Mark Cuban: Why US hospitals "don't know their costs"

sfn42

Maybe Mr. Cuban should put his money where his mouth is and buy a hospital

inanutshellus

Reminds me of the Surgery Center of Oklahoma which cause such a huge news buzz back in 2009ish for publishing packaged pricing. Brilliant move. (And they still do it!)

goda90

> Mr. Cuban argued hospitals often rely on broader accounting methodologies that spread costs across services. Maybe they do this intentionally to avoid insurance refusing to pay for the most expensive but potentially necessary services.

MattCruikshank

> they don’t know what a bill of materials is for a hip replacement. Rather than identifying the actual labor, supplies, implants, overhead and other expenses tied to an individual procedure... How often is there a malpractice case for a hip replacement? I'm willing to bet that the costs of a malpractice case can be one, two, three, or even more orders of magnitude higher than all of those other expenses. Dwarfing any of those enumerated costs. Even cases that they win. Of course they're looking at the statistics rather than counting beans.

jqpabc123

he said that if he bought a hospital, he would operate it like a startup, strip out unnecessary overhead And then he would charge whatever the market would bear in order to maximize return on his investment. "Running it like a business" *is* part of the problem. Health care is not just another business. Once you're in the hospital, it's a little late to go price shopping. And with your life on the line, do you really want to choose the low cost provider?

bluGill

Just be careful. While hospitals need to do better, a large part of what I want from a hospital is to be over prepared. Just in time is good, for a lot of things, but there needs to be a large buffer of things in inventory at a hospital just in case there is a large disaster. (this is hard - blood expires and people don't like to hear about their donation being wasted even though wasted blood means no doctor had to decide which person didn't get blood for lack of supply)

wjnc

There is no one way of doing cost attribution. So, at scale, there is no such thing as one perfectly calculated cost per product. Hospitals are outliers compared to more regular firms in that they produce tens of thousands of procedures / products. In the Netherlands we’ve standardized products for billing and negotiation purposes but still most negotiation is on a higher level than price per product. Tl;dr Mr Cuban is right, but I think hospital accounting nears P/NP-level complexity

josefritzishere

This feels like misdirection. My understanding from providers is that insurance underpayment is the cause of price inflation. Ex. They bill $100, get paid $10, so over time they increase the billing to $200 to collect actuals.

gumby

Clay Christiansen (the “The Innovator‘s Dilemma”/disruption guy) once pointed out to me that hospitals were subject to the same disruptive pressure that kills successful companies. He gave an example (this was 25 years ago) of heart attacks: people used to get bypasses that needed an entire operating team and weeks of hospitalization. But then angioplasty and stents were invented, a treatment you could get and be home the same day, and that could even be done in outside clinics. But while they handled most cases, the hospital still got the rare but super serious ones. So they had these big expensive facilities and staff but not enough “business” to support it. Just like the steel minimill they lost their cost structure but couldn’t see it as it was happening.