Introduction and Episode Overview
[00:00:00] Stacey Richter: Episode 466. "What Is Rising Faster, Insurance Premiums or Hospital Prices?" Today I speak with Vivian Ho.
[00:00:27] Stacey Richter: This episode has three chapters. Each one answers a key question and bottom line, it all adds up to action steps directly and indirectly for many, including plan sponsors probably, community leaders, and also hospital boards of directors. Here's the three chapters in sum.
To listen to this episode or view the show notes with the mentioned links and charts, visit the episode page.
Chapter 1: Rising Insurance Premiums
[00:00:46] Stacey Richter: Chapter one, are commercial insurance premiums rising faster than the inflation rate? And if so, is the employee portion of those premiums also rising, meaning a double whammy for employees paychecks, i.e. premium costs are getting bigger and bigger in an absolute sense, and also employees relative share of those bigger costs is also bigger. Spoiler alert, yes and yes.
Chapter 2: Drivers of Premium Increases
[00:01:14] Stacey Richter: Chapter 2. What is the biggest reason for these premium increases? Like, if you look at the drivers of cost that underpin those rising premiums, what costs a lot that is making these premiums cost a lot?
Spoiler alert, it's hospitals, and the price increases at hospitals. And just in case anyone is wondering, this isn't, Oh, charge masters went up or some kind of other tangential factor.
We're talking about the revenue that hospitals are taking on services delivered has gone up and gone up way higher than the inflation rate.
In fact, hospital costs have gone up over double the amount that premiums have gone up. Wait, what? That's a fact that Dr. Vivian Ho said today that threw my brain for a loop, hospital costs have gone up over double the amount that premiums have gone up.
Chapter 3: Hospital Price Increases
[00:02:06] Stacey Richter: Chapter 3. Is the reason that hospital prices have rocketed up as they have because the underlying costs these hospitals face are also going up way higher than the inflation rate. Like, for example, are nurses salaries skyrocketing and doctors are getting paid a lot more than the inflation rate. Stuff like this. Too many eggs in the cafeteria. Way more charity care.
Bottom line, is an increase in underlying costs the reason for rising hospital prices? Spoiler alert, no. No to all of the above. And I get into this deeply with Dr. Vivian Ho today.
But before I do, I do just want to state with three underlines, not all hospitals are the same. But yeah, you have many major consolidated hospitals crying about their, you know, in air quotes, razor thin margins, who are, it turns out incentivizing their c-suites to do things that ultimately wind up raising prices.
I saw a PowerPoint flying around. You may have seen it too. That was apparently presented by a nonprofit hospital at JP Morgan, and it showed this nonprofit hospital with a 15.1 percent EBITDA in 2024. Not razor thin in my book. It's a, the boards of directors are structuring c-suite incentives in ways that ultimately will raise prices.
If you want to dig in a little deeper on hospital boards and what they may be up to listen to the show with Dr. Suhas Gondi.
Vivian Ho, PhD, my guest today, is a professor and faculty member at Rice University and Baylor College of Medicine.
Her most major role these days is working on health policy at Baker Institute at Rice University. Her work there is at the national, state, and local levels conducting objective research that informs policymakers on how to improve healthcare.
Today on the show, Professor Vivian Ho mentions research with Salpy Kanimian and Derek Jenkins.
Alright, so just one quick sidebar before we get into the show. There is a lot going on with hospitals right now. So before we kick in, let me just make one really important point. A hospital's contribution to medical research, like doing cancer clinical trials, is not the same as how a hospital serves or overcharges their community or makes decisions that increase or reduce their ability to improve the health and well being of patients and members who wind up in or about the hospital.
Huge, consolidated hospital networks can be doing great things that have great value. And also at the exact same time, kind of harmful things clinically and financially that negatively impact lots of Americans and doing all of that simultaneously. This is inarguable. And with that, my name is Stacey Richter.
This podcast is sponsored by Aventria Health Group.
Interview with Dr. Vivian Ho
[00:04:48] Stacey Richter: And here is my conversation with Vivian Ho, PhD.
Dr. Vivian Ho, welcome to Relentless Health Value.
[00:04:54] Dr. Vivian Ho: Thanks so much, Stacey. I'm thrilled to be here. You know, I've learned so much from your past shows, both from you and your prior guests. I'm thrilled to be talking with an audience that is so informed about healthcare and working so hard to improve affordability and access to high quality healthcare.
