Health Care Dollars: Got your missing billions right here

Further evidence today to support my theory that the free market is an inefficient provider of health care. Happened on a short article in today's business section of the Florida Times Union. Just a one page piece about a small local company, E&S, with operations mostly located in Amelia Island and seven employees. What do they do? They work on behalf of hospitals to collect money that insurance companies owe them (and would not pay them without prompting--keeping that money to themselves). E&S has just five clients right now. Pretty small stuff huh?

Well consider this, last year the company identified about $850 million in under-reported claims for its clients. That's right $850 million! For just 5 clients! Using just 7 people! The implications are many and some of them are amazing. The cynic in me wants to buy stock in E&S because you just don't see many business models this good (the company had revenues of about $1 million per employee, taking a 25% cut of the amount collected for clients).

But think of how much waste this implies. There are about 6.000 hospitals in America. Some 3,000 are medium to large hospitals (100 or more beds). There are 900 with over 300 beds. Even if we assume that the 5 clients of E&S each have 4 large hospitals the math is pretty staggering: Over $120,000 in uncollected insurance money per hospital bed. There are about 950,000 hospital beds in American hospitals. Total uncollected insurance money could easily top $100 billion.

What a waste!

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