More costly doesn't mean better

By Bev Jordan
The News & Advance (Lynchburg, Va.), Letters, Sept. 9, 2014

A study of hospital administrative costs in eight nations published Sept. 8 in Health Affairs finds that hospital bureaucracy consumed 25.3 percent of hospital budgets in the United States in 2011, twice as much as any other nation. The study is the first across multiple nations with widely varying health systems. It was carried out by teams from the U.S., the U.K., France, Germany and the Netherlands. Costs were lowest (about 12 percent) in Scotland and Canada, both of which have single-payer systems. Data covered virtually all hospitals in each nation. Administrative spending totaled $667 per capita in the U.S., $158 in Canada, $164 in Scotland, $211 in Wales, $225 in England and $325 in the Netherlands. French and German costs were about 40 percent lower than in the U.S.

The study found no evidence that high U.S. costs translated into better care or yielded any other benefits.

High costs can be attributed to (1) complexity of billing a multiplicity of insurers with varying pay rates, rules, documentations and (2) the entrepreneurial imperative of hospitals to amass profits (or, for nonprofits, surpluses) in order to fund modernization and essential upgrades. This has reduced hospitals efficiency, driving them to divert personnel and dollars to marketing, cherry-picking profitable patients and services, and to expensive computer systems and consultants to “game” the payment system.

“We’re squandering $150 billion a year on hospital bureaucracy,” said lead author Dr. David Himmelstein, a professor at the CUNY/Hunter College of Public Health and lecturer at Harvard Medical School. “And $300 billion more is wasted each year on insurance companies’ overhead and the paperwork they inflict on doctors.”

He added: “Only a single-payer reform can squeeze out the bureaucratic waste and use the money to give patients the care they need. Another senior author said, “For three decades our policy makers have pushed market-oriented strategies that have turned health care into a business. As a result, Americans have the world’s costliest health care, and our life expectancy is years shorter than in most wealthy nations.”

Quality health care is a right that no one should be denied. The Affordable Health Care Act is a small step in that direction and our Republican Virginia lawmakers need to realize this and side with the people and the medical professionals, rather than the bureaucrats.

This information may be accessed through the website of Physicians for a National Health Program,

Bev Jordan resides in Lynchburg.