Discussion on Health Insurance Costs
[00:05:12] Stacey Richter: I think we all have a sense that premiums are going up in this country for commercially insured employees and members of commercial plans. Would that be correct statement?
[00:05:23] Dr. Vivian Ho: Yes, you're absolutely right about that Stacey. If you look at the data from 1999 through 2023, so close to 25 years, the cumulative increase in the cost of a family insurance premium through employer sponsored and health insurance has risen by 314%. So that's the cost of insuring a family of four. For combined for both the employer and the employee.
[00:05:46] Stacey Richter: We have the price to insure a family for an employer and the employee has gone up 314%. I mean, is that just the inflation rate that's pretty long time?
[00:05:57] Dr. Vivian Ho: No, it's much higher than the inflation rate. Over that same time period, workers earnings increased by 111%. So there is this significant disparity between how fast the cost of a worker's health insurance premium has risen compared to their take home pay.
[00:06:14] Stacey Richter: Right, okay, so we just went up 111 percent and the cost of the insurance goes up 314 percent. I just saw a LinkedIn post by Byron Hugley the other day referencing an article entitled, "Have Wages Stagnated for Decades in the US", which was written by Michael Strain that corroborates exactly what you're saying right now. Dave Chase and others have talked a lot about this.
[00:06:41] Dr. Vivian Ho: Oh, absolutely. This is a big hit to workers take home pay because that contribution, it turns out that if you look at the portion of the premium that the worker is paying for, that's actually increased even more. It's actually increased 326%. So not only is the cost of the entire insurance premium increasing, the amount that the worker has to pay for is even higher.
And then these costs don't even take into account the amount the worker pays once they actually start going to the doctor. So we know over time, deductibles have risen, copays have risen. So, this is a tremendous burden upon most American workers.
[00:07:23] Stacey Richter: Just the cost shifting, the member is paying of the premium has gone up substantially, as you just said, which doesn't even include the amount they're paying after the premium is said and done.
Like, for example, when they go to the doctor and get hit with some additional portion of the spend.
[00:07:43] Dr. Vivian Ho: Over time, what the worker is seeing is less and less of their paycheck coming home in terms of cash and more going towards paying for the health insurance, I almost wonder when people are talking about how difficult insurance has been in terms of being able to pay for groceries and other items, that it's actually behind the scenes become even worse because they forget the part that was already taken out of their paycheck to cover healthcare.
[00:08:08] Stacey Richter: Zack Cooper, I just saw him speak and he said, and this comes out of KFF, a family premium in 2025 is something like $25,500 on average, which is more than a car, right? Like you can buy a decent car, brand new, drive it off the lot for less than $25,500. Curse the insurance companies. Is that where we're at?
[00:08:31] Dr. Vivian Ho: Well, I realize when I've been showing this graph in public presentations, that that's exactly what the audience would say. Those darn insurers, they're taking home huge profits and we've got to do something about it. But, you know, it doesn't tell the entire story because health insurance premiums have to cover the cost of the underlying healthcare.
And so we've been looking further at this particular issue. And, you know, I actually have come to the conclusion that a lot of the increase in the rise of health insurance premiums is due to the rise in the underlying cost of hospital care.
[00:09:06] Stacey Richter: Just to back up for a sec. So the graph that you're talking about is this, and we can put it in the show notes, it's this crazy looking thing where you show that the cost to insure populations of employees and families. It just is this spike. It's just this yellow line goes straight up in the air.
The point that you're making is, is this insurers taking in massive profits? Uh, maybe, but if you look a little bit deeper, underlying costs are a factor here and you just drop the hospital word.
Do you want to dig in a little bit on that? Because what I'm inferring from what you're saying is that hospitals are potentially a component of these underlying costs, which then wind up driving premiums for insured Americans.
[00:09:51] Dr. Vivian Ho: Sure. So, with the help of Salpy Kanimian, one of my graduate students, we went to look at Bureau of Labor Statistics data to look at increases in prices of the underlying services that are included in health insurance premiums, specifically, we look for increases in prices for hospital services, physician services, and then also the price index for health insurance.
[00:10:18] Stacey Richter: We just had this conversation about how much premiums have gone up was like 314%, which is way higher than inflation. And if we're thinking here about, okay, well, maybe this is driven by hospital prices as you and your team started to conclude. Is there a smoking gun here? Like, how are we figuring out one of these things leads to the other?
