Why hospitals/healthcare are so profitable in US?

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.
S

shangrila

Full Member
7+ Year Member
Joined
Feb 19, 2014
Messages
16
Reaction score
5
Members do not see this ad.
Why are hospitals, private clinics, and healthcare companies so profitable in the US? Even non-profit hospitals accumulate massive profits every year. In Europe and Canada, I've heard that hospitals get reimbursed for every patient or procedure by the government or private insurance according to a fee schedule (like the US), but their reimbursement is always roughly their expenses, so they are just marginally financially stable.
 
Keep big business big...and they keep voting for you. Simple politics.
 
shangrila said:
Why are hospitals, private clinics, and healthcare companies so profitable in the US? Even non-profit hospitals accumulate massive profits every year. In Europe and Canada, I've heard that hospitals get reimbursed for every patient or procedure by the government or private insurance according to a fee schedule (like the US), but their reimbursement is always roughly their expenses, so they are just marginally financially stable.
Click to expand...
Simple. Expenses and salaries of employees. End thread.
 
Last edited:
shangrila said:
Why are hospitals, private clinics, and healthcare companies so profitable in the US? Even non-profit hospitals accumulate massive profits every year. In Europe and Canada, I've heard that hospitals get reimbursed for every patient or procedure by the government or private insurance according to a fee schedule (like the US), but their reimbursement is always roughly their expenses, so they are just marginally financially stable.
Click to expand...
Tell me how would their CEOs get a big house in Connecticut and a few vacation homes all over the country as well as overseas... Not against free market, but most people complain about the greedy physician making 200k+/years but they tend to forget these hospital CEOs/CFOs who are laughing all the way to the bank. I heard for instance Neurosurgeons usually get a 1/4 of the amount of money they bring to the hospital. My question is: why physicians always have to be the ones who got the other end of the stick?
 
BestDoctorEver said:
Tell me how would their CEOs get a big house in Connecticut and a few vacation homes all over the country as well as overseas... Not against free market, but most people complain about the greedy physician making 200k+/years but they tend to forget these hospital CEOs/CFOs who are laughing all the way to the bank. I heard for instance Neurosurgeons usually get a 1/4 of the amount of money they bring to the hospital. My question is: why physicians always have to be the ones who got the other end of the stick?
Click to expand...

The love-hate relationship between hospital administrators and physicians has going on for a long time. The problem is the moment one group is thrown under the bus in the media, the other one attacks. The problem is that as physicians we are held accountable for administrators' actions. I could be wrong, but physicians aren't the ones coming up with prices for the chargemaster.

The job of the hospital administrator is to keep the hospital from going under financially. Whether I like it or not, that is a very hard job to do. We've gotten to the point in history in which we have told physicians, finally, that yes, you need to consider the price of things when you come up with an Assessment and Plan for your patient. That to me is very scary, as a physician and as a future patient.
 
I swear the average person thinks a CEO is an idiot. That's like saying Lebron James is bad at basketball. You don't rise to the top of the food chain by being bad at what you do.
 
RPiZYyY.png
 
PL198 said:
I swear the average person thinks a CEO is an idiot. That's like saying Lebron James is bad at basketball. You don't rise to the top of the food chain by being bad at what you do.
Click to expand...

No that would be like if you said a successful CEO was an idiot. There are plenty of stupid CEOs who drive their hospital systems into the ground or get pushed out. Or sell their hospital to a bigger system, take a cut and run while all the employees get screwed.
 
calvnandhobbs68 said:
No that would be like if you said a successful CEO was an idiot. There are plenty of stupid CEOs who drive their hospital systems into the ground or get pushed out. Or sell their hospital to a bigger system, take a cut and run while all the employees get screwed.
Click to expand...
Why do you think the American Hospital Association is so powerful on Capitol Hill?
 
calvnandhobbs68 said:
No that would be like if you said a successful CEO was an idiot. There are plenty of stupid CEOs who drive their hospital systems into the ground or get pushed out. Or sell their hospital to a bigger system, take a cut and run while all the employees get screwed.
Click to expand...

Stupid CEO? Ok, then there are plenty of stupid doctors, right?. So there are some NBA players that suck at basketball? No. No there aren't. You don't get to be a CEO by sucking.
 
PL198 said:
Stupid CEO? Ok, then there are plenty of stupid doctors, right?. So there are some NBA players that suck at basketball? No. No there aren't. You don't get to be a CEO by sucking.
Click to expand...

It's all relative. For example, Brian Scalabrine spent most of his NBA years on the bench, so one could say he sucked at basketball relative to other NBA players. However, he could still destroy the average college basketball player with ease.
 
How are healthcare facilities able to keep on charging more than their expenses and various insurances including MediCare willing to reimburse them for that excess amount? I just don't understand how the government is letting non-profit hospitals being wealthy, when it's not even their mission to.
 
shangrila said:
How are healthcare facilities able to keep on charging more than their expenses and various insurances including MediCare willing to reimburse them for that excess amount? I just don't understand how the government is letting non-profit hospitals being wealthy, when it's not even their mission to.
Click to expand...

