essential to the primary purpose of the company, make something more efficient, etc. then sell high/go public. They make their money when they sell/go public. Of course the failure rate is pretty high for newer startups, but most of the health care involvement though, outside of in the pharma industry (where they buy small, typically single drug, startups and then at the point if/when it is ready for clinical trials sell to the company and research team to the pharma since they have the infrastructure and funds for that; it also saves pharma from as many failures), is generally with more established but financially struggling health care systems/practices. Usually the debt that the buyer takes on reduces profits and usually results in higher prices to partly cover that. (Non-profits get more government and grant money that doesn't have to paid back - obviously both groups need capital for projects.)
Business research documents over and over (usually taught more in upper level strategy classes, more detail than in the capstone classes undergrad or grad) that many mergers and acquisitions don't result in the anticipated gains due to how complicated it can be to merge cultures, processes, staffing issues and affect profits due to debt due to the purchase. Profits can drop and prices can go up until they sort out all the merger of 2 companies issues (and many never realized the anticipated gains due to failure to sort that out ).
And yes economics would predict that for profits would be more efficient, be more profitable, etc. however that has not materialized as well in the health care industry as it has in other industries due to the particular conditions in the health care industry. Research here is very mixed.
There are other studies that document, on average (across several countries, not just the USA) that for profits typically charge more and typically get higher reimbursements for the same services.
Since I am no longer teaching I threw out boxes and boxes of resources and cleared out my computer so I had to hunt for something reputable to back up my statements (and of course nothing is clear cut).
All of this will tend to drive costs of health care up (yes there are a number of other reasons as well including fraudulently upcoding, just for an example) or increase profits by denying services (like what is going on in many MAP's).
Quotes from the source at the bottom of my post:
"In sum, although standard economic theory predicts greater efficiency9 in for-profit than in not-for-profit organizations, the expected ability of investor-owned for-profit organizations to produce the same services at lower cost than their not-for-profit counterparts has not been demonstrated. Large organizations theoretically benefit from economies of scale and reduced transaction costs, but such savings may be offset by central-office costs, higher capital costs resulting from a growth orientation, and the payment of taxes and dividends"
In another part of the article:
"Studies comparing for-profit and not-for-profit hospitals show clear disadvantages of investor ownership regarding cost to payers and smaller disadvantages regarding expenses and service to patients who are unable to pay."
"The presence of a for-profit sector has some advantages that are not revealed in studies comparing its performance with that of not-for-profit institutions. First, the for-profit sector's access to equity capital (and the resulting enhanced access to debt capital) can help meet the health care sector's capital requirements and reduce the need for government to raise capital through taxes, which the federal government is unlikely to do in the forseeable future. However, over time, investor equity is an expensive source of capital,"
The chapter also talks about a ton of other issues in health care and contrasts for profit and non-profits (I wish they had included government owned systems too). I found it an interesting read but I would suspect most will say too much information that has nothing to do with selling insurance (and they would be right other than how it may affect costs which will affect premiums)
=====
Of course I am no expert, rather was a generalist when I taught this kind of stuff and I backed into teaching health care administration due to a hiring freeze, had the lowest seniority and no one else wanted to learn a new field, commute off campus and then have no place to park when they got back to the main campus. As a result I was "elected". At the time I was pretty ticked as I had a heck of a lot to learn very quickly, I wasn't tenured yet and it cut into my time big time to get up to speed.
Now, of course, I am glad I have that knowledge but for the first year I did this I certainly wouldn't have said that although I found it interesting and also found there is a pretty big difference in what we teach to MBA's (eg mostly about fortune 500 companies and little to nothing about non-profit, industries that some would call, essentially, a public good, etc.) and masters of health care administration students (I also taught undergrads in that dept too). In some respects the accredited health care administration program watered down MBA material.
We are seeing some of the results of that with far more MBA's in health care management positions. I also had, maybe, 1/4 of my classes I had taught in the college who switched to health care administration as they were struggling in MBA's. That is a scary thought as we need the best and brightest to run health care systems as they are every bit as complicated as global/multinational corporations, just complicated in a different way.