That there's like some causation that's afoot.
[00:10:45] Dr. Vivian Ho: When we're looking at prices, the Bureau of Labor Statistics doesn't provide continuous data back to 1999, but we can start in 2006. And so if we say, let's set an index in 2006 for hospital, physician, and insurance prices at 100. And then look how they've increased through 2023. That's just under 20 years.
The price index for hospital services goes from 100 up to 184. Over that same time period, if you look at the price index for physician services and insurance, the price indices go up by 138 and 128 respectively. So the price index for hospital care has risen substantially over time. It's risen for physician services and insurance, but not by as much, not even close.
[00:11:32] Stacey Richter: Okay. So over the time period that we're talking about from starting in 2006, because as you said, you can't get data on hospital prices prior to 2006 or the kind that you're looking for. So from 2006 forward we've got an 84 increase on hospital prices. Meanwhile, it's only 38 for doctors and only 28 for insurance.
[00:11:56] Dr. Vivian Ho: Yes.
[00:11:57] Stacey Richter: Which is weird and striking. Like my head is a twirl right now. Just, just to hear this, that we've got hospital prices that are going up double, more than double the other two factors.
And, and I think this is what you always talk about, economists are looking at the entire healthcare system, not trying to find some silo villain in a way that, as we all know, people who listen to this show, that it is definitely a healthcare system that it was perverse incentives and complexity and, there's actions and reactions. So you kind of got to look at things systemically.
And it's very striking to me to hear that hospital prices have gone up so much relative to other services.
[00:12:42] Dr. Vivian Ho: Economists, they really do like to focus on the basics. So when we talk about overall spending, that's price times quantity. And in this case, we say, well, let's also look at prices. And it's important to look at the different types of prices and Uwe Reinhardt years ago wrote this article, "It's the Prices, stupid”. And so it's not just the prices, but the prices for what types of services.
[00:13:02] Stacey Richter Got it. The types of services that we're talking about are hospital services, not necessarily a service which a doctor is doing and then specifically getting paid for.
[00:13:12] Dr. Vivian Ho: Oh, absolutely right. We're talking about the price that an insurer is negotiating with a hospital to provide care to an employee.
[00:13:20] Stacey Richter And this makes sense to me. I saw at the Winter HBCH Houston Business Coalition on Health meeting, employers were asked, there's a poll question and employers were asked: “What do you feel poses the greatest threat to the viability and success of your health plan?”
Winner by a mile, hospital inpatient costs. Which is not surprising if you start digging in to the percentage of any given plan sponsor spend attributed to hospitals.
For example, Marilyn Bartlett was on the show, I think she said something like 45 to 50 percent of the spend in Montana was directly attributable to hospitals, with a huge chunk of that being acute care hospitals.
Cora Opsahl and Claire Brockbank were on the show saying something similar. I just had a conversation with Shawn Gremminger the other day who asked around and he said that most plan sponsors will attribute about 50%. So half of their entire spend is going to hospitals. The National Alliance has a report that's very interesting on or about these topics.
But the percentage of plan sponsor spend may actually be even more than 50 percent because a lot of times those numbers don't count buy in bill. It doesn't count, you know, patient or member gets a drug infused and then the hospital could mark it up.
There's a show with Autumn Yongchu and Erik Davis. Hospitals sometimes mark up the cost of the drug three to five times or sometimes even as much as 10 times the cost. And so that 50 percent number doesn't even include stuff like that.
So this is this is kind of making sense that if you've got the prices that are going up by a factor of 84 more than double everything else, if one aspect is going up double the percentage or the number of points of everything else, then it's going to become a bigger chunk of the pie. So I mean, this is kind of corroborative if we start thinking about it.
[00:15:10] Dr. Vivian Ho: And it's consistent with the anecdotes that we're hearing about medical debt. And in consumer bankruptcy. Most of the stories that I hear about health bills being the leading cause of personal bankruptcy tend to be hospital bills. So everything is, as you said, consistent with the picture that we're hearing about from the public.
[00:15:29] Stacey Richter: If I'm thinking about the why here, like, okay, so we've got skyrocketing hospital prices. And if you look at that graph, it looks pretty skyrocketing, frankly. Is it because underlying hospital costs have gone up so much that you read press releases, razor thin operating margin, like that's the go to phrase, razor thin operating margins.
