Healthcare 2: Follow the Money (created on 10-28-09)

In the advice of "deep-throat", when you want to find out what’s going on, "Follow the Money."

So why does healthcare cost so much. Why would a minor, 30 minutes in and out, hand surgery I recently had cost $1800. There wasn't much in the way of materials. They sterilized my hand, they put a sterile cloth over my arm, they gave me a few injections of lidocaine, and then the doctor, nurse and assistant spent about 15 minutes poking holes in the fibers built up by my Dupuytren's contracture. And simple band aid was all I needed and I was on my way home.

The process was a complete success. I am totally happy with the results. But why so much cost.

The company I learned most of what I know about successful business would have been able to give me an answer. They religiously tracked the cost of doing everything so that they didn't take on jobs which were no profit and strove to develop customers which were high profit. They tracked how much it cost to do internal operations. We were advised that because of the paperwork involved in filling out a purchase requisition, tracking the purchase requisition, tracking the invoice, and paying the invoice, that there was a hidden cost of $100 for every purchase order. So we should whenever possible, wait to order until we had several items to order from the supplier. And we shouldn't split orders between suppliers because one supplier was $10 cheaper on one item than the other supplier. Saving that $10 would cost $100.

So here is my suspicion, there is too much paperwork in healthcare. I suspect a big portion of the cost is filling out and handling all of the paperwork. Of course the insurance industry won't want to hear this. There entire existence is based on paperwork. I have heard estimates that 20% of our healthcare costs occur directly in the insurance companies. But it has to much more than this. The doctor and his staff have to spend a huge amount of time filling out paperwork for the insurance company and the government.

So the next time you go to an emergency room and get a $500 bill for the 10 minutes the doctor spent putting in a couple of stitches, the doctor didn't get paid that $500. I suspect that for the 10 minutes the doctor spent with you, a total of 1 to 2 hours of paperwork by a number of other people were involved.

If I were in charge, I would start "following the money" with a religious fervor.