Incentives matter: America's for-profit medical industry thrives on massive wastage, unnecessary procedures, overbilling and overtreating

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Incentives matter: America’s for-profit medical industry thrives on massive wastage, unnecessary procedures, overbilling and overtreating

Like any other country has it better…



“It’s sort of this perfect storm where no one is really evil but the net effect is predatory,” Saini said.

I’d argue that some are, in fact, really evil (looking at you, Martin Shkreli). But otherwise, this is spot-on.


As I understand it, talking to actual doctors, part of it too is the fear of malpractice suits by predatory lawyers and just wanting to cover their asses. The insurance they have to pay as even a general practitioner is incredibly high. I asked years ago about cutting costs, and every doctor I talked to said tort reform would go a long way.

That said, I am sure there are also other things that can be done.


I’m not happy with the churn of ‘best practices’, on top of the laundry list of tests. It too closely resembles the current popular diet plan, which is out the following year. You need to be eating low-carb; low fat; paleo; bone broth; raw; vegan keto now, or you’ll get sick and die!

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A relative of mine works in the insurance industry, fielding calls from doctors’ offices who want to get paid. He said they know that 75% of their claims will get denied, so most doctors routinely just over-bill for everything, throwing procedures in there they didn’t do, billing hundreds of dollars for small over the counter items, etc.

His stories about dealing with doctors have made me respect the work of nurses over doctors massively.


Since you’re aware of such rampant waste, fraud and abuse, I’m sure you’ve contacted the Center for Medicare Services. What did they say?

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I know that they bill the insurance $250 for what I pay a cash price of $80 for. I know that in the near future I will switch policies and get to pay only a $60 co pay.

The reason they bill so much more to insurance is, as you say, they don’t often get paid, and because of the added admin costs for the nurses or paper work people to stay on top of things to try to get paid.

Well given that they KNEW about the scam for those motorized wheel chairs, where they literally GAVE them to people who didn’t need them to bill Medicare something lie $10k on a chair worth half that much, and yet it took nearly a decade to change things around to end this scam, I don’t have a lot of faith with them being fairly productive on that front.

Certainly fraud in this area is contributing to our costs.


tort reform

If you can be bothered, look into ACC (Accident Compensation Corporation). We lost the right to sue (in most, but not quite all, cases) and IT IS GLORIOUS.

Of course, NIH and American Exceptionalism apply, so like health care or firearms control there’s no possible general lessons that could be learnt.


I think this article gets to the heart of the problem:

Careful - you may suffer episodes of head explosion.


Incentives DO matter – there were doctors who were caught doing unnecessary heart bypass surgeries at one California hospital. It’s not about ‘cover your ass’ or the need for limiting the rights of wounded patients to sue, though. The same MDs and hospitals which will make a fast buck off of needless testing and surgeries are just as eager to make a buck by denying patients needed care if they are in an HMO or managed care situation where patients (or their employers) pay a fixed monthly fee no matter how sick they become.

So-called tort reform is a fraud on the patients. In California, where a doctor paralyzed one of my best friends and put her in a wheelchair for life, the damages for emotional distress and pain and suffering are limited by law to $250,000. This law, which has been in force for over forty years here, has had no measurable effect on reducing needless testing or surgeries. The same has been found in other states that have restricted patients’ rights.


You mean like not charging $900 for two pills of vicodin?

I’m not even kidding; that was the bill from the emergency room 15 years ago, when my manager forced me to go because I was having abdominal pains while at work. (Needless to say I didn’t have insurance at the time.)

Years later, I was contacted to participate in a class action suit against that hospital for overcharging uninsured patients.


Yep. I don’t know which came first the outrageous bills, or the unwillingness to pay bills, and thus requiring to pad said bills.

Doing it against uninsured, cash patients should be criminal.

My former doctor wanted to be a small, private, family doctor with maybe one other doctor and a nurse practitioner. She ended up taking out loans to make payroll because of our fucked up system.

I’ve been rather against the idea of the government taking over, but it seems to me when no one can afford said services, they are going to push for alternatives. The whole insurance scheme seems like it includes tons of middle man costs, and the administrative costs have just exploded. Combine that with the stats that a single payer system ends up costing people less, and they are able to negotiate for cheaper prices, I feel that eventually the US will have to come around.


Worse, their offices have to negotiate with different insurance companies (with completely different coding schemes) to get $0.50 on the dollar for every claim, which means paying for at least one full-time staff member. I don’t think there’s any other developed country where (for-profit) vocational schools list “medical billing assistant” as a high-demand career in their advertising.

That (very long – tldr; version) Brill article should be required reading for anyone interested in commenting on this topic – I also recommend it regularly, so thank you. It’s bad enough that most people don’t have the time and resources to negotiate medical bills with hospitals and insurers, but the information asymmetry in the market is so bad that they don’t even know there’s a baseline for negotiations to begin with.


Another part of the problem is people showing up in the ER for something that should be addressed by a family practitioner. I knew a lady who took her young son to the ER to get his sore throat looked at because she didn’t want to pay $60 office visit fee at the walk-in clinic. She figured, correctly, that the hospital wouldn’t make her pay up front and she then ignored the hospital bill that came later. Trying to offset that loss is why people get charged $20 for an aspirin.

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I consider the requirement for colonoscopy (over age 50) to be another example. This is a very expensive preventative measure that requires general anesthesia, requires most of a day off work, and requires someone else’s time off work to provide transportation and wait for the person being tested. There is also a nonzero risk during the procedure of tearing the intestine, which is a very serious problem.

An alternative protocol to colonoscopy is a sigmoidoscopy combined with a stool test. A sigmoidoscopy is less intrusive, requires no anesthesia, does not require a highly trained specialist, takes a few minutes, you can drive yourself home, and costs far less.

My GP told me very frankly that he no longer prescribes sigmoidoscopy for one reason: you can’t get them. GI specialists, at least in our area, refuse to perform them. He offered to prescribe one for me if I can find a GI doctor who will do one. So I got an appointment with a local specialist, and I was essentially laughed out of the office. He used the phrase “You’re serious?” When I told him that I didn’t have anyone available to drive me to/from a colonoscopy appointment, he still refused.

He added the coup de grace by charging my insurance for a level 4 consult in order to tell me that. After I found out, I called their office, and was told that it had been mis-coded. They dropped it to a level 2. To get the answer to one question!


It’s unbelievable how many layers there are in US health care, each with its own middle men extracting money who don’t provide health care services (directly or indirectly).

Either that, or go full third-world country (parts of the US are already there, of course). These days, that feels like a more likely option.


That’s not a problem. It’s people’s sane response to the insane problem, and should be treated as a symptom.


Oh wait, one other thought, this illustrates - sorta - why people addicted to opioids are turning to heroin. It’s cheaper and in some cases easier to get.


I am told by friends who live in Europe and in China that general anesthesia is usually never offered, and that the procedure is “uncomfortable but not so painful as to be intolerable.”

My boss in here in Texas also opted for no anesthesia. She sometimes doesn’t ask for painkiller for dental procedures either (something my father-in-law was well-known for as well). She and I have both delivered our children via unmedicated childbirth, and in order to have something to compare pain levels from her unmedicated colonoscopy, I ask for a comparison. She said it was maybe slightly less painful, and that unlike labor and delivery, the procedure usually isn’t all that long (30-60 minutes).

Skipping the anesthesia does definitely make the mental recovery time shorter. Less foggy, less dopey. Sore, probably…

Thanks for the hot tip on sigmoidoscopy. Will be checking that out.