So if we're thinking about these skyrocketing hospital prices, there's a lot of underlying costs for hospitals. We've heard about escalating these travel nurses, we've heard about the issues with drug shortages, and then the prices go up, and Martin Shkreli, and, you know, like, there's a lot of things that conceivably the hospital themselves has to deal with the inflation rate.
Are we seeing that the underlying costs of everything are escalating at, you know, have gone from 100 to 184 as well, leaving the hospitals with this razor thin operating margin? Is that an explanation here?
[00:16:25] Dr. Vivian Ho: No.
[00:16:26] Stacey Richter: That was pretty much underlined.
[00:16:28] Dr. Vivian Ho: So first of all, if one looks at the increase in wages over time, as we already talked about over the last 25 years, workers earnings have increased 111 percent and a portion of that, you know, in there is nurses wages and other healthcare workers.
So we know that earnings have not kept up with the cost of the family insurance premium. And we've talked about the rising hospital prices being higher than for physician services.
Hospital Profit Margins and CEO Incentives
[00:16:52] Dr. Vivian Ho: So we know that physicians earnings aren't increasing as much. But not only that, we actually, in our study, we took a closer look at the net profit margins of nonprofit and for profit hospitals and compared them to insurance companies.
This is what we were able to do with our collaboration with Marilyn Bartlett and the NASHP Hospital Cost Tool. And if you look over time, in every year, the net profit margins for insurers are actually lower than either the nonprofit or for profit hospitals, except for 2022. And there's actually other research showing for many large consolidated nonprofit hospital systems, their net profit margins were lower in 22 because of their investment portfolio, not because of anything going on the healthcare delivery side.
[00:17:38] Stacey Richter: Well, wait, wait, I just need to stop you. So you're saying that the profit for hospitals, is higher than the profit for insurers.
[00:17:46] Dr. Vivian Ho: Yes. The profit for hospitals is higher than for insurers and actually anybody can check this online because if you Google you can look at sort of the total profit for insurers for 2023 and you'll get a report from the National Association of Insurance Commissioners and they'll say it was $25 billion total.
And then if you look at the most recent version of the hospital cost tool and you download it. It's free. And you can sum up the operating profits across all the hospitals in the sample. And we've just updated the data and for 2023, fiscal year 2023, it's slightly different in terms of months, but it sums to $205 billion.
[00:18:27] Stacey Richter: So and that's in total. And I do just want to state for the record here that not all hospital systems are the same.
There are, in fact, hospital systems that actually do have razor thin operating margins and I think that's really important and there are some amazing people, I talk to people all the time who are so mission driven that work at hospitals, right. So I really just want to highlight in six colors that we're certainly not talking about all hospitals and we're certainly not talking about all people who work at hospitals.
So the hospital profits in total in 2023, 205 billion dollars.
[00:19:02] Dr. Vivian Ho: Yeah, we're talking about hospitals $205 billion versus insurance companies $25 billion.
[00:19:08] Stacey Richter: I'm trying to figure out a way to rationalize this and also try to get a bead on the pushback here. So, so, let me think this through.
A, there's a lot more hospitals than insurers that could play a role here.
Additionally, we have especially nonprofit hospitals, if you overhear or hear a retelling of a hospital conversation with a local employer or read the press release, I mean, they will say that we've got a cost shift to you commercial insurers in order to pick up all of the charitable care and the cost of uninsured or underinsured or Medicaid's not paying us enough. So like we have to cover those costs. So like that could certainly be a chunk there. And then you had also said we're taking losses in our investment portfolio.
So I guess, I don't know if that's stated outright, but like what is the pushback that the hospitals give, I guess is probably a summary of this entire question. And how do you respond?
[00:19:55] Dr. Vivian Ho: Hospitals will respond, they're providing benefits to the community with those profits that they're earning. But we did another paper with the NASHP Hospital Cost Tool data.
We looked at the period between 2012 and 2019. There was an increase in profits for hospitals over that time period. And we looked at how much went towards charity care, and how much went towards the fund balance. Or, you know, you, I'm working at a university, it's the equivalent kind of an endowment for a healthcare system.
