The vicious cycle of corporate profit in healthcare: Less healthcare for you

It is a little difficult to focus on writing about the terrible things happening in US healthcare given all the terrible, existential, threats to the nation and the world. Yet it is not unrelated. The abuses and rapacity of the US healthcare system is a microcosm (although, in this country, a BIG microcosm) of the tremendously damaging outcomes that arise from a system that is based upon the insatiable greed of a few and their willingness to use their wealth to fuel lies, wars, and climate change, and to attack democracy, to further line their pockets.

So it is in healthcare. An industry that is ostensibly devoted to maintaining the health of, and treating and sometimes curing the diseases of, the American people is consistently revealed as nothing more than an industry, devoted to making as much money as possible. Pretty much period. It does not, as an industry, care about your health, or that of your family. This is not to say that the people who provide health care do not; almost uniformly the doctors, nurses, pharmacists, therapists, and others are working hard to do the best that they can for your health, motivated by the commitment that took them into their field in the first place. But fewer and fewer of them are in control of their own practices; most are employed, and even those who work for themselves must almost always work with institutions that are corporate and dedicated to that holiest of holies, the bottom line. (To be sure, there are a few independent practitioners who can deliver their services on their own without the involvement of hospitals, drug companies, insurance companies, etc., but there are few and the care that they can provide is almost always narrow and limited. If that is all you need, you are in luck. For now.)

Revelations continue apace about the extent to which this is true, to which almost all efforts in health care are geared toward garnering profit. There is very rarely news that is good for the health of the public, although it often is for the stocks of the corporations involved, the profits of the private equity companies that often own them, or the salaries of the C-suite executives of those that are “non-profit”. We almost never see a change that is likely to increase the quality, quantity or distribution of healthcare even if it might cost the company more. Quite the contrary, changes almost always involve restricting healthcare in terms of what is available and how much it costs the recipient in various ways (premiums, deductibles, co-pays). We also see a consolidation of ownership, frequently involving vertical integration (where, say, the insurance company owns the providers of care -- as in the case of UnitedHealth and Optum -- and essentially pays itself), an exploitation of public funds and redirecting tax dollars intended for healthcare provision into profit (see Medicare Advantage), and a huge amount of money going into profit and incredibly bloated salaries.

I almost said “ever increasing” profit, but this is not true. The amount of profit is not always increasing, although it remains obscenely large. Sometimes this is interpreted by “the markets” (a benign-sounding euphemism for the rapacious predators that they are) as a problem; even when profits are increasing, but not at the rate investors want them to, insurers and healthcare corporations are pressured to further cut back services and increase premiums and charges, always to the detriment of the health of the American people (as per this Wall St. Journal article).

A good summary of the many ways in which the health of Americans is sacrificed on the altar of profit is a JAMA Viewpoint titled “Salve Lucrum: The Existential Threat of Greed in US Health Care” by Donald Berwick, former administrator of the Center for Medicare and Medicaid Services (CMS) and co-founder of the Institute for Healthcare Improvement (IHI). The Latin phrase means “Hail Profit” which Berwick observes was found under a mountain of ash on the mosaic floor of a grand house in Pompeii, and that it would, sadly, be an appropriate motto for many of our healthcare institutions. Berwick goes through the various components of our system, showing how – and how much – they maximize profit by sacrificing health, especially making every effort to tap into “deep pockets” (particularly government-funded programs like Medicare) and avoid the poor, sick, and poorly-insured, even though those often are the people most in need of healthcare.

Medicare Advantage (MA) is the program that takes money from the Medicare trust fund and transfers it to private insurance companies to enroll Medicare beneficiaries in essentially HMOs. MA programs receive more money from CMS than it spends on traditional Medicare beneficiaries and uses some of it to provide services that are attractive and not paid for by traditional Medicare such as glasses, hearing aids, and gym memberships. As with non-Medicare HMOs, some people benefit from the integrated services, absence of co-pays and ease of use, as long as they are happy with the options of providers (always limited). And so long as the services they need are approved by the insurer – remember that MA is not actually Medicare but a set of programs run by private insurance companies that can, and do, deny and delay services, often through a process called “prior authorization”. But whether clients are receiving the healthcare that they need or being screwed out of it, Berwick notes that

By gaming Medicare risk codes and the ways in which comparative “benchmarks” are set for expected costs, MA plans have become by far the most profitable branches of large insurance companies. According to some health services research, MA will cost Medicare over $600 billion more in the next 8 years than would have been the case if the same enrollees had remained in traditional Medicare.

