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Fed Up with Drug Companies, Hospitals Decide to Start Their Own

nytimes.com

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Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#61

Post by indescions_2018 »

I always assumed it would be CVS that got into the game. There are are probably a dozen or so drugs that account for the majority of consumption. Flu vaccines, blood pressure, cholesterol, thyroid, insulin, asthma, progesterone, beta-blockers, gerd, etc. Providing these at minimum cost, as well as community public health services. Could be enormously cost effective. And extend general wellness and productivity many times over.

>>> "the trick will be in selecting the right third-party manufacturer to ensure good quality"

Obvious subtext here is outsourcing mass market generics to be produced in India, China and other emerging markets. "Pharma-security" might be a popular way to phrase it today. Quality is undoubtedly reflected in price. And there is enormous opportunity in exponentially reducing R&D costs and finding efficiencies.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#62

Post by chimeracoder »

ejstronge wrote: post #11
chimeracoder wrote: post #4

Earlier quoted context omitted.

> Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive. To clarify: Medicare reimburses rates that are below COGS, so hospitals have to increase the amount they charge private insurers in order to make up the loss.

The grandparent is describing a separate issue - note that not all hospitals will serve Medicare-receiving patients beyond their federal requirements. Insurers negotiate reimbursement rates with hospitals, with both parties being able to leverage their size/social cachet to extract favorable terms. This contributes to the availability of certain hospital chains in the preferred networks vs. the non-preferred networks…

It's actually the same issue - the way the contracts are structured, insurers agree to pay X% of what Medicare charges, where X is typically something like 200% or 300%.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#63

Post by justinph »

fludlight wrote: post #27

Let's say they succeed in launching a new generics company. Ten years down the line they will divest in order to build each hospital a shiny new geriatrics wing. Within six months the spun-off drug company will jack up prices and the cycle will continue.

How would that going to work? The article says they're setting up a nonprofit company. Can't spin that off and sell it.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#64

Post by jacquesm »

ThrustVectoring wrote: post #57
maxxxxx wrote: post #2

I am not sure if patients will see any of the savings though. I view hospitals as fundamentally dishonest organizations after a few experiences. Their medical treatment is fine but their financial practices are borderline fraudulent.

You'd be hard-pressed to make a system that keeps hospitals from being abusive. Your BATNA to accepting their terms is literally dying, and especially the older folks who need more care have giant piles of cash. The cynical profit-maximizer in that position will raise uninsured prices high until the losses due to "eff this, I'm declaring bankruptcy and my various creditors can squabble over my assets" outweighs the i…

Other countries hospitals are doing just fine.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#65

Post by [deleted] »

darkerside wrote: post #42
mirimir wrote: post #22

Earlier quoted context omitted.

Well, some hospitals are honest, and dedicated to patient care. And some are dishonest, and only in it for the money. But whatever, none of them are as evil as most drug companies.

Good Lord, people truly just don't get it. Hospitals are not evil; they are tasked with saving people's lives. People who nobody else can save. All the worst medical problems in the world--sometimes sudden trauma, sometimes a festering problem left to burst--they all end up on the doorstep of the hospitals, full of doctors, nurses, and technicians who are humans just like you and me. And they work ridiculous hours sa…

[deleted]

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#66

Post by Consultant32452 »

ThrustVectoring wrote: post #57
maxxxxx wrote: post #2

I am not sure if patients will see any of the savings though. I view hospitals as fundamentally dishonest organizations after a few experiences. Their medical treatment is fine but their financial practices are borderline fraudulent.

You'd be hard-pressed to make a system that keeps hospitals from being abusive. Your BATNA to accepting their terms is literally dying, and especially the older folks who need more care have giant piles of cash. The cynical profit-maximizer in that position will raise uninsured prices high until the losses due to "eff this, I'm declaring bankruptcy and my various creditors can squabble over my assets" outweighs the i…

I could design such a system overnight. Starting tomorrow instead of paying for medical care the US Medicare and Medicaid programs will simply cut a check to the people who they were previously funding care for. Then those people may choose to spend the money on anything they wish, healthcare or otherwise. The days of not being able to price shop are over, competition will drop prices through the floor.

The hospital can try to be as evil as they want, but their ability to do so in a market that has actual price and service competition will make it very difficult to do so.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#67

Post by WalterBright »

When there's lack of competition, one needs to look for artificial barriers.

Ah, found it:

"Intermountain executives said that they would seek approval to manufacture the products from the Food and Drug Administration, which has vowed to give priority to companies that want to make generics in markets for which there is little competition."

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#68

Post by sbov »

telchar wrote: post #56
maxxxxx wrote: post #46

Earlier quoted context omitted.

All you are saying is correct but you can't excuse their billing practices.

I work for a hospital and I agree with you that the billing practices are shitty, but I couldn't tell you what a procedure will cost you even if ordered to. At best I could give you an average for a procedure but if you're in for a few days you may see dozens of doctors and have hundreds of procedures including an operating room procedure or two and a whole lot of blood tests, imaging, poking and prodding (e.g. asses…

It's not only that. Our local hospitals can't give us prices for procedures that other places can.

We tried price shopping an hsg test because we had to out of pocket it. Hospitals took hours on the phone and multiple call backs. Other places could give us a quote in minutes.

We chose a hospital based on price. The morning of the procedure they told us it doesn't include everything. But they said we were wrong and our insurance covered it, so we didn't worry. But it got denied, and then we had to pay their shitty insurance inflated price.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#69

Post by chrisbennet »

ekianjo wrote: post #55
TillE wrote: post #32

Earlier quoted context omitted.

From that perspective, does any country have their own publicly owned pharmaceutical manufacturer? It's the kind of thing the NHS should do, since they control most other aspects of health care, but I don't think they do. There's so little benefit to competition with generics, you may as well have that vertical integration to at least provide what hospitals need.

Country-owned means of production have usually not fared well vs competitive forces in the past. And it could be considered as unfair competition: a state-owned manufacturer could basically have a blank check from the government for any kind of investment and would not have to worry at all about profitability. It sounds very nice as a thought exercise, but economical incentives are very tightly linked with productivi…

Thinking of it as “unfair competition” implies that companies have some sort of entitlement to a market. They don’t.

If my town wants to have its own fire department, it’s not “unfair” to privately owned fire departments anymore than working on my own car is “unfair” to professional mechanics.

Re: Fed Up with Drug Companies, Hospitals Decide to Start Their Own

#70

Post by cjalmeida »

programmingpol wrote: post #3
maxxxxx wrote: post #2

I am not sure if patients will see any of the savings though. I view hospitals as fundamentally dishonest organizations after a few experiences. Their medical treatment is fine but their financial practices are borderline fraudulent.

Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive. The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. Its a bit…

Oh please. Doctors in the US get huge amounts of money, to the point they're the actual 1%. You don't see anything like this in OCDE countries.

Doctor associations all across the country create enormous barriers to the opening of new medical schools to avoid competition.

Don't get me wrong, medical doctors are generally good hard working people. But we need to acknowledge they're part of the problem.

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