Respectfully submitted by Lawrence E. Rafferty(rafflaw)-Guest Blogger
If you have had any medical procedures lately, you may already be aware of the enormous prices being charged by hospitals. What you may not be aware of is just how expensive this medical treatment is and how relying on private health care may just be reducing our lifespans. I apologize in advance on the length of the following examples, but they are necessary to understand the enormity of the issue.
“Brill’s article begins with the story of a 42-year-old Ohio man named Sean Recchi, who traveled to MD Anderson Cancer Center in Houston for treatment of non-Hodgkin’s lymphoma. He and his wife Stephanie had paid $469 a month, or about 20% of their income, for insurance that covered $2,000 per day of hospital costs. His financial troubles started when MD Anderson told him, “We don’t take that kind of discount insurance.” But he had to go to the hospital. His wife recalled that he was “sweating and shaking with chills and pains. He had a large mass in his chest that was..growing. He was panicked.”
Stephanie asked her mother to write a check for $48,900. Sean waited for 90 minutes while the hospital confirmed that the check had cleared. He was also required to advance MD Anderson $7,500 from his credit card. The total cost for the initial treatment and chemotherapy was $83,900, including a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars, $283 for an x-ray that Medicare categorizes as a $20 charge, and $1.50 for a generic version of a Tylenol pill.” CommonDreams
Those charges were just the start of the enormous costs that Mr. and Mrs. Recchi would be subjected to while dealing with his illness. His total bill for the beginning of his treatment for cancer was $83,900! If Mr. Recchi had been treated under Medicare for the same procedures and blood tests his cost would have been much less. “Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.” Time
The hospital in this example is a non-profit division of the University of Texas, but its profits are enormous. ‘ “The hospital’s hard-nosed approach pays off. Although it is officially a nonprofit unit of the University of Texas, MD Anderson has revenue that exceeds the cost of the world-class care it provides by so much that its operating profit for the fiscal year 2010, the most recent annual report it filed with the U.S. Department of Health and Human Services, was $531 million. That’s a profit margin of 26% on revenue of $2.05 billion, an astounding result for such a service-intensive enterprise.1
The president of MD Anderson is paid like someone running a prosperous business. Ronald DePinho’s total compensation last year was $1,845,000. That does not count outside earnings derived from a much publicized waiver he received from the university that, according to the Houston Chronicle, allows him to maintain unspecified “financial ties with his three principal pharmaceutical companies.” ‘ Time
Not only is this hospital reaping huge financial windfalls on the backs of its patients and their insurance companies, the compensation of the hospital’s CEO, as noted above, is astronomical. And that compensation does not even include the “unspecified financial ties” with pharmaceutical companies. Does that mean that the CEO is allowed to receive kickbacks from some of the companies that his hospital may be using for their medications?
This is just one example, but the Time magazine article linked above delves into other examples of this type of outrageous medical costs charged to patients. If the patients noted in the examples were able to take advantage of a Medicare for all plan, the costs would be a small fraction of what Mr. Recchi was subjected to. It is interesting to note that the Administrator of Medicare for the entire country made a small fraction of what this one hospital CEO took home. “The Medicare administrator made a base salary of approximately $170,000 in 2010.” TheNation
Just what do we get in terms of service and results for these extraordinary charges? “Our private health care system has indeed failed us. We have by far the most expensive system in the developed world. The cost of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany.” Common Dreams Our expensive private health care system does not even produce better medical results than the results achieved under Medicare.
“We now have a shorter life expectancy than almost all other developed countries. A National Research Council study placed the United States LAST among 17 high-income countries.
