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Reminder that physician salaries are a low percentage of healthcare expenses, that the AMA has nothing to with supply restriction, spots can be expanded by local governments and hospitals (and have been!), and that the AMA has been lobbying for a supply expansion for decades.
At the end of the day, all the dollars spent on healthcare end in someone's pocket. If not doctors (and I'll believe some aren't hugely compensated compared to their efforts), then who is keeping the dollars my insurance company (and I) pay the local "nonprofit" hospital for care? Obviously insurance gets it's share (capped by Obamacare). Their executives (doctors!) are compensated pretty well as far as I can tell.
I believe the actual answer to this is "Private Equity firms". Where the money eventually goes after that is incredibly complicated to track (by design), but last I checked they played a fairly important role in cost inflation.
Why does Private equity play such a big role in modern investing? Is it a new thing, or did some regulatory change happen, or is there some reason I hear them brought up in almost any economic discussion nowadays, or am I just misremembering a time before private equity was a talking point?
I don't think that private equity is a particularly new thing - it was how Mitt Romney made his money, after all.
My personal belief, which I freely admit has no actual verifiable statistical backing, is that the main reason you're hearing more about them is that the proboscises of parasitic capital are being turned inward. A lot of financial instruments and practices, whatever their legality or the finer points of how they work, essentially functioned as wealth pumps that funneled treasure from various parts of the world to the imperial core. But those wealth pumps develop constituencies and dependents, so they can't just turn off when the flow of lucre begins to slow, and as a result they're forced to target the interior of the empire. These engines of exploitation, which have for years been going into poorer countries and exploiting them for profit, are being forced to turn to the US heartland because that's where the easiest money is. Now, instead of buying hospitals and dramatically raising prices while lowering quality in the global south, they do things like buy Red Lobster and suck out so much capital it dies, or set up cartels in the firefighting equipment manufacturing sector, driving up costs of equipment massively while also simultaneously creating shortages in both repair parts and finished vehicles (https://www.thebignewsletter.com/p/did-a-private-equity-fire-truck-roll).
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A big piece of it is admin bloat, just as in academia the number of middle managers and other folks like that (assistant infection control nurse - whose job is to make sure we don't order any labs that may show signs of infection!). Also more general middlemen/industries of various kinds.
Examples: PBMs, billing staff, EMRs.
If you look at a surgery a small fraction of the cost is the surgeons professional fee - yes lots of labor costs but thats because their are literally scores of people involved. Supplies, instruments, equipment....all places where someone could be greedy (see: ortho vendors).
Executives in healthcare are increasingly MBAs or nursing and often have authority over the doctors that can lead to both increased cost and decreased quality (see: travel nursing).
Doctor supply issues may be a problem but they are pretty orthogonal to the overall cost disease problems.
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A bunch of it is surely administrative bullshit.
Administrative bullshit maybe, administrators probably not.
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Interesting. I need to look into this. Perhaps my model of the world is wrong or out of date. I was under the impression that the AMA severely restricts the number of medical schools and the number of spots within those schools - such that the typical new doctor graduates with hundreds of thousands of student loan debt. Any links as to what drives healthcare costs?
The bottleneck in producing new doctors in America isn't the schools, it's the residencies. After graduation, all doctors go to some teaching hospital somewhere and serve a 4 year residency to learn how to actually practice medicine. This training program costs the teaching hospitals money, which is reimbursed by CMS. So in practice, the number of available residencies is determined by CMS; hospitals won't spend money out of their own pocket to train new doctors above and beyond what CMS reimburses.
The impact this has on healthcare costs, I don't know. I'm sure it's something, but is it a major component, or a drop in the bucket compared to other factors? I don't know.
"We won't train doctors to the regulatory standard unless taxpayers give us bundles of money to do so," is an obvious confluence of terrible interests in the private sector and government, especially when the industry has achieved significant amounts of regulatory capture. Surely, there is a better way.
Imagine this in other industries. Grocery stores get the government to set up a licencing requirement to stock shelves, with some boilerplate reasoning about food safety or something. The thing is, the only way to get licensed is to get a grocery store to give you the mandatory years of experience. And, of course, they refuse to have such positions unless the government pays them for it. I would predict that there would be fewer grocery store employees, their pay would be higher, industry profits would be higher, government outlays would be higher, prices to the consumer would be higher, and service quality would decrease.
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Everyone points fingers at a variety of things but physician salaries are under ten percent of spending. A massive drop in doctor salary only gets you 3-4 percent less expensive healthcare.
The AMA historically was engaged in what you are talking about but then spent multiple decades lobbying for increased role for midlevel providers which is a de facto supply increase. It's finally moving away from that in the last few years but has yet to find a new passion lol.
Historically the limiting factor on doctor production has been residency spots which are mostly funded by the government, however plenty of states and private corporations will fund those spots because the labor is dirt cheap and they actually make a ton of money.
Additionally ability to increase spots in the higher paying/lower number specialties is limited because you need enough work to adequately train and all kinds of things have caused problems with that (ex: a reduction in surgical frequency secondary to an increase in medical technology meaning not enough cases). Lower paying specialties like FM and Peds have more room to grow but nobody wants to do them because of the poor (relatively speaking) pay.
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