Insurance, including health insurance, companies in the US have always been for-profit with few exceptions (the traditional Blue Cross/Blue Shield, for example, although these have now almost all been converted to for-profit). But the profits that they are making now are extreme. Pharmaceutical companies have always been for-profit and have long been the healthcare industry poster child for overpricing and holding people’s health hostage to their making money. Direct service providers (e.g., hospitals and doctors) have increasingly been acquired by for-profit operations, especially insurance and private equity companies and those that remain officially “non-profit” compete by playing by the same rules as those that are not.

Some of the problems with Medicare Advantage programs have come to the attention of Congress, which is concerned about their exploitation of public funds, but what will come in terms of reform is questionable. Many congresspersons actually believe in the transfer of public funds to private companies. These insurance companies have very deep pockets (from the government) with which to lobby those same officials (kind of like the defense industry). They also cite the increasing percent of Medicare beneficiaries (now over 50%) who have “chosen” MA plans (or, often, been pushed into them by employers, including local governments) as evidence that they are valued. Of course, the healthier you are, the more marginal benefit you get from the MA perks; the sicker you are, the more in need, the more those denials and delays harm your health. And, always, at any given time there are fewer very sick people than those who are relatively healthy, even though serious illness is often in their future.

If Congress addresses MA at all, it is likely to be tweaks around the edges. What, instead, needs to happen is the closure of MA, increasing financing for traditional Medicare to fund ALL health needs for its beneficiaries, regulation of the pharmaceutical industry, and a change to a healthcare financing system, such as Medicare for All, that make the health of the people and not the profit of the corporations, the goal of the system.

Medical errors should not be prosecuted as crimes: Systemic change is needed

As reported recently in MedPage Today, Kentucky has become the first state to pass a law shielding medical professionals from criminal prosecution for clinical errors. This is important. It is a good thing and had the support of many professional organizations. It is not about protecting nurses and doctors who actually commit crimes, as ‘it does not apply to "gross negligence or wanton, willful, malicious, or intentional misconduct."’ For example, the Pennsylvania nurse convicted of murdering patients with insulin would not be covered by this law. But mistakes happen, and while they can have very bad outcomes in the medical setting – including death – when they are not intentional they should not be prosecuted as criminal acts.

The case cited as motivating this law occurred in the neighboring state of Tennessee, and involved a nurse named RaDonda Vaught at Vanderbilt Medical Center. She mistakenly gave a paralytic rather than a sedative with a similar name to a 75 year old woman, causing her death. She did not try to cover it up but reported it immediately, and yet was charged with and convicted of reckless homicide and impaired adult abuse. The outcome, the woman’s death, was terrible, but the criminal charges were neither justified nor functional. Yes, you can bet that the particular nurse would be extra careful the next time she gives medication – although, of course, with the criminal conviction she has lost her nursing license. Maybe it could be a deterrent to other nurses and doctors making inadvertent mistakes? Think about how well this works in other areas, about, for example, how a pedestrian or bicyclist being killed by a car in your town has suddenly made all the other drivers extra careful. Right.

Doctors, nurses, and other health professionals are already careful (barring the rare truly malicious exception, who is not covered by this law). The issue is how to make it increasingly difficult to make mistakes, to make errors. A whole field of health safety and error prevention exists, originally stimulated by the work of W. Edwards Deming and Avedis Donabedian, and including such luminaries as the Institute for Healthcare Improvement (IHI) and founders Donald Berwick and Paul Batalden, and Harvard professor Gordon Schiff.  One thing that is clear is that the solution is not draconian punishment of those who have made mistakes. It is mostly (almost all) about systems, about making it difficult (and some day, hopefully impossible) to commit errors. Deming said “To find the mistake is not enough. It is necessary to find the cause behind the mistake, and to build a system that minimizes future mistakes”. Every mistake is a gem, because it offers us the opportunity to discover the cause and to develop systems to prevent that, and similar, mistakes in the future.