It wasn’t always this way. Since 1960 there has been a close parallel between worsening life expectancy and increased health care costs as a percentage of GDP. Most disturbing is our growing infant mortality rate relative to other countries. A UNICEF study places the U.S. 22nd out of 24 OECD countries in “children’s health and well-being.” In startling contrast, Americans covered by Medicare INCREASED their life expectancy by 3.5 years from the 1960s to the turn of the century.” Common Dreams
That last factoid on life expectancy is amazing. We are paying far more than any other country in the world for our private health care system, but we are not getting the world-class results for those high prices. Why do we as a nation continue to allow the medical industry to charge these exorbitant rates? The answer is the lobbying money spent on our politicians in Washington and in state capitals all over this country. We have to take over the for profit health care system and replace it with a Medicare for all type system or we will continue to overpay for less. Will Obamacare help this situation? It may, but we won’t know for a few more years if costs are controlled and results are improved.
Will Obamacare start us down the road to a single payer system? One can hope, but I am not holding my breath. Does it make sense to cut Medicare services and push back the eligibility age in light of the huge national costs incurred in the private health care system? What do you think?
mahtso,
Go take the MCAT and get back to me.
Salaries of CEOs are set by boards of directors. They operate on a “you scratch my back and I will scratch yours.” They are not about service or even competency. Vast sums and bonuses are being paid to managers and CEOs who take a profitable company and drive it into the ground. It is conspiracy to commit greed. One of the seven deadly sins. If I were in Patricia’s (and those like her) shoes, I would not be able to sleep nights. I have a conscience.
As for doctors. Few doctors go into medicine to get rich. If they wanted to make obscene amounts of money, most of them are smart enough to figure out how to become a CEO with a third the education.
Once a doctor, do you have any idea how much liability premiums are? They are not cheap. You have to get at least forty hours of continuing medical education a year. Category I courses are not cheap. I think I mentioned something about 12 days in a row, pulling 12 hour shifts, one day off and then seven more days of 12 hour shifts. And that is salary work. It is not unusual for a private practice physician to go to work at six in the morning, and get home at eleven that night. Then expect the phone to ring a half dozen times at night when the nurses at the hospital call for new orders or update on a patient. Now explain to me again why Ms. Hemingway is paid more in one year than that doctor will ever expect to make in his or her lifetime. Why is her work that much more important than even the lowest paid physician?
Short answer is that it isn’t. Those managers with obscenely bloated pay are leeches on society compared to those who actually…you know….work for a living.
My version of American Heritage (4th Ed page 608) does not show the same definition of greed that Elaine M. quoted. My version shows it is “an excessive desire” for more than one needs (and it does not include any reference to “avarice”). I assume that most of us (those commenting on this blog) have more than we need. So it is only a problem if the “desire” becomes excessive. Using that definition, the rate of pay has no bearing on the matter.
Otteray Scribe,
The answer to your first question about Ms. Hemingway-Hall is simple: we live in a (relatively) free society where the owners of the company (for the most part) get decide how much to pay each employee.
The Affordable Care Act may limit that freedom with regard to health insurance companies because it ties rates to cost of medical treatment.
As to the second question, part 1 of the answer is the same as above. Part 2 is conjecture, but I’d say that doctors are in essence billing for their time whereas Ms. Hemingway-Hall is not (and I assume much of her pay was in options/stock etc.) And I ask again, how much is too much for a doctor to be paid? Average pay of $200,000 per year sounds like a lot to be (AVERAGE being the key word here) and egotistical as it may sound, the education aspect does not sway me because I know that if I wanted to be a doctor, I would become one. (And I also think that the vast majority of us could as well.)
Another thing, during residency doctors are being paid (ehow shows $45k to 75k for “regular” and up to $125k).
Bron:
I think you need to work on partialing out the difference between greed and ambition. They are two completely different things. There is nothing admirable about avarice. Wanting a better living standard for oneself and one’s family is an honorable goal.
There is a point where one must ask, “When does ‘enough’ morph into ‘too much’.”
I have asked this question of many people, but no one will answer me; perhaps because there is no answer that will fit into any known model of logic: Why is somebody like Patricia Hemingway-Hall, who has five or six years of college education and sits behind a desk paid so much? How much? $12.9 million in the year 2011 alone. Surveys show the average family practice physician makes just under $200,000 per year. To become a family doctor requires four years of pre-med, four years of medical school and four years of Residency.
