Healthcare – More Developments

As if there hasn’t been enough bad news about health care in general, and the ACA (Obamacare) in specific, here is another set of facts to keep you awake at night.[su_spacer]
One of my doctors has to apply for a medical exemption for me to get the drug he is prescribing.  The insurance company doesn’t cover that drug, and the similar one they do cover from a different pharmaceutical company doesn’t work for me.  So, the doctor has to file forms (5 pages) asking for an exemption.  He told me that he spends $60,000 per year filing these exemptions, arguing with insurance companies, and justifying his requests.[su_spacer]
Now, the AMA (American Medical Association) says they have 225,000 members and that is 1/5 of the licensed doctors in the U.S.  A little fourth-grade math tells us that there are then about 1,125,000 licensed doctors (not including licensed practitioners).  If each of those spends $60,000 per year arguing with insurance companies to protect their patients that are about $67,500,000,000 per year.  It is reasonable to assume that the insurance companies spend something along those lines arguing their point.  Now we are looking at over 1.35 trillion dollars.[su_spacer]
Okay, so let’s take a conservative approach to this and assume that not every doctor of every discipline spends that much.  So we will cut it in half and agree that the insurance companies due to the savings in volume only spend 1/3 of the amount.  That totals about 570 billion dollars per year.[su_spacer]
Why do the insurance companies only cover certain drugs and not others (their formulary)?  It seems that pharmaceutical companies offer both discounts and kickbacks to insurance companies that cover their drugs.  It doesn’t take a genius to understand that both the insurance companies and the pharmaceutical companies spend a large amount negotiating these deals.  How much?  Who knows, but it is certainly substantial.[su_spacer]
Well, who pays for all this?  You and I do.  Through higher insurance premiums, higher deductibles, and higher co-pays, and higher drug costs.[su_spacer]
Fixing that doesn’t sound like it would be that hard until we understand that the same entities that must fix it are the very ones that benefit by not fixing it.  Gee, sounds a lot like fixing the federal government, doesn’t it?


Ken Vincent
Ken Vincent
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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  1. Way too often the people in charge of building these systems don’t know how to build a big system. Just a series of small ones. Healthcare is a big system, and big systems need to be handled with skills that the current system builders do not have. These skills are centered around the big PICTURE.

    P – planning long term
    I – innovation and leadership
    C – capital (both physical and data)
    T – transparency
    U – unification and alignment
    R – reinvention of systems
    E – evolution of culture

    The problem is that those in charge just don’t know what they don’t know. If they did, there wouldn’t be any issues.