The Incestuous Nature of Healthcare

Any discussion about the cost of healthcare must begin with an understanding of Capacity Utilization in Manufacturing. To optimize profitability a factory must run at 100% of capacity. At 110% of capacity, quality suffers. When quality suffers, reduced profitability follows. At 90% capacity the fixed costs and overhead cause profitability to suffer. The ideal is to operate at 100% of capacity and the closer you are to reaching 100% of capacity the greater your profitability.

In healthcare, medical service providers are the factory. If you own a hospital, your goal is to utilize 100% of the hospital’s manufacturing capacity. That means you want every bed in every room occupied. Every imaging machine should be booked to 100% of capacity. Every doctor should be billable 100% of their billable time. An outpatient care center is no different. Filling the urgent care center with patients is no different than a widget manufacturing plant building only sold widgets. Every sold widget that brings you closer to 100% utilization also beings a higher degree of profitability.

There is no incentive for a healthcare manufacturer to reduce the utilization of their manufacturing facilities. Their profit increases when their facility operates at 100% of capacity as do their outpatient surgery facilities, their urgent care facilities, their blood work facilities, their imaging facilities, their dialysis facilities, their vision facilities, and more.

How can you trust your conglomerate healthcare institution to provide you with the tools required to control and reduce your healthcare expense when you know their fiduciary responsibility to their shareholders to maximize ROI and ROI optimization is dependent on 100 utilization of their manufacturing capacity?

There is ZERO incentive for a health insurance company that owns healthcare manufacturing facilities to reduce their utilization as it negatively impacts their profitability. It is this inherent conflict of interest that is driving the consolidation of services in healthcare and simultaneously increasing the cost of healthcare.

360 exists to reduce the cost of healthcare, to reduce delays in getting necessary care due to cost, to increase adherence to a patient’s physician prescribed care plan, and to improve the health of your self-funded healthcare plan insureds.

360 New York, 1180 6th Ave, New York, NY 10036 Main Line (917) 983-0525