Or you know, hospitals with residency programs could just use of the massive insurance money they make to fund residency positions. It's not like the residents aren't employees or something.. Even the medicaid/medicare procedures are reimbursable.
Medical stuff is incredibly complex. Hospitals aren't making massive amounts of money -- overall the situation is that there are too many hospital beds as insurers push more and more procedures into outpatient settings with better outcomes and lower shared cost.
That's why medical networks are forming -- they put the GPs on a salary, cram in more nurse practitioners and PAs, avoid union contracts that are more common in hospital settings and extract more money from those settings.
So you have lots of implicit and explicit subsidy. Hospitals lose money on Medicare and some medicaid patients, and on no-pay patients who lack insurance. When my wife had my son, the unplanned c-section cost over $40k, largely because of those insane overheads that require subsidy.
i think one of the most interesting things about healthcare is how local it is. Most hospitals around the country are struggling, but there is a subset of large powerful hospitals that are making money hand over fist. They are basically buying physician networks so that 1) they can charge more for the same services by getting facility fees and higher negotiated rates and 2) they can control patient flow from primary care all the way to the hospital. And often that means treating a patient in the most profitable setting to the health system
Sutter is a shining example of this type of health system -- get huge regional scale, vertically and horizontally integrate, control patient flow, and crush payers at the negotiating table. Their prize is having some very profitable hospitals, including the second most profitable in the nation (almost $300M / year in profit at one hospital). And this profit is after paying their execs handsomely
Hospital spending is the biggest driver of cost, in no small part because of practices like the above
Oh totally. These networks engage in all sorts of unethical and self-dealing practices as well.
The Catholic hospital and medical network in my region was swallowed up with Trinity Health, which is a national medical network. Your interaction with a doctor or hospital is entering a sales funnel, where each additional interaction is engineered to generate more revenue for the network.
A family member had a stroke, which was debilitating and had a bunch of after affects. Prior to hospital discharge, the social worker (aka salesperson) drops a packet of nursing homes in the room and demands that it gets filled out by the end of that day. (which is illegal) That packet doesn't include acute rehab facilities, which is contrary to their physician's guidance. The list is sorted by available beds and exclusively consists of nursing homes owned by the medical network.
> Their prize is having some very profitable hospitals, including the second most profitable in the nation (almost $300M / year in profit at one hospital).
Yea, but this is on over $12 billion in revenue. That's less than 2.5% margin.
the article i saw said that the $270M profit was for a single hospital, sutter memorial hospital in sacramento, which does revenue of $3B per a separate article i found.
it is interesting that sutter's overall system-level profit is $370M. i think they have a few other very profitable hospitals as well. they must spend a lot on corporate sg&A and executive salaries (their CEO has a $7-10M salary IIRC)
I think sutters CEO is in the top 3 or so highest paid non profit CEOs, and sutter may be the biggest / second biggest non profit health system in the country, so I don't know that there are many industry comparables
I'd love to see a breakout of corporate g&a vs provider level g&a at sutter vs a set of comparable systems. All that "non-profit" profit has to go somewhere
> Even the medicaid/medicare procedures are reimbursable.
Medicare reimburses rates below-cost. About 7% below COGS, which means they lose money per-patient, even before they have to pay doctors, nurses, janitorial staff, etc.
> Or you know, hospitals with residency programs could just use of the massive insurance money they make to fund residency positions.
The "massive insurance money" is used to subsidize the losses that hospitals make on Medicare patients.
> It's not like the residents aren't employees or something
Great point. And that's why companies generally don't hire employees unless they work they do is profitable for the company. As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them".
> As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them".
This isn't quite in line with reality. If you familiarize yourself with specific hospital system figures, you find gems like this: Of Beaumont Hospital's 395 residents, 91 are not covered by Medicare and so are paid for by Beaumont. The $57 million for GME represents 4.73% of Beaumont's net patient revenue in 2013, or about $189,368 per resident. [0]
> The 91 residents that are trained within the hospital system without medicaid funding speaks to the fact that residents are in fact employees
...nobody ever said that residents weren't employees? The point is that they are and hospitals aren't going to go out and hire more unless it's profitable for them to do so. (Which it isn't, or else they would have done so, and that article even says as much).
