A medical residency is not easy. Part of the coping mechanism involves complaining among your fellow residents about everything from the work hours to the deteriorating quality of vanilla pudding parfait in the cafeteria. Generally the discussion goes something like this:
Resident A: “The vanilla pudding parfait has too much whip cream and not enough pudding.”
Resident B: “We get paid fifty-thousand dollars a year for working eighty hours a week, and they can’t even have a respectable dessert in the cafeteria.”
Residenc A: “I am going to go have a chocolate parfait. That one comes with an Oreo.”
While Resident A is probably just partial to chocolate, Resident B’s observation begs for an obvious non-dessert-related question. If medical residents create such immense value at a low cost to hospitals, then increasing the size of the residency program must also be highly desirable. But the truth is even in the face of increasing demand for physicians, America is not making many more doctors to match the demand. Continue reading
Update: On January 5, 2015, Stephen Brill published America’s Bitter Pill: Money, Politics, Back-Room Deals, and the Fight to Fix Our Broken Healthcare System, expanding on his popular Time article.
It is an interesting book, not because I agree with Mr. Brill’s data but because it happens to be a useful exercise in how data sometimes can be applied/misapplied to streamline a compelling narrative.
Below is a shameless self-reblog from my response to the original Brill article focusing on how data from a sub-sub-sub-specialized hospital should not be used to comment on an entire set of hospitals, some of which struggle to serve as the safety net for a vulnerable population.
In an article titled “Bitter Pill: Why Medical Bills are Killing Us,” Stephen Brill outlines a well-researched investigation on hospital over-billing. In the article, Brill begins by highlighting the unreasonable mark-up MD Anderson places on every medication, service, and imaging that it provides. He argues that this “hard-nosed approach pays off,” earning MD Anderson $531 million operating profit in 2010, and that this comprises a 26% operating margin. $1.8 million of that went to the pockets of Ronald DePinho, the president of the cancer center.
Although Brill never outright states the connection, his implication is clear: general hospitals are the oft ignored mammoth in the health care debate, operating under the veil of legitimate non-profit business. A general hospital funds its astounding operating income by making the uninsured and under-insured suffering patients an offer they cannot refuse – a markedly inflated bill. It then funnels this unfairly earned profit into the pockets to the Godfather of the organization.
The logic is sensational, if only it were correct.
In a prior post, I read Steven Brill’s story on health care hospital bills and offered a brief analysis of the “average hospital” in contrast with MD Anderson (spoilers: sub-specialty cancer treatment is profitable, the average hospital is not). The data show that average hospitals are low-margin organizations.
Below, I argue that although the data disagrees with the vilification of general hospitals in “Bitter Pill,” the article is spot-on that medical bills are incredibly over-priced.
Then, I offer a hypothesis on why.