OK I'll get off my soap box. And yes I probably missed some things in my proof reading.
- Thread starter
- #16
@annon123 nothing personal, but this is like the proverbial axiom about watching sausage being made.
There aren't a lot of NFP health insurance carriers. I mentioned a few earlier but failed to mention fraternals.
Most health insurance carriers are for profit entities and most are diversified. They make money in some areas, lose money in others, but most make money, albeit slim margins.
Insurance carriers of all colors are highly regulated. There are penalties for lower than mandated loss ratios as well as higher than average profit margins. As a former employer said . . . insurance is the craziest business model. If you make too much money you have to give some of it back, and if you lose money . . . oh well, better luck next year.
Managed health care has more ways to rig the outcome than a casino. I have no idea how managed health care companies end up losing money (other than stupidity) but some do. That, plus excessive oversight by the government resulted in fewer carriers for 2025 plus tighter networks, fewer formulary drugs and lower commissions (in some cases).
While most carriers are profitable the providers they own/control seem to be having banner years . . . both in terms of revenue and profits. Why? Because provider billed charges are not regulated and neither are profit margins.
So here we are . . .
There aren't a lot of NFP health insurance carriers. I mentioned a few earlier but failed to mention fraternals.
Most health insurance carriers are for profit entities and most are diversified. They make money in some areas, lose money in others, but most make money, albeit slim margins.
Insurance carriers of all colors are highly regulated. There are penalties for lower than mandated loss ratios as well as higher than average profit margins. As a former employer said . . . insurance is the craziest business model. If you make too much money you have to give some of it back, and if you lose money . . . oh well, better luck next year.
Managed health care has more ways to rig the outcome than a casino. I have no idea how managed health care companies end up losing money (other than stupidity) but some do. That, plus excessive oversight by the government resulted in fewer carriers for 2025 plus tighter networks, fewer formulary drugs and lower commissions (in some cases).
While most carriers are profitable the providers they own/control seem to be having banner years . . . both in terms of revenue and profits. Why? Because provider billed charges are not regulated and neither are profit margins.
So here we are . . .
Yeah I know (sausage boiling)... The entire thing is a big, complicated mess.
The diversified ones certainly can engage in fairly effective, um, sneaky accounting where it is hard to track across subsidiaries what is going on - especially when they have their hands in most or all the pockets in most or all of the "supply chain" and the left hand feeds the right.. Add to that is that they are broadly diversified using subsidiaries rather than departments so they show up on different company financials. In my opinion this is not going to end well for the youngest generations (already isn't for the 65+ generations).
While I do not know if this is true, I have heard that some D's make most of the copay people pay for drugs the wholesale cost or in many cases that plus a profit for them so that the premiums and a percentage of what the patient pays is profit (and yes they need profits). I wouldn't be surprised if it might be.
And of course many of the usual for profit company assumptions aren't operating in health care. They have monopolies in so many areas, oligopolies in most others, and their customers are actually the physicians since they are the ones who make the reputation which then brings in (or not) the patients. Patients don't view the services as identical widgets and for the most part don't shop on price. They don't even know the price despite the government trying to make that more transparent.
- Thread starter
- #18
Stand alone PDP is a money loser for most, if not all the carriers.
PDP formularies are mostly horrible for policyholders. Generic copays with most plans are often higher than cash discount cards (GRx, SC for example).
In some cases, clients with expensive brand name drugs can get a "good deal" on those meds due to the $2k cap. I have a number of clients in that situation and they don't need PAP, grants, drugs from Canada. This makes it easy all the way around.
The drug side of Medicare has the PBM's pulling strings like a puppet master and making sure THEY turn a profit in spite of losses among retail pharmacies.
- 5,297
They also have relatives, neighbors, mistresses on the payroll in non-essential jobs to make sure the profits stay low enough to retain non-profit.
- 5,297
according to data, non-profits actually provide less charity care than the for profit hospitals, which is surprising
Similar threads