My question is: Why does a physician, who has the most rigorous and expensive education possible, have to work 65 years in order to earn as much as Patricia Hemingway made (I refuse to call it “earned”) in the year 2011 alone?
leejcarroll,
Greed–as defined The American Heritage Dictionary of the English Language:
A rapacaious desire for more than one needs or deserves, as of food, wealth, power; avarice.
*****
I think wanting to be rich isn’t quite the same thing as being greedy. Many people work hard and make lots of money. That doesn’t mean they are greedy. I also think one can aspire to be an inventor without having greed as a motivating factor.
Greed is good. Maybe initially. It does cause people to work harder, to invent, etc but it is not when CEO’s get millions of dollars in compensation after doing a bad job, when insurance companies raise, and raise, and raise again their premiums so people are squeezed out of being able to afford insurance, when prices are increased to the point where so many need to get help from the government just to be able to afford food. Greed has, in many ways, including the soul, made us poor.
Greed is not good
Submitted by Edward Harrison
Naked Capitalism
10/15/09
http://www.nakedcapitalism.com/2009/10/greed-is-not-good.html
Excerpt:
Well, let me tell you something greed is not good. Greed is corrosive and it is tearing at the very fabric of our democracy. A generation ago most people in America worked for a few institutions in their lifetimes. Many had employer-paid healthcare and employer-financed defined benefit pension plans.
But, since the 1980s the moorings have come off and set us adrift in a world of economic insecurity.
Job insecurity has increased dramatically, especially as reflected in part work statistics(see here and here). This has resulted in deteriorating health and declining work safety.
The healthcare debate is front and center in the US today. Yet, incongruously, the focus has mainly been on how ‘socialist’ proposed remedies appear.
And defined benefit has been almost completely replaced with 401(k) plans, leaving retirees to face potential economic hardship in old age.
This is “the Great Risk shift” in which corporations in pursuit of shareholder value (remember ‘greed is good’) have sloughed off as many economic risks onto ordinary Americans as they could reasonably get away with. This is crony capitalism, not free market capitalism. And a anesthetized American public has put up with this. I continue to ask myself why.
Maslow’s hierarchy of needs was very much on display earlier in the year as we entered the worst of this financial crisis. Everyone felt vulnerable. But now that recession is over, it does seem that America is returning to business as usual, both on Wall Street and on Main Street.
What I find most galling is that just one year ago Barack Obama was saying, “Elect me! Elect me! I am change you can believe in. But, no sooner does he enter office and he continues the massive bailout of the financial services industry that was begun by the predecessor administration. And today there are really no substantive regulatory changes on offer by this Administration. It was this same support for the financial elite at the expense of the middle class which has led to a widening gulf in income and wealth.
Bron,
Greed is not good! It gave us the financial meltdown of 2008–among other things.
*****
Why Greed Is Bad for Capitalism
By Nigel Barbar
10/13/10
http://www.huffingtonpost.com/nigel-barber/why-greed-is-bad-for-capi_b_759907.html
Excerpt:
Darwin celebrated the nasty side of life — brutal competition. Yet, in the struggle for existence he perceived a creative force that produced the many varied and wonderful life forms around today.
In the realm of economic theory, many writers echo Darwin, waxing poetic on the merits of competition as a force that improves business practices and pushes creative businesses to the forefront.
Business competitiveness is partly motivated by greed, as Adam Smith recognized long ago. Yet, Smith recognized that greed is potentially very bad for free markets. As far as he was concerned, business people exhibit a marked weakness for rigging the system in their favor. To him, a group of merchants in the same room was all that it took for a price-fixing monopoly to emerge.
Greed may be creative in a competitive context but it has opposite effects in a cartel. When greedy monopolists set their own prices, watch out because they are going to hurt you.
The fleecing of America
When markets are truly free, they regulate prices at reasonable levels. Conservative commentators often make the mistake of conflating free markets with absence of government regulation but that is a huge error. Without regulation, markets always move in the direction of monopoly where large players fix prices to their own advantage and do everything in their power to squelch the competition.