And what we found over this period, it's close to a decade, we found there was no statistically significant increase in annual charity care for hospitals that was provided over that period. But there was well over a dollar. More than a $1.50 in each dollar increase in profit actually went towards their fund balance towards their own endowment.
So, I just don't buy that the profits are actually going back to the community. And there's plenty of work that's been done by Ge Bai and other researchers showing the amount of charity care provided by these healthcare systems is nothing compared to the tax breaks that they're actually receiving from the federal government as non profit hospitals.
[00:21:08] Stacey Richter Yeah, and you do see hospitals pushing back on the NASHP analysis. And if anyone is really interested, you should look up the pushback because it does exist.
Personally, I see it as a philosophical pushback. There's kind of like broad stroke statements, like we disagree with this math. But then if you start asking a lot of questions about what is disagreed with, like, that's where the talk track starts to falter.
But if anyone has read anything that they feel is really compelling, as far as a pushback with actual, you know, like column A and column B, and this is exactly what's different, I would be very interested to see it because I have not as of yet. I just, it's more of a public relations pushback
I will also say, interestingly, just coming out of JP Morgan, there is a chart going around from Advent Health that show, which is a nonprofit, and they had a 15.1 percent EBITDA in 2024, which is a lot different than the razor. I would not consider a 15.1 percent EBITDA as a razor thin operating margin. And that was a chart, I believe that was presented by the hospital themselves at JPM.
So correct me if I'm wrong, anybody, but like, again, I think most businesses would be thrilled to have a 15.1 percent EBITDA.
[00:22:23] Dr. Vivian Ho: Yeah, so there will be criticisms, particularly from the American Hospital Association, about these numbers. But they come from the data that these hospitals submitted to Medicare cost reports. So how can they on one hand say, yes, use this data to determine how much you should raise our reimbursements for Medicare in the future, but then say, don't trust the data? It doesn't make sense to me.
[00:22:47] Stacey Richter: Yeah, this seems to be a bit of a contradictory statement.
But why is this? You know, like we're here we are having conversations about nonprofit health systems. Why does this happen? These are institutions. If they're nonprofit, they are taking tax breaks because they are positioned and have been in the past pillars of the community serving the community and really, really important ways and still do. Right, like I don't want to diminish the role that hospitals play here and the people who work there.
But, how does it happen that we're in a place where we have a hospital systems that are making so much money that they're able to fund their endowments while at the same time saying that there's razor thin operating, like, how does this happen?
[00:23:32] Dr. Vivian Ho: So, we received funding from Arnold Ventures to analyze the NASHP hospital cost tool data and we linked it up with IRS 990 reports that contain the compensation of CEOs of hospitals.
And we didn't know what we were going to find. We just wanted to look at what are the factors that are most associated with high CEO pay. I've been working with a terrific postdoctoral scholar, Derek Jenkins. And what we found, again, over the period 2012 to 2019, CEO pay increased, the mean pay increased from 1 to 1.3 million dollars.
But what was most important was the factors that were most likely to explain higher increase in pay. So the CEOs that got the highest raises were the ones that increase the profits of their healthcare system the most and also increase the bed size, the number of beds under their control, whether that was hospitals getting bigger or them acquiring more hospitals.
So what the data is telling us is that CEOs, maybe inadvertently, from their boards, but regardless, are being incentivized to consolidate. And, under that consolidation that gives them more negotiating power, they can therefore charge these higher prices that we see in the data to more patients.
[00:24:53] Stacey Richter: The point that you're making is that it's not all just the salary increase. It's the incentives. So CEOs are accountable to the boards of the hospital. And what you've found when you start digging into the data is the hospitals that are paying their CEOs the biggest raises, it's conditional on performance metrics and what those performance metrics are, are more beds.
And I guess you can buy or you can build. So one of the fastest ways to get bigger is to acquire other hospitals. So the CEOs now are incentivized by their boards to effectively consolidate. And we know what that means, long time listeners of the show.
[00:25:34] Dr. Vivian Ho: Absolutely. So, I didn't think this way maybe 10 years ago, but then I actually did 10 years of service on a nonprofit board, actually Harris Health's managed care organization, Community Health Choice. And I got put on the governance committee, which determines the compensation for the CEO. And so I saw it it's actually, you have this committee and it decides the criteria under which you're going to give the CEO a bonus. And so the things we looked at, there was profit in there because you do have to make sure you don't lose money, otherwise the company goes under.
