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>> I'm curious while we're on the topic if we were in a world where we were doing
something towards a more unified payment system like Medicare for all,
what would that look like?
>> I think that the payment model be straightforward that
the hospitals would be in total chaos from that,
because that would have been such a financial shock to go from,
again, the commercially insured payments to to public payments.
So we wrote a paper last year and I think I talked to Elizabeth about this.
>> Yeah.
>> So we looked at payment models for what Medicare for all could be,
how we have this 33% of the markets commercially insured and
the health system charged them a much higher rate above their cost.
And then we have the public programs, they are charging much lower rate.
The data we used for that was American Hospital Association data and
one of the business scholars at Stanford is again,
Jack Rowe who used to be CEO of Aetna.
And as soon as that paper got published, he called me and yelled at me.
He said that was trade association data.
That wasn't anywhere near what they were paying.
They were paying much higher rates.
And finally, last summer, I said, well, that's the best we had at the time.
Well, last summer, RAND actually published the rates for self-insured employers.
And for hospitals, we were paying 3 to 400% of Medicare.
And for outpatient services, 4 or 5, 600% of Medicare.
So the cost shift is actually much greater than even what
I have projected we have described on.
It's in the same direction.
So hospitals would have been a huge financial hole
right now coming into the pandemic just from that.
>> Yeah and I'm going to be since I have nothing to do with a hospital
at the moment somewhat, and I know Kevin is not totally
sympathetic with the fact like I feel like hospitals.
Yes, if we came into the pandemic with a Medicare for all system,
they would be in huge trouble, even more trouble than they're in now.
They are now getting and I think this is really speaks to this.
They're now getting something like 100 million.
Sorry, 100 billion in COVID relief funds and why is that?
It's because they so make their business out of doing these elective
procedures that aren't happening now.
So it's partly the cost of taking care of COVID, but I think and
Kevin maybe as an economist would say more about this.
It's in very large part to the fact that their cash cows,
they're not able to tap into right now and I'm have limited sympathy with that and
that I think these were not great cash cows to begin with.
And some of these elective procedures have historically been overused and
abused, because they are so lucrative.
I do as I go around and speak at hospitals and I know Kevin, I agree on this too.
I'll look around and part of their dilemma right now is
they've kind of had their heads in the sand about what was
coming down the pike in terms of the rational future of medicine.
So when I go to these hospitals, I was at UVA speaking last month or
not last month before COVID.
It was much longer than last month.
They showed me their brand new billion dollar hospital and I was like
to replace a pretty new half a billion dollar hospital that wasn't at all.
And I'm like wow, I hope you guys all have plans to turn this into condos, because I
don't think fancy inpatient care is really where our system needs to be heading.
And so I think a lot of hospitals and our health system in many ways,
the problem is that it's hardwired to deliver a kind of health
care that is not what we need and the COVID outbreak has has just
kind of opened the curtain down that in such a dramatic way.
>> Yeah, I mean, I think one of the things and
especially from the business side, business managers make choices.
And if you go back and look 20 years ago, we didn't see as
much of a difference between the public and private payment models as we see.
And we've allowed at the market level,
the consolidation of health systems is no secret.
The reason why they consolidate it was actually Moses Cohn who was a hospice in
North Carolina, they got acquired by Carolinas healthcare.
Now called atrium and the president said, well, they got acquired,
because Carolina has had expertise in pair relationships and supply chain management.
In other words, they knew how to raise premiums and reduce costs on things,
purchasing like PPEs.
And so we've built this over a 20-year period this model
as healthcare costs have increased by 155%.
We've built a model that was really escalating costs year after year and
falling close behind our ability to get higher, and higher commercial payments
was our ability or our interest in actually building property plant and
equipment that they catered to that market.
So when I was at Duke, we rounded the VA which is publicly funded.
Most cancer patients are Medicare beneficiaries.
That's publicly funded and I would ask my residents a rhetorical question,
why is it that the VA looks like it does built in 1950?
And our cancer center has this amazingly elegant fireplace in the atrium.
Why they're both publicly funded programs?
Why they look so different?
And I think we have to start asking really hard questions.
Do we really want to bail out poor choices of managers?
It's almost as like the financial crisis.
If instead of investing in property, plant and equipment, hospital leaders and
investing in derivatives, would you want to bail them out for that?
And if we do bail them out, what do we get in return?
Do we go back to ever increasing escalating cost to private health
insurance?
Or do we have some other pathway to a different model where
they're going to have to be accountable for the cost of care?
It kind of begs back to Libby's Kaiser's data from their employer survey.
Employer and employees were paying $20,000 last year for private health insurance.
United States paying 18% of GDP in the old days pre-COVID for
healthcare versus the next highest most expensive was Switzerland at around 12%.
So we're paying almost 6% more in GDP in healthcare and
there's no measurable improvement in health outcomes.
And now, we now know our public health system is measurably
deficient compared to some of those other countries.
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