Fair prices are what the market will bear in a competitive atmosphere and are the lowest price at which suppliers can afford to sell. Monopolies, charge the highest price that it is possible for customers to pay.
Americans suffer from the greed of many different monopolies:
We pay twice as much for medical care as other developed countries although many people receive grossly inadequate services.
Corporate officers influence their own compensation committees. This is a license to steal and CEOs of large companies have raised their own pay to astronomical levels some 263 times the salary of an average worker last year which compares to a ratio of 42 in 1980 (but down from 525 in 2000, according to AFL-CIO).
Such corporate theft has been very bad for business. It has hurt investors who have made no money on average over the past decade. American workers have also lost a decade receiving no pay raise despite dramatically increased productivity over the period.
*****
Greed is (not) good. Here’s a better capitalism.
Profit should not be the sole goal of business. Profit should be the byproduct of business excellence.
By Cleve W. Stevens, Contributor / August 21, 2012
http://www.csmonitor.com/Business/new-economy/2012/0821/Greed-is-not-good.-Here-s-a-better-capitalism
Excerpt:
In the years since we first heard film character Gordon Gekko tell us “Greed … is good,” we’ve experienced a lot that reminds us just how wrongheaded that assertion is. The most convincing evidence, of course, is the recent near total collapse of the world economy and our continuing painful slog out of the residue of the Great Recession. And if you think that the greed-is-good mindset is not what informed those who led us off the economic cliff, then, to put it in clinical terms, you’re in denial.
Of course, Oliver Stone’s film “Wall Street,” where we first meet Gekko, was not intended as a platform for laissez-faire economics, but a less-than subtle critique of it. Yet the would-be financial masters of the universe were not dissuaded. Indeed, they were emboldened by the words of the cheeky antihero. “Greed works. Greed clarifies, cuts through and captures the essence of the evolutionary spirit,” Gekko declares. And suddenly they were off and running as never before. Looking for pop-cultural reinforcement for Milton Friedman’s economic mantra – shareholder value is the only value – they surely had found it.
And boy did they ever run up the profits. Until, that is, reality came crashing down on all of us in the autumn of ‘08. And as we struggled to get to our knees, our business and political leaders assured us that we (and they) would learn from our (and their) mistakes and things would be forever different going forward.
But four years later, things don’t seem so dramatically different. Witness the two most recent de facto case studies: Chase loses well over $2 billion of investors’ money in an instant, yet CEO Jamie Dimon waltzes through his ensuing “confrontation” before Congress virtually unscathed; and more recently, just before London is to host the Olympics, Barclays’ Libor scandal hits (Barclays’ portion of which, Warren Buffet declares, will be but the tip of the global iceberg).
And our economic malaise continues. The Dimons and Blankfeins (as in Lloyd of Goldman Sachs fame) of the world are still in charge (not an adult in sight) and, frankly speaking, you and I are still in trouble, perhaps now more than ever.
We’re still in trouble because the underlying and still-unaddressed problem seems so daunting at first blush that we would prefer to ignore it altogether. But it’s not as ferocious as it might at first seem. The problem is that we remain unwilling to question the reigning dogma of Western capitalism. Dogma, remember, is a belief that is accepted without evidence, often perceived as self-evident, and is not to be disputed by adherents of the faith. The economic dogma of our time is a belief that business is and must be exclusively based on the supremacy of profit, a belief that a relentless focus on profit above all else is the one and only way of creating sustainable business success. It’s a narrow and crippling bit of economic doctrine that seems now to pervade nearly all quarters of the business world.
that third home or luxury yacht puts a good many people to work.
Greed is good, it has raised our standard of living from wretched existence to relative comfort. It has made health care possible. It has made life saving drugs and technologies possible. Without greed we would still be living a tribal existence and succumbing to disease and overwork in our 30’s or 40’s.
Ignore where those profits come from, mahtso. Payments to non-doctors, overpayment to doctors, it’s all money that should be spent on care instead of some venal jackasses third home or luxury yacht. Your failure to understand that they come out of patient’s pockets from the monies they have to apply to their overall treatment is kinda cute. Mainly because its a rationalization of profit through designed profit margins over the value of a human life. Greed is good. Good and stupid.