Many systems have been developed in many places and areas of healthcare to do this. For example, in pharmacy drug lists, similar sounding or spelled drugs are often distinguished by having the letters that are different capitalized, calling attention to it and making it less likely to prescribe the wrong one. Surgery now almost never takes place without a final “timeout” in which a checklist is gone through with all the operating team present, including “which side are we operating on”! There are many more examples. In the field of occupational health, the first choice in preventing injuries is architectural, e.g., don’t put a big window next to a place on the shop floor where slippery substances are spilled. The second choice is engineering: ok, the window is there, so let’s put up bars across it so if people do slip they don’t go through. The last choice is behavioral: tell the people who work there to be careful! If this last sounds unlikely to be completely successful, it is both the most common and the least effective. Imagine your being responsible for changing the behavior, consistently and always, of a person. Now make that everyone! Think back to drivers…

It is true that many, maybe most, healthcare facilities are and have been working to improve quality and limit the number of possible places that workers can make mistakes, but these procedures are processes and must continually be upgraded and enhanced, primarily by identifying mistakes that continue to be made and figuring out how they can be prevented. Quality improvement is not something that can be “put in place”; it is both a state of mind of individuals and most importantly an overarching commitment on the part of the institution, in all places. Yes, it costs money – but so do the lawsuits that come when it is inadequate, and that should not be the motivation.

Although making money is a strong motivation. Insurance companies, for example, are very good at instituting procedures that make them money. ProPublica recently published an article about Dr. Debby Day, who was one of the physician reviewers at CIGNA, tasked with reviewing the decisions about approving or denying coverage for people’s care, after the initial decision was made by a nurse reviewer (mostly working in the Philippines). CIGNA continually monitored the number of minutes taken for each review, and physicians like Dr. Day were sanctioned or even fired if they took too long. They took too long making decisions that could not only affect people’s health, but their life and death. Your life and death. Your family’s. How were they supposed to keep up with the speedup expectations? ‘“Deny, deny, deny. That’s how you hit your numbers,” said Day, “If you take a breath or think about any of these cases, you’re going to fall behind.”’ This makes CIGNA (and, to be fair ALL the big health insurance companies) money. The speedup is part of it, but the denials are where the real money is made. Denying ‘coverage for a cancer patient or a sick baby’. Your cancer. Your baby.

To be sure, insurance companies as such are not the actual providers of health care, like hospitals and doctors. Except, increasingly through vertical integration, they are – UnitedHealth, for example, owns Optum (and OptumRx, a pharmacy benefits manager). The thing is that they are corporations and are very good at putting systems in place to increase their bottom-line profits, even when that harms the health of – or kills – people who are their clients. So, I think, they should and can be equally effective in putting in place systems that protect and benefit those clients/customers/patients/people.

Hopefully, the type of law passed in Kentucky will become more widespread. This will make it more difficult for the prosecutors and politicians who want to make their “tough on crime” reps by such prosecutions, which is good. But also, hopefully, it will be combined with renewed efforts to strengthen the systems of quality control, and greatly limit the possibility of an individual making a mistake.

The health of people should be the goal of healthcare organizations.

Making people healthy or making money: What should be the goal of our health system?

In the February 16, 2023 issue of The Nation, epidemiologist Gregg Gonsalves writes about The Fight for the Soul of American Medicine. It is a particularly good and thorough review of the corruption of American medicine by the quest for profit, and the growing resistance of many physicians to its adverse effects on themselves and, more important, the health of their patients.

He cites several other recent articles that emphasize different aspects of this situation. Eric Reinhardt, writing in the New York Times about physician burnout, calls for increased unionization of physicians to counter the power of the corporate controllers of US medical care. Gonsalves also cites a JAMA Viewpoint by former CMS administrator Don Berwick calling out the many ways that greed perverts and destroys American healthcare, using the old Pompeiian phrase Salve lucrum, “Hail Profit”, and naming it an existential threat. Finally, he cites an article in the Journal of General Internal Medicine by Gondi, Kishore, and McWilliams called “Professional Backgrounds of Board Members at Top-Ranked US Hospitals” which identifies the fact that US hospitals are run by people with finance, not healthcare, backgrounds:

At top-ranked US hospitals, the most common professional background for board members is finance, far exceeding representation from physicians, nurses, and other health care workers. Over half (~56%) of board members are from finance or business, while a small minority (~15%) have clinical training or are from the health services sector.