For profit hospitals and doctors do not have to accept medicare or medicaid patients. Non-profits are required to to get non-profit tax exempt status. Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do. It is also not rational for these profit seeking doctors/hospitals to accept medicare patients but they do which directly conflicts with your statement that hospitals only do profitable things. One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures). If you didn't have these patients then your utilization would be lower and therefore your COGs would be higher as well. Also you might not be able to scale your hospital to take on the profitable procedures. Residents are also lower paid which give the hospital greater incentive to have them treat the medicaid/medicare patients as well. So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs.
> Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do.
I never said all do - I said that in aggregate, Medicare reimbursements are 7% less than COGS. "Efficiency" doesn't really enter the
picture, because COGS isn't driven by efficiency (ie, overhead); it's driven by upstream costs.
> So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs.
Nope, none of the stuff you mentioned falls under COGS.
> One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures)
This is the classic "we'll lose money per customer, but make it up in volume" argument.
You keep giving me the sense (like with your "7% below COGS" statistic) that you do actually know why residencies aren't profitable, but you keep making an indirect economic argument instead of talking about that directly.
All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit.
> All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit.
Because hospitals have to pay:
- residents' salaries
- attendings' salaries
- health insurance
- residents' insurance (for practicing)
- licensing fees
- taxes
It turns out, that all comes out to a lot of money. And hiring additional residents doesn't really save them much money, or bring in much additional revenue. The costs are greater than the revenue or savings. So, it's not profitable.
> to do work that we know costs tons of money (because we see the bills)
That's a question of medical billing, which is a whole other separate topic. In short: hospitals don't receive anywhere near the sticker amount for those bills, and a massive chunk of reimbursements from privately-insured patients goes towards recouping the losses that Medicare and Medicaid patients incur (as explained elsewhere, hospitals lose money on a per-patient basis for publicly-insured patients).
It seems to me that all of that (both the fully loaded costs of an employee, and the complexity of medical billing) applies equally to any other doctor, with a single exception. The exception is the portion of the attendings' costs that can be "charged" to each resident.
Is it that the additional cost in attendings' time, along with the reduced ability to earn larger sums for complex unsupervised procedures, outweighs the lower salary?
> Or allow people to do internships with normal, non-ER doctors.
Huh? What does that even mean? The only people who do their residency training with EM physicians are residents training in... EM.
> Or eliminate the residency requirement completely.
So... have people who aren't qualified to practice medicine be allowed to practice medicine?
Residency isn't just some arbitrary requirement - it's how neurosurgeons actually train in neurosurgery[0], and so on.
[0] Well, to be pedantic, neurosurgery also requires a post-residency fellowship. But you'd be hard-pressed to make the argument that neurosurgery fellowships could somehow eschew the residency requirement - it's a prerequisite for a reason.
> Well, to be pedantic, neurosurgery requires a post-residency fellowship.
Doubly pedantic: further specialization within neurosurgery (complex spine, vascular, tumor, peripheral ...) is done via fellowship, but plenty of practicing general neurosurgeons ended their training with residency. Source: wife is in her final year of neurosurgery residency. Of the folks in her program who have graduated while she's been around, about 1/2 did a fellowship, the other half went straight into practice.
(I hesitate to post this extremely minor correction, because everything you've said in this thread is absolutely spot-on and a very welcome dose of facts.)
Now that we are discussing facts... please tell us how many doctors you have personally visited that have been required to perform neurosurgery on you? I can't think of a single incident where that has been necessary in my own experience, and yet every doctor I have seen has been required to have residency experience. Rather counterintuitively, most of the time that has seemed unnecessary, and the work was done by a low-paid nurse or technical staff with the doctor waltzing-in at the end to "sign-off" on the results in order to fulfill the requirements of the insurance companies and ensure the hourly-billing rate was well-above what it would have cost to pay a private clinic staffed by the same nurses to do the same work.
