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MCIC Press Release

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Phone: (732) 292-1100
Fax: (732) 292-1111
Email: info@themcic.com

Hot Off The Press

No One Culprit To Blame For Soaring Healthcare Costs, MCIC Survey Finds

MANASQUAN, NJ -- Who is to blame for the ever-growing surge in healthcare costs? Just about everyone, according to an exclusive survey conducted by the Managed Care Information Center (MCIC).

"The blame can't be fixed on one thing or one group," said a respondent who works for a hospital-medical center. "This is like asking who is to blame for the American Revolution."

"The cold hard fact of the matter is that it is unlikely that the rise in healthcare costs can be reduced significantly over the long run," the respondent added. "Anyone who thinks they can is either full of blarney or should find themselves a good behavioral health professional."

Multiple Factors

Most of the respondents blamed a multitude of factors or a combination of factors for the hike in healthcare costs.

One respondent who answered "everyone" said that consumers are not accountable for their healthcare use and perceive their healthcare coverage as an entitlement.

"Health plans have underpriced their products and poorly managed the costs," the respondent added. "Employers have demanded encompassing networks without regard to ultimate costs. Hospitals have not managed internal waste or staffing issues and through consolidation they have now begun to squeeze the health plans for increased rates at the expense of providers and consumers and have not shown any real savings or improved outcomes data."

Another respondent from a physician organization cited "our culture" as the primary cause of rising healthcare costs.

"We are expected to do things faster with fewer resources, yet with more focus in a 24/7 society," the respondent said. "We sleep too little, care too little, eat too much. Morality has eroded. Smoking and drinking in excess have become too common. Obesity looms as the No. 1 health time bomb with no solution in sight."

Common Culprits

Some of the more common culprits named in the survey included: an aging population, doctors, consumers, drug companies, health maintenance organizations, inefficient hospital management, high liability insurance, the federal government, expensive technology, lawyers, poor reimbursements, the Health Insurance Portability and Accountability Act (HIPAA), drug manufacturers and drug company advertising costs.

Consumers Garner Most Of Blame But consumers took the biggest hit, with 12.5 percent of the respondents placing the blame squarely on the American public. "Consumers have not participated fully in the management of their own healthcare and the costs relating to providing that care," said a consultant. "When consumers begin to feel some of the costs more fully, then they will begin to make the changes necessary to improve their own respective health condition, which in turn will result in the overall lowering of the cost of care." "The consumer is insulated, sheltered and protected from the actual costs of healthcare," said a representative from a managed care organization. "In economics, this is an unbalanced market system, not a free market where the consumer is responsible for demand and producers are responsible for supply."

Physicians Second On List

Doctors were second on the list, with 10.4 percent of the respondents blaming them for the cost hikes. Drug costs and pharmaceutical companies came in third, with a combined 8.3 percent.

"Physicians are still the drivers of all healthcare cost decisions, and as they are squeezed by managed care companies, they will react by searching for more ways to increase their incomes," said a respondent from a managed care organization.

The MCIC received almost 100 responses to the question "Who Is To Blame For Soaring Healthcare costs?" from a variety of healthcare executives, with the bulk coming from consultants.

    The breakdown of respondents included:
  • Consulting firms 39.6 percent.
  • Managed care organizations 20.8 percent.
  • Other healthcare providers 15.6 percent.
  • Physician organizations (independent practice associations, physician practice management companies, physician organizations, management services organizations) 11.5 percent.
  • Hospital-medical center 10.4 percent.

For the most part, respondents from each category placed the blame on a variety of factors, rather than on any one cause.

Consultants faulted consumers and managed care plans frequently, while MCOs tended to blame doctors, drug companies and hospitals.

One representative from a consulting firm also placed the blame on "everyone."

"Consumers want everything covered," the respondent said. "Physicians want more money, and do not practice evidence-based medicine; Congress and state legislators want to mandate coverage for popular benefits and make managed care plans lighten up their restrictions; hospitals are committed to inefficiency because they are rewarded for it."

Top Five Culprits In Rising Healthcare Costs

  • Consumers 12.5%
  • Physicians 10.4%
  • Drug Costs, Pharmaceutical Companies 8.3%
  • "Everyone" 7.29%
  • Government 5.2%

Another respondent said the responsibility lay with "the American public" and said the biggest single driver of rising health costs was new technology.

"This would not be a factor if Americans didn't have an entitlement mentality regarding the best possible care and if Americans were not so eager to sue for medical malpractice," the respondent said. "Doctors order the latest, greatest treatments because they are practicing defensively. I don't work for any of the organization types listed. I am an insurance regulator."

Drug Industry Also Faulted

One healthcare provider cited pharmaceutical industry costs as one of the major drivers.

"The money spent in advertising and other merchandising tools is unnecessary," the respondent said. "Medications shouldn't be advertised. The consumer pays for those expenses. The government should regulate the laboratories about advertising their products."

Another respondent, who listed the "graying of America" as the top problem, said that both HMOs and hospitals underpriced products and costs for years to gain market share and are now making up for lost time.

"Both types of entities fell behind the 8 ball' by underpricing their services for several years,"said the respondent, from the hospital-medical center category. "Then, when no one was looking, America got older."

Baby Boomers are moving towards the "high consumption" years, the respondent said, and senior citizens are already consuming services, technology and high-priced drugs.

An "acute shortage" of medical personnel, who all demand higher wages, causes pricing per unit to increase, the survey respondent said.

"When cost per unit and volume increases occur, one is in for a huge growth of cost," the respondent said.

Lawyers, litigation and high liability insurance also play a part in runaway healthcare costs, several respondents said.

"Lawyers force care providers to do more than is generally reasonable for clients so that the likelihood of a lawsuit is reduced or to defend lawsuits that are brought," said one respondent from the hospital-medical center category.

Address: Managed Care Information Center, 1913 Atlantic Ave., Suite F4, Manasquan, NJ 08736; (888) 843-6242, www.themcic.com.

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