Healthcare 🩺

Resources

Of the 100s of articles/podcasts/books I’ve read, these are the best concentrations of healthcare knowledge that I’ve come across:

• EconTalk | Podcast | Vivian Lee: The Long Fix - overview of hospital procedure pricing and broken market incentives in healthcare
• EconTalk | Podcast | Adam Caifu: Ending Medical Reversal - discussion about the observational/anecdotal evidence used to justify most medical procedures
• EconTalk | Podcast | Robin Feldman on Drugs, Money, and Secret Handshakes - PBMs explained
• McKinsey | Report | Walking out of the hospital: The continued rise of ambulatory care… (2020)
• Clayton Christensen | Book | The Innovator’s Prescription
  • “The current value network in healthcare” - how current employer-sponsored insurance packages result in general hospitals getting used as primary care providers and why out-of-network care is so expensive
  • “Relative abilities to reduce costs and prices” pg 201 - how physician guilds have captured the reimbursement system and keep out Physicians Assistants and Nurse Practitioners
  • “Relative abilities to reduce costs and prices” pg 202 - summary of how Medicare pricing is determined
  • “Employers as integrators” pg 203 - overview of how and why employers are incentivized to improve healthcare outcomes and pricing

Salient Observations

• General physician stats
  • Percent of physicians work in private practices: 54% (Kane, 2019)
    • Percent of physicians who are owners in a private practice: 41%
  • Number of physicians in practices of varying sizes: 35% in <5; 20% in 5-10; 13% in 11-24; 7% in 25-49; 15% in 50+; 9% in hospitals (Kane, 2019)
  • Physicians in USA: ~1m (Wikipedia)
• Self-insured plan stats
  • 61% of covered workers have a plan that is self-insured (source: KFF 2019, section 10), with 71 million covered workers (source: KFF 2019, design & methods)
    • This was 54% in 2005, 44% in 1999 (KFF 2005 exhibit 10.1) and 40% in 1991 (Sullivan, 1992).
    • “Finance companies” have gone from 51% self-insured in 2005 to 70% in 2019 (KFF 2005 exhibit 10.1, KFF 2019 exhibit 10.3).
    • For small firms (3-199 employees), this was 13% in 2005 (exhibit 10.1) and 17% in 2019 (exhibit 10.3).

Ridiculous Observations

• Billed rates are frequently >5x the reimbursed cost (analysis of Medicare PUF CY2018)
• “There are more than 9,000 billing codes for individual procedures and units of care. But there is not a single billing code for patient adherence or improvement, or for helping patients stay well.” (pg 150, The Innovator’s Prescription)
• The average annual turnover for members in health plans is 17%, ie., each patient is a member for roughly 5-years. This disincentivizes preventative care for issues that manifest outside a short (<5 year) timeframe. (pg 206, The Innovator’s Prescription)

Questions

• What percentage of practices store credit card information for automated billing?
  • What percentage of practices charge coinsurance up-front, before the procedure?
• How much do claim clearinghouses charge?
• How are hospitals collecting data in order to accurately price services (for value-based reimbursement)?
• How are PCPs incentivized to be gatekeepers in HMOs/ACOs?
• How many self-insured employers directly employ physicians to handle care coordination (or non-physician care coordinators)? Why or why not? Do any TPAs offer this?
• Who is running Amazon’s healthcare initiatives? What complementary businesses do they need to exist (to create the value network) to provide their services?
• Review “Competition in Health Care: It’s Evolution over the Past Decade”, Health Affairs (2005) - discusses capitation systems and the problem with it being an approach to value-based care