Hospitals Are Making Huge Profits From Unnecessary Care

I was at a meeting last week and heard an interesting speech made by Martin Makary, M.D. He is a Harvard trained and currently an oncology surgeon at Johns Hopkins. In addition, he is researcher and expert in healthcare innovation and quality measurement science.

Marty’s big passions are health care appropriateness and physician safety. The fact that 30% of all health care rendered is deemed unnecessary drives him. There are two aspects of that drive. The primary driver is the significant patient harm that comes from this unnecessary care. The second is the wasted pain, time, and money that comes from unnecessary health care.

Dr. Makary made a statement that got me thinking about a travesty that also results. Hospitals make vast amounts of money from unnecessary care. Mid-sized hospitals in a typical city derive 10’s of millions from unnecessary care. Those 10’s of millions enable large staffs of six and seven figure administrators. It also fueled the proliferation of new, fancy facilities that are now being reported as likely to be unutilized in the next 5-10 years because of changes in delivery. That seems pretty bad.

However, my thoughts went further. These changes will produce a flurry of stories about cuts in hospital employment. Look at recent history to see where those cuts will occur–pediatricians, primary care doctors, nurses, and other front-line care delivery people. Where they will not occur is a large number of division and affiliate presidents, vice-presidents, managers, billing staff, or fundraising departments. They will also not occur in marketing efforts.

Think about how much better health care would be if marketing and advertising budgets went away and the supposed non-profits were not allowed to sponsor other non-profits such as the Cleveland Clinic Theater in the Great Lakes Science Center. There are dozens of examples around every town. Think about it.



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