Let me see if I understand this one: Canandian doctors think they can make more money in the US becuase there are profits in the US system and these profits accrue from payments made to non-doctors?
mahtso,
Apparently the word “parallel” doesn’t scan for you. And ask any Canadian why they don’t have enough doctors. Almost to a one they’ll tell you because doctors think they can make more money in America.
Where does that money come from?
It’s profits purposefully engineered into the system.
Where does that profit come from?
From monies that could better be spent on patient care instead of CEO bonuses and ridiculous pay plans and perks for people who don’t do jackshit for caring for a patient and the majority of whom are not even educated in science much less an actual doctor.
If you become a doctor simply for the profit motive?
I don’t want you anywhere near me.
Fatfingered that last comment. It was one of my daughters who was referred to the endocrinologist. Left out part of a sentence.
Part of the reason for scarcity of medical specialists is that many grant and scholarships have a payback requirement. A doctor is required to train–and practice–as a primary care physician. If the newly minted doctor goes to an under-served or poverty area, as defined by HHS, the debt is forgiven in three years. If the practice is set up in a place where there are adequate numbers of doctors, the forgiveness takes five years. During the payback time, if the doctor retrains or starts practicing in a non-primary care specialty, the grant must be repaid with interest and stiff penalties.
In the old TV series “Northern Exposure,” The key character is Dr. Joel Fleischman. He is sent to a small Alaskan town, an under-served area, in order to fulfill his obligation to pay back the grant. That is how it is done.
I don’t know anything about the Canadian physician system. I suspect the primary reason for doctor shortage is about the same as in the US.
My future grandson-in-law says he does not have any trouble at all getting appointments with a physician, and he lives in Ontario, somewhere north of Toronto. On the other hand, our family doctor referred referred her to an endocrinologist, and the earliest she could get an appointment was three months. This is a university town with a medical school, and it still took that long to see a specialist. This is not an isolated case, and it is not just endocrinologists.
Otteray Scribe
“mahtso, do you have any more ideas regarding physician compensation?”
I haven’t put forth any ideas about physician pay; I asked a series of questions, which to me are logical in light of comments about pay being too high.
Gene H.,
What I do understand is that health insurance is not health care; the Canadian Case and my experience with Medicaid are proof enough of that for me.
As I previously wrote, whether all the doctors in a single payer system all work for the government or not is immaterial to my point that in such a system any doctor who does not accept the single payers’ rules will be out of business. Accepting as true Otteray Scribes’ description of what is required to become a doctor, I can’t help but wonder if the rewards of being a doctor in the Quebec single payer system are not worth the costs and whether that is why there is a shortage of doctors there.
Elaine,
The only way to address that problem will be provide grants, not loans, to medical students. This is a major reason there are doctor shortages, especially in rural areas. If you have a gigantic loan to pay back, you go where the money is to work. The money is in the cities, not the backwoods. If a patient can only pay for an office visit with some home grown tomatoes, there is little incentive to move to a more scenic and peaceful rural area, no matter how personally and professionally satisfying that might be.
Otteray Scribe,
My husband’s youngest brother is a doctor. When he graduated from medical school, he had nearly $100,000 in debt–and that was more than twenty years ago!
I forgot to mention. A new doctor starting out is likely to have anywhere from $100,000 to a half-million or more in student loans to pay back. The
loan sharksbanker’s got theirhired helpfriends in Congress to make student loans exempt from bankruptcy filing. That way, they know the only way a student can default on a loan is to die. I know of a couple of doctors who took that route when insurance reimbursement became such a problem their practices were failing, and there was no way for them to pay back the student loans.OS,
So true!
After being an RN for several years, my niece went back to school to get her nurse practionier degree (I didn’t know that you can have your own practice as a nurse practionier? and write prescriptions?) She informed me that she could triple or even quadruple her current salary of a RN. She was telling me that RN’s are under so much work related stress, while being underpaid (she also informed me that hospitals or health systems are requiring graduating nursing students-RNs- to have at least 2-3 years of experience before coming to work at a major health systems (like Barnes-Jewish Children, BJC) or hospitals. Hence you have to go work at a nursing home, making only $15-$22 an hour while still paying on your student loan debt.