Nonprofit is a a corporation designation. It does not, despite what many seem to think, mean that a company should not work to operate in the green.
 
shangrila said:
How are healthcare facilities able to keep on charging more than their expenses and various insurances including MediCare willing to reimburse them for that excess amount? I just don't understand how the government is letting non-profit hospitals being wealthy, when it's not even their mission to.
Click to expand...

The government isn't regulating hospital profits.

The hospitals are there to profit as much as they can. The system isn't transparent and there's very little attempt to control costs - as the higher the costs are, the more the hospitals get paid. Basically, the system gives incentives to be wasteful and to perform as many covered procedures/services as possible.

Insurance pays because they promise to pay - if you have their policy, they have to pay what is included in their policy. Since there are little controls, the healthcare spending can now go through the roof. Insurance companies then realize they aren't profiting enough, so they raise their premiums, making insurance cost more and more.

No one is accountable. Hospitals charge so much because of all the people not paying. Insurance charges so much because all the tests/procedures/drugs ordered often unnecessarily. Pharm charges so much because they can - no one can compete. Once a drug becomes a generic they tuck tail and run, to find a new monopoly where they can charge $7,000 for a single drug. Medical device manufacturers are the same, they charge so much because they can - the hospital will bill whatever they charge and the insurance has promised to pay for procedures. If you hip implant costs $5,000 instead of $500 - who cares!? It's what the market will pay, the patient doesn't know or care how much the implant costs - the insurance company has promised to pay for the procedure, why? They will just shift the costs to the system the next year. Insurance companies remained profitable throughout the last decade, year after year for this simple fact. They can anticipate what their costs will be, then increase premiums and therefore command whatever profit they want. All with little to no competition. Most states have a few insurers to choose from.

And then we just added millions of extra people to the same system...
 
Deadlifts said:
Nonprofit is a a corporation designation. It does not, despite what many seem to think, mean that a company should not work to operate in the green.
Click to expand...

Nonprofit doesn't mean much. I believe you mean, "operate in the black".
 
Psai said:
No there aren't. You don't make it into medical school by being stupid.
Click to expand...

I'm stupid and graduated from med school and in residency. So, another dumb **** made it through 😛
 
shangrila said:
Why are hospitals, private clinics, and healthcare companies so profitable in the US? Even non-profit hospitals accumulate massive profits every year. In Europe and Canada, I've heard that hospitals get reimbursed for every patient or procedure by the government or private insurance according to a fee schedule (like the US), but their reimbursement is always roughly their expenses, so they are just marginally financially stable.
Click to expand...

In a nutshell, US hospitals cater to elderly and chronic disease patients who have good insurance. They then give them expensive and often unnecessary screening tests, imaging, and treatments.
 
@JackShephard said:
Nonprofit doesn't mean much. I believe you mean, "operate in the black".
Click to expand...

Correct, I did mean black. Good catch.

Yes, there is a lot of waste and overutilization of care in non-profit healthcare environments. I was addressing what seemed to be a "but they're not-for-profit institutions, why do they have profits" statement.
 
Psai said:
No there aren't. You don't make it into medical school by being stupid.
Click to expand...


There are many doctors that believe a man like being stepped forward and spoke everything into existence, and that you can pack two of everything on a boat and have them repopulate the world without inbreeding depression.


this dude is a physician

 
Intelligence and faith are not able to be compared in each other's discussion. Totally separate dimensions.
 
PL198 said:
Intelligence and faith are not able to be compared in each other's discussion. Totally separate dimensions.
Click to expand...

Yet, If I professed a deep belief in the flying spaghetti monster to would society see me as mental impaired?
 
EMDO2018 said:
Yet, If I professed a deep belief in the flying spaghetti monster to would society see me as mental impaired?
Click to expand...

There are plenty of people who have faith or are religions while being excellent physicians.

It's not even relevant to this thread.
 
I look at faith as similar to any other belief. Just because you feel a certain way doesn't mean you're stupid. If everyone of X religion is stupid for believing in it, then couldn't you say the same thing about another group that supports political party Y? I don't really see how they're different. Just a set of beliefs.
 
Uhh, hospitals are so profitable because of their profit margin. Have you ever paid for healthcare in this country? $200 for a 15 minute clinic visit. $1500 for a 1 hour stay in the ED. $5k for a 10 minute MRI read. $20 grand for a 2 night inpatient hospitalization. $300 grand for a course of radiation therapy. Their charges well exceed their expenses.

How else do you think they can afford to pay doctors salaries and incentives well above any other profession and med school is super competitive with the highest paying residencies being the most competitive? Duh.
 