Gonsalves notes how the perversion of healthcare, particularly medical care, by an explicit profit motive leads to the US having both the greatest cost and the worst health outcomes of the wealthy countries of the world, but then goes beyond that to further criticize our reliance on medical care as the avenue to people’s health. He cites the National Academy of Sciences estimate that medical care accounts for only 10-20% of health, with social determinants (and, one could convincingly argue, social determination) accounting for the other 80-90%. Social determination is found in the structure of our society, conceived perversely on democracy and plutocracy, rooted in the extermination of one set of peoples and the enslavement of another, and the racist roots that continue to poison our social structures today. Social determinants – including poverty, housing, food, education, childcare, and others -- are well documented, and are profoundly poorly addressed by us in the US.

This is more than coincidental. Gonsalves refers to a book by Bradley and Taylor, The American Health Paradox: Why spending more is getting us less (which I discussed, along with a NY Times op-ed they wrote, in a blog post To improve health the US must spend more on social services Dec 18, 2011). The essential point of that book is that, while the US spends far more than other wealthy countries on medical care (twice as much as a few and three times or more as much as most others), it spends far less on other social services and social supports. Furthermore, as Bradley and Taylor document, the US is unique in that of all its spending on social service and medical care, the vast majority is on medical, dwarfing expenditures on food, housing, childcare, job training, and social supports that are far more important in maintaining health and preventing disease, while medical care is focused on treating disease once it is there (for those who can access it, at enormous cost).

These are all true things. Our society spends most of its “social services” money on medical care, and it is directed at the most expensive types of care, those that generate the most profit for the big corporate and venture capital players in the hospital, nursing home, and ambulatory care fields as well as the better-documented profiteers in the pharmaceutical and insurance industries. The burnout of physicians from overwork is real and is simply what industrial workers used to call “speed-up”, the demand for more production in the same hours (and for the same pay). In industrial workers, speed-up was and is well known to increase the rate of accidents, both minor and major, and to destroy the psychological health of those workers, so that it is unsurprising that it does the same to doctors and other health workers. What is more surprising is that it has taken so long for them to realize it; over a few decades corporations have taken over almost all of health care delivery, with independent physicians and physician groups that own themselves almost disappearing.

Most hospitals, or “health systems”, are controlled by large corporations – or so they are called if they are for profit. The non-profit health systems, however, including academic health centers, behave scarcely less like corporations, chasing increased revenue (if not “profit” per se), and are, as Gondi et al., demonstrate, just as likely to be led by people with financial backgrounds, rarely medical ones. The good aspect of for profit relative to non-profit hospitals is that they, at least, pay taxes rather than be the recipients of government largesse through being tax-free in return for ostensible, and increasingly unrealized, community benefit. The bad side is that they provide even less community benefit, and generally have worse quality care, than non-profits. In addition, the positive side of the non-profit ledger is enhanced by inclusion of those hospitals in rural areas and inner cities that actually do care for the needy. These, however, are the very ones that are at greatest risk of going bankrupt, and closing because their patients are uninsured or are underinsured, including by Medicaid and even Medicare. A NY Times article recently addressed the increasing closure of rural hospitals, and an even more recent one documents how many rural hospitals are closing their maternity units, because it is a high-cost, low-revenue “service line”, causing rural women to have to travel dangerous distances for pregnancy care and delivery.

In terms of other healthcare operations, such as physician practice groups and nursing homes, “private equity”, venture capital groups, are playing a larger and larger role. Nursing homes have long been primarily private, and of generally poor quality, but they are increasing being acquired by such private equity or health corporations. Those physician practice groups that are not already owned by hospital systems (including academic ones) are often being acquired by the same groups. The results can be disastrous for their patients, particularly when encouraged by the government, as in the ACO/REACH program which I recently discussed (Privatizing Medicare through "Medicare Advantage" and REACH: The Wrong Way to Go!, Jan 20, 2023). Of course, one reason these (misad-)ventures are successful is that their downsides tend to only be apparent once you need care, when you are sick, when the less obvious odious characteristics of such arrangements can stymie you effective access to care. And, of course (and thankfully!) most of us are not sick at any given time.

I have often written that profit, in any form, does not belong in health care. This is absolutely true. The most egregious forms are the corporations that make and sell pharmaceuticals and the insurance companies that existence as parasitic middlemen between health care and patients, not only sucking off money but also limiting care in ways that actually and frequently harm people. But that is only the tip of the corrupt iceberg. Being “non-profit” does not prevent a health system from acting in the same fashion, to maximize revenue, and reward “successful” (i.e., money-making) management accordingly in seven figures.

