Thomas Scully MD

Hospital prices are completely made up. The implications are huge. Imagine your local Italian restaurant runs like this: They contract with local businesses for reasonable prices on pasta, pizza, appetizers, breadsticks, etc. But there's no transparency. As a customer, you have no idea what they charge the local H&R Block for linguine or the Shell station employees for gnocchi in vodka sauce. And that's fine—those are private deals. Now, you walk in, hungry, and the menu has no prices. You order a big plate of ragu bolognese. When the check comes, it’s $4,500. Stunned, you ask to see the manager. You say you only have cash, but not that much. The manager replies, "Oh, you didn’t mention cash! We’ll knock it down to $90." Frustrated that a plate of pasta costs $90, you're still grateful you're not paying $4,500. But wait, there's more. The restaurant lets two poor people a month eat for free. With a pasta price of $4,500, they claim $9,000 in charity food each month. Then they allow 10 more patrons with "pasta insurance" for the poor, which reimburses pasta at $5. They write off the remaining $4,495 as "uncompensated food" for each diner. The restaurant cries poor. They show how bad their finances look with all this charity and uncompensated food. They negotiate "non-profit" status, saving millions in taxes, robbing the community of that tax revenue. Yet, they still cry poor. They secure more government subsidies. Food is a human right, after all. They manipulate public "food insurance" programs to get paid more than local food trucks. They need a "facility fee" since it's "more expensive" to serve food at their restaurant. They justify this with their balance sheet, showing all that charity and uncompensated food. They get the government to force suppliers into giving them massive discounts. "We serve 12 poor patients a month! Nearly 12% of our clientele!" they cry. With these benefits, the Italian restaurant buys up other restaurants, growing into a massive conglomerate. They use this market power to increase prices for H&R Block, Shell, and other contracted businesses. "$500 for pasta?!?" the Shell manager asks. "Hey, it's still a massive discount off the $4,500 we normally charge!" the restaurant replies. Making massive margins on pizza, pasta, and entrees, the administration bloats. They hire more people to manage quality metrics, billing codes, and government requirements for the centrally administered "food insurance plan." Administrator growth outpaces cooks and waitstaff by 30-1. Looking at the balance sheet, they realize administrators are expensive! The chief parmesan officer makes 7 figures! So, they cry poor again. They need more reimbursement for their pasta. More regulations to put competitors out of business. Non-compete clauses for cooks and certificates of need for new restaurants. They pass laws forbidding cooks from owning restaurants. They aggressively go after debt, sending poor patients to collections for unpaid marinara sauce. Protected from market forces by regulations, they bloat and inefficiency reigns. Yet, they demand more pizza & pasta be served. Cooks and waitstaff are miserable as quality suffers under bureaucracy. They claim "disproportionate share" status for serving 12 poor patients a month while turning away extra poor people at the door. This isn't hyperbole. These are the tactics hospitals use to inflate care costs. This is why healthcare spending spirals out of control. We wouldn't tolerate this from our food service establishments. We shouldn't tolerate it from our hospitals, either. @anish_koka @drdanchoi @JPGK_MD @SpineNeuro @MartyMakary @MedicareMeddler @cscla @EconTalker @mungowitz