Why are airlines so unprofitable?
 
atomi said:
Uhh, hospitals are so profitable because of their profit margin. Have you ever paid for healthcare in this country? $200 for a 15 minute clinic visit. $1500 for a 1 hour stay in the ED. $5k for a 10 minute MRI read. $20 grand for a 2 night inpatient hospitalization. $300 grand for a course of radiation therapy. Their charges well exceed their expenses.

How else do you think they can afford to pay doctors salaries and incentives well above any other profession and med school is super competitive with the highest paying residencies being the most competitive? Duh.
Click to expand...

Um what? Not sure if trolling or just a pre med, can't see on my phone.
 
EMDO2018 said:
There are many doctors that believe a man like being stepped forward and spoke everything into existence, and that you can pack two of everything on a boat and have them repopulate the world without inbreeding depression.


this dude is a physician

Click to expand...


One of the guys involved in the creation of the CT or MRI scanner - I forget which - is a young earth creationist.

Doesn't mean your stupid.


Sent from my iPhone using Tapatalk
 
alpinism said:
Heh if you want to find some stupid physicians all you have to do is turn on your TV.

Don't forget about the Harvard, UPenn, and Columbia educated Dr. Oz.

Who ironically was also the med school class president at UPeen.

http://www.latimes.com/business/hiltzik/la-fi-mh-dr-oz-still-shilling-20140620-column.html
Click to expand...

Haha. Dr. Oz is incredibly smart.

If you think his goal is offer evidence based recommendations to his followers you're dead wrong.

He's trying to make money and he's doing an excellent job at it. Ethics aside, he's a smart man.
 
@JackShephard said:
Haha. Dr. Oz is incredibly smart.

If you think his goal is offer evidence based recommendations to his followers you're dead wrong.

He's trying to make money and he's doing an excellent job at it. Ethics aside, he's a smart man.
Click to expand...

Ethics aside? It takes intelligence to become successful while adhering to your ethics. With no ethics, it really isn't that hard to make money. I couldn't do what he does, but I could make a **** ton of money nonetheless.
 
Brain Bucket said:
Ethics aside? It takes intelligence to become successful while adhering to your ethics. With no ethics, it really isn't that hard to make money. I couldn't do what he does, but I could make a **** ton of money nonetheless.
Click to expand...
Not really. Being unethical in medicine (pill mills, needless procedures, etc.) will catch up to you. If you want to stay related medicine and within the bounds of unethical legality, you're left with health supplement sales which is a saturated market.
 
circulus vitios said:
Not really. Being unethical in medicine (pill mills, needless procedures, etc.) will catch up to you. If you want to stay in medicine and within the bounds of unethical legality, you're left with health supplement sales which is a saturated market.
Click to expand...
Not talking about medicine. I wouldn't jeopardize that. It would be stupid to do so.
 
Thinking someone is stupid for decisions they've made is completely different than them being intellectually stupid. We could find the smartest person in the world, catch them during a critical error and proclaim them an idiot for doing so. Everyone is going to make mistakes.
 
Brain Bucket said:
Ethics aside? It takes intelligence to become successful while adhering to your ethics. With no ethics, it really isn't that hard to make money. I couldn't do what he does, but I could make a **** ton of money nonetheless.
Click to expand...

Ethics and intelligence are separate traits.

And sure, it's easier to make money ethically than unethically.

Dr. Oz may adhere to his own ethics... only he can judge that.
 
PL198 said:
Thinking someone is stupid for decisions they've made is completely different than them being intellectually stupid. We could find the smartest person in the world, catch them during a critical error and proclaim them an idiot for doing so. Everyone is going to make mistakes.
Click to expand...
Who's being called stupid?
 
@JackShephard said:
Ethics and intelligence are separate traits.

And sure, it's easier to make money ethically than unethically.

Dr. Oz may adhere to his own ethics... only he can judge that.
Click to expand...

They're not. The more intelligent you are, the harder it becomes to accept/adhere to the 'ethics' imposed by society/law.
 
Brain Bucket said:
Who's being called stupid?
Click to expand...

No one in particular, just the general sentiment of some physicians being stupid. I agree with Jack though about the validity of our conversation.

Revisiting the topic, OP are you referring to nonprofits or for-profit hospitals? Obviously nonprofits don't have profits, so just trying to iron out what you mean.
 
You must log in or register to reply here.

Similar threads

X0001234
Why are federal loans unsubsidized?
Replies
2
Views
659
LucidSplash
LucidSplash
S
Why are interview rates so low?
Replies
39
Views
6K
aldol16
A
V
Why are some residents/attendings like this??
Replies
46
Views
4K
Lost in Translation
Lost in Translation
C
Why is the NBME test taking software so ****ty?
Replies
2
Views
675
voxveritatisetlucis
V
V
Why do attendings at community hospitals hate med students?
2
Replies
70
Views
7K
Nontrad_FL_LGBT
N
Top