Profit in healthcare

You may have heard that the health care industry is stepping up to the newest health care plan working its way through congress. This article says that the drug companies were first to step up by giving up $80Billion and now hospitals are stepping up to accepting $155 in cuts. The reason they are willing to give this up (according to the article) is that "they're trying stave off a much bigger hit if the government sets up a public health insurance plan that pays them according to the relatively stingy fee schedule of Medicare."

So they see this as the least offensive option. But my question is, where will the cuts come from? Now I'm the first to say that hospitals charge very expensive rates. They routinely discount their rates 50% or more for insurance companies and my recent experience with some self-paid bills indicate that an individual can get the same discounts.

So these new cuts must be in addition. But what are they going to cut out? Just the "overhead"? Well, even if that's true, "overhead" results in jobs. In moving all records to electronic records, some paper pusher will lose a job. But my concern isn't just for paper pushers, it's for the other jobs. The person who cleans the rooms, the person who prepares the meals, and (most importantly) the nurses, doctors, aides, etc.

If profits are good (as I stipulated last month here), then profit in health care is good. And cutting that profit means job losses and (more scarily) potentially cuts in service.