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cost, healthcare, impact, insurance

The Cost Impact of Insurance on Healthcare

HIPnation, June 23, 2018

I will start with a common yet exceptionally important statement frequently mentioned in health policy discussions: The current payment model for healthcare drives up the cost of healthcare services. Please take a moment and read that again.

The current payment model is insurance. We call this a third-party payment model — the payer is not the one who receives the healthcare services. Insurance is provided either through the private commercial market or a government-funded plan like Medicare or Medicaid.

Why Healthcare Costs are Escalating

The addition of the third-party payer scheme into the healthcare equation leads to a multitude of negative effects, one of which is escalating healthcare costs. According to various studies, the administrative costs for the average primary care physician’s office run in the 60% range. An average primary care office has four to five staff members per physician. Of those staff, only one is involved in helping care for patients. The remaining members deal with the third-party payers.

And from the insurance side, they have about three employees per doctor that again do nothing other than manage the system. None of these people help make you better.

Now, sprinkle in a few consultants, accountants, lawyers and a slew of others that physicians use just to meet the requirements of the third-party payers.

How does this add up? Based on a Harvard Business Review study, there are ten full-time administrative employees per physician. This equates to $600,000 per physician. Since there are about one million physicians, this adds up to a stunning $600 billion dollars paid to people working in healthcare who do not provide healthcare. This is an unnecessary burden borne by our patients, paid for through continuously rising premiums and escalating healthcare costs.

Insurance is supposed to protect against rare, high-cost catastrophic events. However, with a system that places insurance in every aspect of healthcare, the cost of simple office visits, labs, imaging and every other aspect of healthcare becomes ridiculously expensive. We refer to this as the “magic of insurance.”

How HIPnation Changes Healthcare Costs

With HIPnation, we pop the bubble of inflated healthcare costs. When you look around our primary care offices, you will not see coders, billers, claims denial processors, insurance negotiators, or insurance regulatory consultants. We remove insurance from the places in healthcare where it should not exist. This allows us to drive down the cost of healthcare to make it more affordable.

Such a simple tweak — remove the distraction and unnecessary costs associated with a poorly constructed payment model that is the third-party payment system — and healthcare becomes affordable. It almost seems too good to be true, but this is only because we have been conditioned for so long to believe that health insurance is necessary to pay for healthcare. Instead, insurance has made healthcare increasingly unaffordable. It is time for a reconfiguring of healthcare. It is with great pleasure that we have removed the noise of insurance from our offices.

Call us today at HIPnation to learn more about our healthcare solution and what we can do for you.