I need to break down an analysis of the piece over several posts, but for now I just want to draw attention to the radically different conclusion Brill outlines arrives at compared with Atul Gawande's celebrated New Yorker article from a few years ago. Gawande, recall, spent a week visiting with doctors at a private for-profit hospital in McAllen, Texas who, collectively, accrued higher utilization rates and billing charges than similar sized cities in the area. His conclusion was that our current fee for service model was flawed and easily corrupted by greedy, profit-driven individual physicians and group practices and that the solution was to transition to a system where doctors worked as employees for large, monopolistic heath care behemoths, incentivized to provide "quality care" at, presumably, much lower costs.
The New Yorker piece was lauded across the spectrum. President Obama even mentioned it in one of his many speeches leading up to the PPACA passage. Nevertheless, from the beginning I found the article unconvincing. My dissents can be read here and here.
Brill has written a 28 page masterpiece of investigative journalism. I encourage all to print it out online and spend an hour reading it ASAP. His take is that the problem transcends individual doctors, fee for service models, and greedy local for-profit health care providers. Brill determines that the problem is that health care systems have grown too large, too monopolisitic and are therefore able to dictate to insurance companies more favorable reimbursements. By starting from an arbitrary price index, called the chargemaster, larger hospitals are able to maximize profit margins. Further, he argues that the "non-profit" institutions are a bigger potential problem, cost-wise, than the smaller, for-profit institutions in towns like McAllen:
In fact, when McKinsey, aided by a Bank of America survey, pulled together all hospital financial reports, it found that the 2,900 nonprofit hospitals across the country, which are exempt from income taxes, actually end up averaging higher operating profit margins than the 1,000 for-profit hospitals after the for-profits’ income-tax obligations are deducted. In health care, being nonprofit produces more profit.More to come .....