However, there is still a process of eliminating your student loans via bankruptcy. When you file a chapter 7, you can ask your attorney to file an adversary form or hearing? Then, you and your attorney can appear before a judge (along with the legal representation of the student loan company), and you plead with the judge to either erase all or most of your student loan debt. It is up to the judge to decide. See the following article:
http://www.nationalbankruptcyforum.com/bankruptcy-case-law-and-analysis/filing-an-adversary-proceeding-to-discharge-student-loan-debt/
Typo: 160,000 to $200,00 = $160,000 to $200,000
mahtso questions the pay of physicians and dentists, above asking if 160,000 to $200,00 per year is too much. There was a poll taken about twenty years ago, when Hillary Clinton was proposing overhauling the medical payment system. The poll showed the average American polled thought about $60,000 a year was enough for any physician to make.
Let’s take a look at those numbers, shall we?
To be a physician or dentist you must first do several things:
Go to a quality college with a good pre-medical program, which is one of the most difficult majors in any college. Graduate at or near the top of your class with excellent grades. If your GPA is lower than about 3.4, forget medical school and get a job doing something else.
After graduation, take the MCAT, and make a top score. If you make an average score, forget going to medical school.
So far so good. Now time to apply for medical school. Apply to a number of medical schools and pay the application fee, which is usually a lot more than pocket change. If you are accepted, then talk to your friendly banker about borrowing a few hundred thousand dollars. If you get the loan, you are all set.
Not so fast. You still have to keep up good grades, and among other academic hurdles, get past microbiology, the one course that separates the wheat from the chaff. After four long years of medical school, and tens of thousands of dollars later, you are ready to apply for a Residency.
Medical schools have a “dream list” of medical schools with Residency slots. Some residencies are easier to get into than other, Some medical students may have to wait several years before getting into the Residency program they want. Until then, they do medical scut work for low pay until a slot becomes available. It is easier to get into a family practice program, for example, than many other specialties. Easier is a relative term, because all Residency programs are selective. Residents get paid, but not much. The typical residency program is another four years of training. If a medical student wants to become a neurosurgeon, that is a seven year Residency program, with some schools requiring eight years.
We are now up to 12 to 15 years of education, and during that entire time, grades have to be kept to the highest level. That’s not all. Residents work shifts that range from 12 to 36 hours or more.
I talked to my son last night. He is a board certified physician. He left private practice because of insurance companies trying to stiff him on his fees, and denying his patients needed care. He elected to take a salaried position with a hospital, where he can let management take care of billing headaches. He told me he is scheduled to work the next twelve days. That is 144 hours without a break. He will have one day off before he starts another week long stretch of 12 hour shifts.
mahtso old chap, recall that Blue Cross & Blue Shield of Illinois paid CEO Patricia Hemingway Hall more than $12.9 million. The average worker puts in between 1,600 and 2,000 hours per year. Let’s assume Ms. Hemingway worked at the top end of that and put in about 2,000 hour per year. That means she was making $6,450 per hour! You suggest a physician a physician making $200,000 per year may be overpaid. Someone making $200,000 per year would have to work 64.5 years to make as much as an insurance CEO like Patricia Hemingway made in 2011 alone. I cannot find her current salary, but I cannot believe it might have been cut.
Her bio says she has a Bachelor of Science degree in Nursing and a Master’s degree in Public Health, Health Planning and Administration.
Would somebody out there who is smarter than me explain why somebody with five or six years of education–education which has much lower academic standards than medical school–can justifiably make more money in one year than somebody who went through the most rigorous education possible can make in 65 years? One other thing. Most doctors I know work from 60 to 80 hours per week. I don’t know of any doctors who work 40 or fewer hours weekly unless they are semi-retired.
mahtso, do you have any more ideas regarding physician compensation?