Blog and News

As physicians face declining third party payments, comply with expensive government mandates such as electronic medical records and attempt to navigate through burdensome government regulations, it is no surprise that more and more physicians are leaving "private practice" and becoming "employees" of large hospital chains. The benefit to doctors is apparent; more predictable hours and no more need to manage a small business in a ever changing healthcare environment. Unfortunately, this consolidation of physicians within powerful hospital chains is actually driving up the cost of healthcare in many communities around the nation.  

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The Galen Institute's Grace-Marie Turner recently appeared on FoxBusiness Channel's show Varney & Co. to discuss the cost differential for medical services paid for by a consumer versus an insurance company. Because patients in a consumer-driven health care system have more incentive to price shop, they are able to purchase health care services at a lower cost. 

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Last week, D4PC published information that a group of doctors had called for an ending to certain cancer screenings and treatments finding that they were not worth their costs (see here). As D4PC noted, this would certainly raise concerns about whether ending these tests would be in the best interest of patients. A recent study will undoubtedly fuel the concerns over whether ending these tests is in the best interests of patients. The latest study found that the U.S. spent more on health care for cancer patients compared to other developed countries but that there is a noticeably better outcome for patients in the U.S. 

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Before the advent of Medicare and Medicaid and the HMO Act of 1973, the private sector funded over three quarters of the country's health care expenditures, individuals paid nearly one-half of total costs out-of-pocket and health care inflation was in-line with the consumer price index (CPI). When a third party pays the cost of routine health care services, consumers become insensitive to prices, quality, and choice of care setting. Individuals respond to lower cost-sharing (more comprehensive coverage) by utilizing more care, as well as more expensive care because they do not face the full price of their decisions at the point of utilization. 

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