Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Facilities fees: "That'll be $20 for the haircut and $10 for the chair"

Sandra G. Boodman of Kaiser Health News as reported in the Washington Post describes the imposition of additional medical charges for what is vaguely described as facilities fees link here. It looks like fees on anything for which health care providers can find a justification. The examples are large and growing.

The breakthrough occurred some years back when the providers got medicare rules changed to allow it. Boodman writes, "patients increasingly are being charged the fees, the result of an obscure change in Medicare rules that occurred nearly a decade ago. Called "provider-based billing," it allows hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill separately for the facility as well as for physician services. Because hospitals that bill Medicare beneficiaries this way must do so for all other patients, facility fees affect patients of all ages. Doctors' offices owned by physicians and freestanding clinics are not permitted to charge them."

Boodman has lots of examples, but I haven't been able yet to find out how this got lobbied through the bureaucracy.

On the capture of the medical "business" by the medical "interests," you can see a short video version on Bill Moyer's Journal here Or read Maggie Mahar'S book Money-Driven Medicine: The Real Reason Health Care Costs So Much


I'm sorry, but I'm missing how this relates to monopoly.
It's true that not all issues to do with the high cost of health care have to do directly with monopoly, but given that many of them do, it seems sensible to discuss them here.
NPR's Planet Money actually discussed this very issue towards the end of Monday's Podcast, where they talk about a guy who got 4 separate bills for the same procedure. http://www.npr.org/blogs/money/2009/10/podcast_the_health_care_econom.html
What is the essential characteristic of monopoly? Pricing power. If you can set the price or change it at will, you have pricing power. If we are going to change this in society, we have to recognize when it is happening and how.

To call it all monopoly is perhaps sloppy, but it is good politics. To me that is what this blog is about--changing minds.

Monopoly has many faces--brand names, access to restricted markets based on permits or licenses, and so on. Read the book I suggested. The health industry is full of it, starting with your doctor who has to be certified and recertified every few years.

Thanks for the response, David! I wanted to make sure I wasn't missing something. The medical field is indeed loaded with monopoly privileges, and the topic is obviously timely.
Thanks for the response, David! I wanted to make sure I wasn't missing something. The medical field is indeed loaded with monopoly privileges, and the topic is obviously timely.
I was just prescribed a CPAP machine for sleep apnea. The price to be billed to my insurance: $1700. After having some trouble with the beast, I started doing some online research. The same machine is widely available for 1/3 the price if you're paying for it "yourself." Supplies, accessories...don't get me started.

CPAP machines force air under pressure into you--a little bit like blowing you up like a balloon to keep your airways open and stop you from snoring.

Only about half the people who start using these machines keep using them even part time. (The formal definition of compliance is pretty relaxed in my opinion - 4 hours a night 5 nights a week is considered a success. Even long term users can't stand to use them all night long every night.)

The industry that makes these machines is now thoroughly ensconced in the insurance bureaucracy. The hospital I went to has a full time person with a wall full of machines and accessories to sell at full list price. Until I prove I can't tolerate the machine, I can't get any less invasive or cheaper therapies (officially, the machines are 100% effective, for the people who can stand them).

I found an article online by a physician about how to increase the low compliance rate. I wish I could find the article again. You'll just have to take my word for the summary:

He very candidly advocated scaring the crap out of patients to increase compliance (conventional wisdom is that apnea kills people decades early, makes their hearts explode and they cost the medical system 3x the average--they've been scaring me pretty good). Fine, if the facts are that scary, let's give people the facts.

But then he did the math at the bottom of his article: there's a $12 billion opportunity here, with the typical compliant patient's insurance company being able to be soaked for $40K+ over the long haul.

Not to be even more long-winded than I already have been, but I've been exposed by happenstance in the last couple of years to the two-tier price lists in the health care system. I have great insurance--Cadillac insurance, to coin a phrase. When you have insurance, if you pay attention to the charges, you'll discover the prices are patently obscene (no pun intended). If you don't have insurance, the costs will be negotiated down to reasonable amounts. They bill you at the initial obscene rate to soften you up before the negotiations start.

The important waste and fraud in the system is from the cronyism and calcification, not from the cheaters. Nothing but truly radical reform is going to fix this. My thought: Legally mandated minimum $5,000 deductibles on health care insurance, with some kind of tax credit for the poor. Insurance is supposed to be for evening out the costs of catastrophes, not for buying cough syrup.

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