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The Healthcare Industry’s Role in Rising Healthcare Costs

Every Chicago medical malpractice attorney at our firm has heard the common argument by those who seek to take away patients rights via tort reform legislation: We need to do it to lower healthcare costs. We have repeated ad nauseam how those claims have literally no basis in reality. Taking away the ability of victims of Illinois medical malpractice to file civil lawsuits will not lower healthcare costs. The main thing accomplished by these measures is shifting the responsibility of paying for these errors from those who actually commit them to the taxpayers as a whole.

The truth is that healthcare costs are far more complex than those supporting tort reform measures claim. Serious investigations into these costs show that the obvious focus should be on insurance companies and the healthcare industry itself-not private citizens hurt by medical errors.

A Close Look At Hospitals

An interesting blog post at The Atlantic this week explores how the healthcare industry itself is responsible for the rising costs of the system. The story explains how the “fee for service” system in our country has the obviously implication of encouraging medical professionals to provide more care and more expensive care. So long as the healthcare industry is a private business, the drive for profits will be paramount. This system emphasizes quantity over quality-leading to overuse of the medical system and a driving up of costs.

Yet, the basic idea of more consumption equaling higher cost doesn’t exactly work. The story notes that claims compiled by the Healthcare Cost Institute found that even as medical costs increased at three times the rate of inflation, actual healthcare usage decreased by five percent.

What gives?

Hospitals are increasing their rates even as demands on the system are abating. How are they able to do this?

Part of the reason, as they story explains, is that medical clinics, hospitals, and doctors have incentives to keep recommending treatments and “screenings” that actually do more harm than good. Our Illinois medical malpractice lawyers were a bit disgusted to read in a CNN op-ed about one hospital executive who bragged about calculating out how a “free” cancer screening event was able to turn a profit. The hospital could predict ahead of time how much money they would make by treating the percentage of patients who had cancer as well as treating the side effects from those who were false alarms.

In other words, business games are being played based solely on the bottom line for hospitals.

Medical malpractice attorneys who work on enough of these cases understand the role that insurance companies play in guiding the care and cost of treatments. However, as this story reminds us, it is important not to forget to influence wielded by the hospitals as well. In some cases, some hospital networks are actually able to push around the insurance company, sometimes even forcing them to increase the cost of premiums for all policyholders. This power obviously includes the ability to charge what they want for care, and without anyone around to provide a check on that power, the increases continue year after year.

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