But the things we were looking at were quality, measures in terms of satisfaction by a customer and then quality measures, you know, the caps, different quality measures for insurance companies, and also satisfaction by the physicians that you're reimbursing.
And so then it should be the case that a nonprofit board of a hospital should be thinking of, I would think if they're caring about the community that they would be caring about how much charity care the hospital is providing. Are they serving the entire community? Do they care about quality as well? And you know, we're working on another study trying to show there's some association between quality and CEO compensation. But gosh, darn it. The thing that matters the most is profits for the hospital and bed size.
[00:26:52] Stacey Richter: Again, as we all know, there's, there's two factors I just want to point out here. It's long been known and there's a lot of research to this end. When you consolidate, hospital prices go up, and there's a lot of data to that end.
There's a Zack Cooper study. There's just so much information that shows that once consolidation starts to happen, hospitals start to derive market power and hospital prices will, in fact, go up and consolidated hospitals have so much higher prices than independent hospitals for all kinds of reasons.
But like, that's a fact. So effectively, what we've got is boards of directors who are incentivizing their CEOs to figure out how to consolidate and I guess this is not that striking. I'm thinking back to the show with Suhas Gondi, Dr. Suhas Gondi, who they did a bunch of research and found that the profession with the biggest representation on a lot of these hospital boards is dun dun dun, finance professionals.
So, I mean, there's like, generally speaking, and I'm winging this off the top of my head, but it's like, there's 1.2 doctors on any given hospital board and .01 nurses.There's so few individuals who actually have a clinical background, mostly it's finance.
So I guess finance is going to do what finance is going to do, and this sounds very financey.
[00:28:12] Dr. Vivian Ho: Yes, it's not only someone with a finance background, but it, you would think in terms of who wants to be on these boards, it's going to be a wealthy member of the community who cares that when, heaven forbid, something terrible happens to them or their family, that they can go to the local hospital and immediately get the most advanced care, that they're not going to have to fly to New York City or to one of these other top places to get that advanced care.
So the only thing going in their minds, is the financial resources at a hospital so that it can buy the latest, greatest technology for them without thinking what are the consequences for the entire community if this care is not affordable to everybody?
[00:28:54] Stacey Richter: That's really interesting. So what you're saying is who's going to be on a board is going to be a finance person who's thinking, Whoa, we got to have the latest and greatest PET scan, whatever, with all the bells and whistles.
And we need to have that in the local hospital. So we got to make sure that we're spending a whole lot of money to service that fancy equipment. Without probably I mean, again, they're finance people, they're not epidemiologists. So they may not realize that your chances of needing a fancy PET scan machine are minimal compared to you needing the best care for chronic kidney disease or not get MRSA while, while in the hospital, right?
Like, if what our main focus is, is building a new building so that we can put the fancy machines in there.
Resources are a zero sum game, and we've got the CEO of the place very, very focused on making sure that we're just adding this new fancy equipment that means that attention is necessarily being taken from let's make sure that we have a high quality place. The more attention that you put on one thing, the less attention as far as time and energy and money that is going to be placed on something else.
[00:30:01] Dr. Vivian Ho: Oh, oh, absolutely. I think the approach that these boards are taking now is incredibly myopic because what they are doing, they're raising the cost of health care for their own workers because of this.
Mark Cuban, who's been on your show, has said, you know, he realizes things in the design of his benefit actually had been harmful to his workers and he addressed that. This is the exact same notion that if you are raising the cost for workers this much, they cannot afford to get adequate healthcare, and it's about protecting the entire community and keeping the entire community as productive as possible.
[00:30:38] Stacey Richter: So big action step, everybody try. And it might not be easy to figure out who actually is on the board of directors at your local hospital, and apprise these folks potentially of the impact of their actions.
[00:30:51] Dr. Vivian Ho: What I'm concerned about is the most consolidated systems who are charging the highest prices are actually making it hard, harder even for the hospitals that haven't consolidated to just get by.
And so what I'm worried that is that there's this disparity resulting in, in the delivery of healthcare. But, I couldn't agree with you more in terms of we need more physicians on boards making decisions. I'm a cancer survivor, so I actually make a lot of visits to specialists. And every time I go, they find out I'm a health economist and every single one has a good suggestion on how to improve healthcare delivery in their own system and they say, but no one ever listens to me.
