Friday, 9 January 2015

20+ Facts About Healthcare Costs in the U.S.


General Healthcare Spend*
  1. The U.S. spends nearly 20% of its yearly GDP on healthcare. Other developed countries spend about half that, but the additional spend in the U.S. does not generally result in improved patient outcomes
  2. The healthcare-industrial complex spends more than 3x the amount of the military-industrial complex on lobbying each year
  3. Prices for U.S. prescription drugs are ~50% higher than those in other developed countries
  4. McKinsey estimated an annual healthcare overspend of $750 billion in the U.S.
  5. Company financials seem to indicate that if the U.S. payed for healthcare at similar levels to other developed countries, the profit margins for medtech and pharma companies would remain high enough to continue encouraging innovation

Image Courtesy of Sweetpsychic.com

Hospital Economics
  1. Hospital chargemaster prices are often capricious, and reach levels 10-15x higher than Medicare reimbursement rates
  2. Medicare price models are imperfect, but they are cost-based, and attempt to factor in all direct costs and allocated expenses required to provide a given product or service
  3. Hospitals around the U.S. market aggressively to Medicare patients
  4. The average hospital collection rate is ~35% of the total amount billed
  5. Average operating profit for non-profit hospitals is ~12%
  6. Medtronic sells its products at a 4x markup to COGS, and hospitals routinely sell devices to patients at a 2.5x markup to the wholesale price
  7. Pharma companies commonly offer wholesale prices at 10x to COGS, and hospitals routinely sell these drugs at a 4-5x markup to the wholesale price
  8. Hospitals routinely double- and triple-charge for items on the chargemaster that could reasonably be included under their general facility and room charges
  9. Doctor groups with in-house IVD labs seem to order more tests than those using outside labs
  10. A typical PET / CT piece of equipment will pay for itself within 1 year by carrying out 10-15 procedures per day. The equipment has an expected life span of 7-10 years
Patient Economics
  1. 60% of personal bankruptcy filings in the U.S. per year are related to medical bills
  2. Patients are often delivered large portions of medical bills not covered by their insurance plans
  3. 'Medical billing advocates' often achieve discounts of 30-50% on medical bills just by calling in to negotiate on behalf of patients

Image Courtesy of The Atlantic

Payer Economics
  1. Healthcare insurance premiums under ObamaCare will rise mainly due to 3 provisions: 
    1. Prohibitions on exclusion of pre-existing conditions
    2. Restrictions on co-pays for preventive care
    3. End of annual or lifetime payment caps
  2. The largest payers have historically negotiated reimbursement rates at 30-50% higher than Medicare rates, but increasing hospital consolidation is shifting more collective buying power back to the providers, so that the final negotiated reimbursement rates are moving closer to chargemaster prices
  3. FDA-approved drugs are reimbursed by Medicare at 'average sales price' + 6%. The manufacturer calculates and provides the average sales price

*All facts in this post are from Steven Brill's article Bitter Pill: Why Medical Bills are Killing Us, and his newly published book, America's Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System . They represent only a small portion of his findings, but are among the most objective and meaningful to me.

20 comments:

  1. Very interesting to learn about. Thanks for sharing this information with us.
    Market Research Companies in India | Top Market Research Companies in India

    ReplyDelete
  2. Hello Austin,
    Thank you for your nice sharing. The health care cost is a big fact in US. Not only US its all over the world its a major fact. Specially for the rural areas people can't bear this.

    ReplyDelete
  3. This comment has been removed by the author.

    ReplyDelete
  4. The realities beneath give an abnormal state see into an industry that effects every one of us at some time.

    1. Up to 400,000 individuals are slaughtered every year because of preventable restorative blunders.
    2. 30% of all U.S. healthcare costs, every year is worthless.
    3. 33% of healing facility patients endure some type of preventable damage amid their clinic remain.
    4. 58% of clinicians fondled risky about talking around an issue they watched or were not able motivate others to tune in.
    5. Basic care patients every experience about 2 medicinal mistakes for each day.
    6. 92% of U.S. doctors confessed to settling on some medicinal choices in light of maintaining a strategic distance from claims, rather than the best enthusiasm of their patients

    There are many companies with best health insurance. The main thing more alarming than the rundown above is envisioning what the numbers will resemble quite a while from now on the off chance that we don't on a very basic level change the system.

    ReplyDelete
  5. Look at this great little article about US nursing schools and educational programs.

    ReplyDelete
  6. When healthcare at home wasn't so prevalent or was extremely costly, burdensome and not available so easily, hospitals used to thrive. Home Healthcare Shop

    ReplyDelete
  7. Wisconsin Mortgage Corporation has been providing quality home loans across Wisconsin.Meet our loan officers. Please choose the loan officer that you were referred to view their personal page and apply online.Wisconsin Best Interest Rates Each loan officer's page includes the following services.

    ReplyDelete
  8. This information is very useful. thanks for sharing.
    Assisted Care

    ReplyDelete
  9. Maxicare Philippines is one of the biggest Healthcare Insurance service provider in Philippines. We are offering tailored plans and custom plans for provide you the best service. Why you are waiting? Contact us to get free consultation.

    ReplyDelete
  10. Everything was wonderful. We found our new dentist.Airdrie Dentist

    ReplyDelete
  11. Increasingly, the healthcare sector is gaining popularity among professional who are willing to gain a proper education and be employed in the right vertical in the healthcare sector. MyHealth Care Centre

    ReplyDelete
  12. The newer trends that evolved gave importance to the population as a whole. It not only treated illness, but emphasized on promoting the wellness of the people.Stanozolol

    ReplyDelete
  13. A healthcare venture capital firm's success is dependent on their ability to recruit and retain a high-performing Jockey, a.k.a. "the CEO." If it was only so easy to win The Kentucky Derby or deliver a ten-bagger return.source

    ReplyDelete
  14. I can see that you are an expert at your field! I am launching a website soon, and your information will be very useful for me.. Thanks for all your help and wishing you all the success in your business. online CPR certification

    ReplyDelete
  15. Positive site, where did u come up the information on this have read a few of the on your website now, and I really like your style. Thanks a million and please keep up the effective work.
    Wisdom tooth Airdrie

    ReplyDelete
  16. Great! This is a interesting read. It's a very useful and informative information for me. Thanks for sharing this useful information..
    lifeinvestmentinsurance

    ReplyDelete
  17. Thank You for sharing your article, This is an interesting & informative blog. It is very useful for the developer like me. Kindly keep blogging. Besides that Wisen has established as Best Corporate Training in Chennai .

    Nowadays JavaScript has tons of job opportunities on various vertical industry. Know more about JavaScript Framework Training visit Corporate Training Companies in India.

    This post gives me detailed information about the technology. corporate training companies in india

    ReplyDelete
  18. Such a very useful article. Very interesting to read this article.I would like to thank you for the efforts you had made for writing this awesome article.

    syringe infusion pump

    syringe pump manufacturers

    syringe pump suppliers

    ReplyDelete
  19. Excellent work! Keep it up.

    ReplyDelete