(Newswire.net — May 21, 2019) — The US healthcare sector is by far the biggest in the world, with a turnover that far eclipses any other developed nation and is an essential contributory to the nation’s GDP. Healthcare in the United States is unique, to say the least. It is a profit-based industry that charges a premium for life-saving treatments and offers little to help those who do not have the means to pay for treatment.
On the surface, you could be forgiven for thinking that the healthcare sector works with massive margins and is one of the most profitable industries in the United States. However, when you dig a little deeper, you begin to realize that not all is as it seems, and despite those stratospheric charges that dominate so many Facebook and Buzzfeed stories, the healthcare sector is not always the profitable industry that people seem to believe it is.
In this guide we will take a closer look at some shocking facts about US hospitals, from the complications of strategic hospital planning in a modern US hospital, to problems that arise through insurance and legal issues.
4. The Margins are Not as High as you Think
With thousands of dollars being charged to patients undergoing the most basic of treatments, it’s easy to assume that hospitals have some of the highest profit margins of any business in any sector. After all, they’re paying cents for some of their medications and dollars for the use of some of their equipment, but they’re charging tens of thousands for packages that include these treatments.
In actual fact, the average US hospital has a profit margin of between 7% and 8%, with the more successful ones operating at a relatively low higher-rate of 15%. There are also many hospitals struggling to get anywhere near that 7%, although this is an industry where profit, no matter how small, doesn’t seem to be that hard to come by.
3. The Profits Don’t Always go on Equipment and Services
If the margins are not as high as you might think, or even as they should be, then where is all that money going? You could be forgiven for thinking that the reason hospitals charge so much money for such seemingly basic services is because they are being charged extortionate amounts of money for the equipment that they use, the medications that they prescribe, and the staff that they hire.
You could also be forgiven for thinking that these high charges help to offset free healthcare programs that most hospitals run. However, most of the money that hospitals write off every single year is the result of medical malpractice lawsuits. These lawsuits cost hospitals tens, if not hundreds of millions of dollars every single year.
They are a necessary evil that constantly drives those margins down and leaves very little room for maneuver for US hospitals. There is a good chance that treatment costs will always be high regardless of these lawsuits as that was the case several decades ago before medical malpractice suits became such commonplace in the industry.
2. There Are a lot of Mistakes
Speaking of medical malpractice lawsuits, you might be surprised to learn just how many all of these suits take place every year, and just how many serious, and sometimes deadly, mistakes made within the hospital environment can be.
Strategic healthcare planning includes a significant proportion of the budget set-aside for malpractice lawsuits simply because these are such a regular occurrence. These suits are on the rise, increasing by 2-3% every year and costing the average austral up to half a million dollars for an out of court settlement and in excess of $1 million for a court settlement.
1. The Comparisons are Shocking
Americans know that they are being overcharged for their treatment and their medication. But they don’t have experience of healthcare in other countries so they fail to understand just how extreme these charges are when compared to other developed nations.
As an example, hospitals have been known to charge as much as $15 for a single Tylenol pill, which means that patients are paying over $500 for a week’s worth of treatment of this pain killer.
In the United Kingdom, America’s closest ally, this system is a little more budget friendly. There are no charges for a hospital stay, even if it requires diagnosis and medication. What’s more, if a patient wants to purchase that Tylenol at a local pharmacy they would expect to pay less than £0.40 per box of 16 tablets, which equates to roughly £0.025, or $0.035 per tablet.
In other words, you could purchase 420 Tylenol tablets in the United Kingdom for the same price as just one tablet in a US Hospital.