[00:31:33] Stacey Richter: I really just want to acknowledge that it is really hard to run a hospital. But it just hasn't been a focus of a lot of boards in particular to really contemplate what the impact is to patients of some of these actions.
[00:31:51] Stacey Richter: So yeah, I guess many factors in play that add up to where we are.
[00:31:55] Dr. Vivian Ho: It's extremely hard. It's just we need to listen to the people who actually are experts in making things better and actually take action.
[00:32:04] Stacey Richter: And yeah, just underlying that, we are talking about their most consolidated systems right now, or the ones who aspire to be the most consolidated due to the way that their boards are for sure thinking.
And you had said when you start to get this momentum for consolidation, it actually makes it harder to be an independent hospital for a bunch of different reasons.
And then you start winding up actually because then the individuals who are really mission driven that are working at some of these places and also seeing what's going on, maybe conflicting with their values. You wind up with a lot of cognitive dissonance. It just, it's just a bad scene for all kinds of reasons that I'm sure our audience can articulate it clearly.
Concluding Thoughts and Action Steps
[00:32:44] Stacey Richter: If I was going to ask you to summarize Dr. Vivian Ho, takeaways from what we just talked about are the things that you think are the most important to leave our audience with. How would you do that?
[00:32:55] Dr. Vivian Ho: The cost of health insurance is an enormous burden on working Americans and it has been getting much worse over the last several years.
The work that we've done suggests that high hospital prices are the main reason why those premiums are rising so much. And they've risen faster than for physician care and for insurance premiums.
Not only that, it's not because of high costs for hospitals. Profits for hospitals have been higher than those for insurers except for one year in 2022 for nonprofit hospitals.
What I'm hoping is this knowledge actually generates a discussion amongst the community amongst those who are sitting on hospital boards to try and think more broadly about what is the type of healthcare system we are trying to achieve and what are we trying to incentivize our hospital leaders to do.
Focus more on affordability. Yes, you need to deliver high quality care. You need to make positive profits, but create a better, healthier balance for the cities and communities that you're serving.
[00:33:58] Stacey Richter: So that's what's actionable, is what you're saying, that this has to really start at the board level. Like, the boards really need to become more cognizant of exactly and specifically what they're doing.
Absolutely. You know, we do need to have better health policy, but there are certain things that health policy can't address. Although, in this case, maybe it could be that we have policy that hospitals are required to disclose the compensation matrix they use to deliver bonuses at nonprofit hospitals, but I think this does need to be something that it's more a discussion in the healthcare system amongst everybody involved about what we're trying to achieve. So, boards of directors, this is a whole healthcare ecosystem that we're talking about here and actions have reactions the flywheel that's being created may not actually be the flywheel that you want to create. So I think that's thought number one.
And then thought number two, it'd be important for communities to potentially figure out even who's on the board of their local hospital, which is sometimes really hard because with all this consolidation, the board might be three states away.
And then some of the takeaways from the Suhas Gondi podcast if anybody wants to go back and listen to that, which is like, maybe we should get more healthcare professionals on some of these boards and really start paying attention to the input and insights of those who are actually working in the building, which also came up.
Anything I forgot to ask you that you wanna mention here?
[00:35:18] Dr. Vivian Ho: You know, if I saw all the profits going towards nurses wages, I just fold up shop and go home.
[00:35:25] Stacey Richter: Yeah.
[00:35:25] Dr. Vivian Ho: Just not happening.
[00:35:27] Stacey Richter: Dr. Vivian Ho, if someone is interested in learning more about your work, where would you direct them?
[00:35:33] Dr. Vivian Ho: Use your search engine, type in Vivian Ho and Rice University and you'll find my work and you could also go to Google Scholar and type in my name.
[00:35:41] Stacey Richter: Dr. Vivian Ho, thank you so much for being on Relentless Health Value today.
[00:35:44] Dr. Vivian Ho: Thank you Stacey.
[00:35:50] Dr. Vivian Ho: Hi, I'm Dr. Vivian Ho. I'm a health economist at Rice University and Baylor College of Medicine. I listen to Relentless Health Value religiously because this is the show for those who are part of the tribe that wants to improve the quality of healthcare, improve access to care and make it affordable. So make sure that you subscribe to the newsletter and subscribe to the podcast and keep up with every episode.