Who’s on First: Pharma, Health Insurance Agencies, Tech, or Hospitals?

Fellow Average Joes…if you’re anything like me, you either like or have watched baseball.

Baseball is like the health industry: each ‘player’ has a certain position with various responsibilities.

 

There are four main groups in the field of health:

  1. Pharmaceutical/drug companies
  2. Providers (provide health care to average joes such as ourselves)
  3. Payers (the health insurance industries that ‘pay’ for health care)
  4. Tech (Medical Technology Companies, etc.)

 

Now that we know who’s on the field, let’s get down to it: health care costs. How are they determined?

Who’s on First? Tech and Pharma share First Base.

Tech and Pharma, while both vastly different companies, share the same goal: create new prescription drugs or medical devices, and sell those to the health care providers.

Who’s on Second? Providers (hospitals and doctors) share second with Payers (Health Insurance Agencies)

These are the people you see when you break your arm. Your bill takes into account how many prescription drugs the health providers purchased. As well as other factors, such as: building rent, fixed and variable costs of running a hospital/health clinic.

But if you break your arm and have a health insurance plan, then note this Average Joes…the hospitals and health insurance agencies bargain BEFORE you come in with your broken arm.

They bargain over the prescription drugs prices, hospital bed, etc.

That is why the Average Bobs might have a different hospital bill than the Average Joes: second base bargaining.

Any questions, comments, or confusion? Please comment below!

 

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