So please enlighten me instead of just slamming what seems a fairly obvious point without adding anything of actual substance to the discussion. Because from the perspective of an actual patient it seems rather silly that a nurse can't take a blood test, and a paediatrician-in-training can't study with a family doctor or another paediatrician in a private practice. And it seems absurd that extensive state funding is now accepted as necessary simply to certify someone to oversee tasks like prescribing antibiotics, or signing-off on STD tests, or allowing patients to get blood test results.
No-one is suggesting that neurosurgery should be done by people without specialized training (I would actually think that "residency" is a poor way of measuring competence in that field as well, fwiw). And by reducing the complaints to this rather silly level all you are really suggesting you have no practical answer to the question of why "residency" is a reasonable bottleneck blocking the certification of doctors and keeping the costs of general medical care far above what is actually needed to deliver the vast majority of it that doesn't involve cutting into people's brains.
EDIT: I love the downvotes people, but you would be better off answering the question since I have karma to burn and enough experience with the US medical system to know that "residency" hasn't been necessary for almost any of the medical care I have received.
Residency at an ER isn't necessary for someone to become a pediatrician. Pediatricians do a pediatric residency. You seem to be very, very confused.
> Why have you elevated some bottleneck guild requirement into a general license to write prescriptions? Or sign-off on an STD test? Or allow patients to get blood tests? Or to inform them of said test results?
Literally everything you listed here can be done by a mid-level (i.e. non-MD), and commonly is (though the scope of prescriptions they can write is limited by states, IIRC).
> by reducing the argument to this level you are only suggesting you have no adequate response to the actual problem
I have no idea what you're talking about; I posted a minor factual correction to someone else that has nothing to do with this point. Again, you seem to be very, very confused.
----
In your edit you say:
> I would actually think that "residency" is a poor way of measuring competence in that field as well
Residency is not a tool for measuring competence. It is the means by which that competence is acquired[1]. You demonstrate competence by passing the written and oral boards in your specialty.
> "residency" hasn't been necessary for almost any of the medical care I have received.
May this continue to be true. If everyone were so lucky, the medical system would be much, much simpler.
[1] Foreign doctors who may already be competent are required to go through residency in the US as well; there probably should be a way to short-circuit that and allow them to demonstrate competence.
> Residency at an ER isn't necessary for someone to become a pediatrician.
You may simply be talking past each other here. All of my (now doctor) friends who went through residency pulled at least one, and usually more than that, rotations through ED. I can't imagine all 3 hospitals had wildly different residency programs than the rest of the nation, so I imagine 3-6mo of ED rotation is quite common during residency.
Yes, a 3-6 mo ED rotation is quite common for medicine docs (so is an ICU rotation for surgeons), but that's wildly different from an actual emergency medicine residency.
> In recent years, the number of medical residents has become so restricted that even the American Medical Association is pushing to have the number of slots increased.
This does not sound like a system where students can fulfill their residency requirements working at general care facilities with trained doctors who have years of experience.
> The major obstacle at this point is funding. It costs a teaching hospital roughly $150,000 a year for a residency slot.
So why exactly is there a slot shortage if people can literally fulfill their residency requirements pretty much anywhere? There are plenty of hospitals that could easily use the labor.
Scroll up, Stephen. These quotes are in the thread at the heart of this discussion, and they are pulled directly from the article.
I mean... I appreciate getting downvoted for reading the article and addressing it directly, but if there are indeed adequate residency spots then you are disagreeing with the article and would be better served to focus on what it gets wrong instead of attacking me for making rather rudimentary observations that follow from its core premise.
Right, but I never said there were adequate residency spots. In fact, I think that there aren't[1]. So again, why are you replying to this thread in particular?
[1] however, from what I've seen it isn't a critical issue for US healthcare; we need more mid-levels and to expand their scope of practice more than we need residents. For residents, it would be far more effective to reduce the span of pre-residency training somehow, so that people aren't starting residency with $300k in debt.
