Agree. This is a pretty terrible article. Random "facts" that quote big revenue numbers tell you almost nothing. Vertical integration tells you nothing.
It's a relatively old analysis (2009), but McKinsey did some research that I think highlights some pretty important differences in the US healthcare system that actually points to where the money is going.
If you look at Exhibit 2, page 4, they basically compare US spending, as a percentage of GDP, and breaks down the difference between price and volume. The result are some very interesting facts that run counter to common belief:
- health administration and insurance is a tiny contribution to high costs, accounting for about 5% of excess spending
- spending on pharmaceuticals and "non-durable" (supplies) is pretty small and only contributes to 5% of excess spending
- in-patient care (where the patient stays in the hospital overnight) spending is only 10% higher than the OECD average relative to GDP
- 68% of the higher spending is out-patient care (where the patient doesn't stay in the hospital overnight); price is a factor here, but in reality, Americans get way more out-patient procedures than other countries
It's a relatively old analysis (2009), but McKinsey did some research that I think highlights some pretty important differences in the US healthcare system that actually points to where the money is going.
https://www.mckinsey.com/~/media/mckinsey/dotcom/client_serv...
If you look at Exhibit 2, page 4, they basically compare US spending, as a percentage of GDP, and breaks down the difference between price and volume. The result are some very interesting facts that run counter to common belief:
- health administration and insurance is a tiny contribution to high costs, accounting for about 5% of excess spending
- spending on pharmaceuticals and "non-durable" (supplies) is pretty small and only contributes to 5% of excess spending
- in-patient care (where the patient stays in the hospital overnight) spending is only 10% higher than the OECD average relative to GDP
- 68% of the higher spending is out-patient care (where the patient doesn't stay in the hospital overnight); price is a factor here, but in reality, Americans get way more out-patient procedures than other countries