Rising medical costs prompt creative solutions
October 29, 2023
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October 29, 2023
KFF Health News reported on small businesses that offer a free (or inexpensive) clinic to their employees. In this context, "small business" appears to mean companies that employ between 200 and 999 workers. The article reports on companies who help set up such clinics, and that these small businesses might share the clinics with other employers -- both of which seem like creative and practical industry approaches.
The small business featured in the article thinks that the effort has been successful at diverting costly emergency room and urgent care visits, while others who have considered doing something similar are skeptical of the value of the employee benefit. The article points out that it can take years before the benefits are apparent. Interestingly, the featured small business offered a monetary incentive to employees to undergo a physical, with the CEO explaining that the region is known for poor health. This idea of rewarding patients for engaging with their health has been around for a while, but does not seem mainstream. It seems likely that there is no single approach that is cost-effective for all employers, but it is encouraging that a benefit that one might think of as exclusively in the domain of large companies is now a possibility for much smaller ones.
October 21, 2023
Health care is generally provided in clinics or hospitals. However, not everyone can make it to those settings. KFF Health News reported on the Centers for Medicare & Medicaid Services (CMS) changing policy to reimburse healthcare providers who provide care on the street ("non-permanent location on the street or found environment"). Although some states and localities have previously provided reimbursement for this type of care, this change in policy is reported to be the first time that the federal government has done so. The article notes that many providers were previously providing the care on a volunteer basis.
The hope is that "by dramatically expanding primary and specialty care on the streets, they can interrupt the cycle of homelessness and reduce costly ambulance rides, hospitalizations, and repeated trips to the emergency room." Even if no additional providers wish to provide care on the streets, this flexibility seems to be a better policy.
October 15, 2023
Medicaid -- the government's health plan for the indigent -- is known for its access issues: patients frequently cannot find physicians who are willing to accept Medicaid reimbursement. KFF Health News profiled a woman who experienced this effect firsthand. While regulations exist stipulating that patients are entitled to see a specialist within fifteen business days ("unless a longer waiting time would not harm the patient's health"), the profiled patient was unable to do so -- despite severe pain. The insurance company administering the patient's health plan appears to have simply decided that the patient's condition was not urgent and was reported to be unresponsive when pressed.
Without any real repercussions for failing to comply with regulations, it is not difficult to imagine some companies choosing the route that costs less. However, if the government were to impose consequences (e.g. fines), it is unclear what might happen. Some companies might comply, whereas some other companies might stop offering the service. After all, if complying with regulation would cause the health plans to be unprofitable (e.g. because they need to pay more in order to ensure access), some plans would likely exit the market, making the government's job more difficult. An actual longer term solution likely involves paying providers substantially more than current rates for treating Medicaid patients -- something that the government is likely trying to avoid.
October 08, 2023
There has been news about regulators taking action against healthcare mergers where two local competitors join together. KFF Family News reported on a somewhat different trend in which two separate health systems that are not in the same market merge together to form a larger organization. Notably, these deals "accounted for more than half of all hospital mergers and acquisitions during the last decade." At the same time, "for some 50 years, federal regulators have not stepped in to prevent hospitals from merging with systems in other markets," likely because it is "harder to prove how cross-market mergers... reduce competition if the hospitals do not operate within a single market."
Intuitively, it seems that consolidation -- even across markets -- gives the consolidated organizations more power. For example, since insurance companies rarely operate in only one market, allowing these cross-market mergers seems to allow the merged health systems to more easily negotiate for higher prices. Similarly, employees in either market might feel that they have fewer employment options. Intuition, however, does not prove a court case.
October 02, 2023
KFF Health News reported on an agreement that was made five years ago: competing hospitals could join together as one entity, provided that the new health system would not raise prices excessively, would provide a certain amount of charity care, and would maintain or achieve certain quality standards. Unfortunately, the new health system appears to not be upholding many of its obligations.
It is understandable why competitors might want to join together and secure greater market power -- without competition, the new entity can dictate higher prices and not worry about being undercut. This trend occurred to such an extent (along with its ill effects on consumers) that the US federal government passed anti-trust legislation near the start of the twentieth century to stop companies from engaging in such behavior. Within the healthcare industry, state legislatures can pass a certain type of law to allow these mergers (essentially recognizing public need for a more efficient or more stable network), and one can imagine organizations influencing legislators through lobbying or perhaps less legal means.
Approving of these mergers seems to run counter to economic theory and the emphasis that it places on competition. When an organization becomes the only network to provide hospital care in a region, it also seems likely that they become too entrenched for the oversight agencies to allow them to fail. In that regard, it is unclear how states can remedy situations in which the merger is complete (and difficult to undo), but the new entity is not behaving as promised.