Comment by bdunks | Hacker News Reader

Comment by bdunks | Hacker News Reader

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Only 10% of the increase in medical cost in the US is attributable to doctor salaries. The remainder is administrative overhead, Rx costs, insurance administration, etc.

There are now 10 administrators for every 1 doctor.

Since 1970, the number of physicians has increased by 2x. The number of administrative staff has increased by 38x.

If each administrator is making 100k+ - 150k+, that's significant cost.

Some of these crazy billing practices are due to the private equity buy-ups and consolidation, creating workflows and fee structures that are hostile to patients and doctors, but benefit the PE firms.

https://www.commonwealthfund.org/publications/issue-briefs/2...

Lots more data here: https://www.healthsystemtracker.org/

That kind of lazy thinking drives me up the wall. There's a huge swatch of America that thinks elementary school teachers are bringing home FAT BUCKS because college tuition costs are high.

It's the corporations, stupid.

Absolutely. I used the number of administrative personal * administrative salaries because it's a quick mental visualization. I just reviewed United Healthcare's 2022 10k. In 2022, they had $324B in revenue, and paid $210B in medical expenses. Of the $114B remaining, $85.5B was various operating costs, $28.5B (25%) was corporate profit / operating income (before interest & taxes). Even if all 40,000 employees of UnitedHealth Group were making 200k (they're not), that'd only account for $8B of their $85.5B in non-medical costs. https://www.unitedhealthgroup.com/content/dam/UHG/PDF/invest...

US administration costs account for 14% of "excess costs" (above OECD average).

https://www.mckinsey.com/~/media/mckinsey/dotcom/client_serv...

I worked in healthcare and this McKinsey report (exhibit 2 on page 81) is probably the best analysis I've seen that tries to isolate where the extra money is going.

The biggest driver of higher US healthcare costs is outpatient care. And it's not just that each healthcare event is more expensive (though it is), it's that Americans get a lot more outpatient care than other OECD countries.

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