It is time to have no incentives of any kind that allow any person or organization in health care to make money beyond that which is required to run a high-quality operation and pay workers a reasonable salary or wage. Indeed, the impact on the health care of patients should be the sole criterion for anything that is done or reimbursed.

AND, then, we need to start taking much of the money saved by having less or none going to insurers, pharma, and hospitals and health systems and spending it on ensuring everyone has good financial health care coverage and the social systems needed to support the social determinants of health are in place.

Medicare Advantage, Direct Contracting Entities, and other scams to transfer your money to insurance companies

In my post DTC Advertising on TV illustrates the corruption and inequity of the US medical care system (March 6, 2021) I talked a little about advertisements for Medicare Advantage (MA), an alternative to traditional Medicare (TM, not ™) that involves an insurance company taking over your Medicare and you maybe paying additional money to, essentially, be enrolled in their HMO or PPO, with its concomitant advantages and disadvantages to you personally. Advantages include a variety of additional services that are not currently included in TM (they should be, but this is a different issue), such as vision care (or at least glasses), hearing aids, and sometimes dental care. This can save you money. The disadvantages are, essentially, the same as those for any HMO or PPO – a limited “network” of physicians and hospitals (and big charges for which you are liable if you go out of network) and, related to that, a limited geographic area in which your network applies. This is not generally a big issue for the occasional traveler (emergencies are usually covered) but can be a big problem for those who split their time between two or more areas. Plus, it doesn’t protect you from “surprise medical bills”, as they are called in Congress (which discusses them but has yet to enact anything to protect you from them). These occur when, while both your doctor and hospital are “in network”, someone else --  the ambulance company, some doctors caring for you (say, the group that staffs the Emergency Department, or the surgeon assisting your surgeon) are not. They can – and do – then send you big bills. This should be a caution.

Why I am bringing this up again now is that the pace and frequency of solicitations for people to abandon TM and enroll in MA have greatly accelerated because we have entered the “open enrollment” period, when people with Medicare can change their insurer or plan type, and the MA plans, mostly owned by insurance companies, really want you*. This is why in addition to adding more former NFL quarterbacks to their ads (Joe Theismann, who is only my age, joins the 78-year-old Joe Namath), you have (if you are of Medicare age) been getting dozens of information packets in your mail for the plans available in your area – almost all of which pick names and design their envelopes and otherwise do their best to make it look as if they are official and from Medicare (I was going to share the link to one with a name that prominently features “Medicare”, but I figured why advertise them?)  They’re not. And they’re being successful. As documented by the Kaiser Family Foundation, MA plans had an 8% increase from 2018 to 2019 and a 15% increase from 2019 to 2020. Advertising really pays off! And, boy, does it pay! Thanks to your generosity (well, Congress’ generosity, on your behalf, or at least using your money) MA plans (and, by the way, “Medicare Advantage” is the official term specified in the legislation, in case you had any doubts about the influence of insurance companies over Congress) get paid a lot more than the government pays on your behalf to TM. For starters, their administrative overhead – comparable to that of most private insurers – is about 13.2%. Is that a lot? Well, the overhead for TM is about 1.8%! Some sources have cited the overhead for “Medicare” as about 3% -- still a lot better – but that is because it is combining the two. And, of course, as MA increases as a share of Medicare that figure will continue to rise.

MEDPAC, the Medicare Payment Advisory Commission, an independent agency created by the federal government to monitor and recommend on issues related to Medicare, notes that MA plans receive more money from Medicare but spend less on providing patient care to their members, costing Medicare an additional $8B. So it is definitely worth pursuing your business! Unless, of course, and this was the reason for the asterisk (*) above following really want you, you are sick. Then you would cost them money, and they would rather that you switch to regular TM. Which would be better for you, of course, but it would have been better for you to have never been in MA. This is a core part of their business strategy: attracting healthy seniors who will not cost them much money with the lure of cheap glasses and hearing aids and such (“cherry picking”) and then getting rid of those beneficiaries who really get sick and would cost them a lot of money (“lemon dropping”). All this is an effort to improve their “Medical Loss Ratio”, which is to say decrease the % of the money that they collect which they have to spend on actually taking care of you. If it sounds weird or offensive (and it is both) that their spending money on what they are supposed to be in the business of doing is called “loss”, it is a term that comes from the overall insurance industry. The % of homeowner’s premiums that have to be paid out to clients because their homes burn down, or auto insurance premiums that have to be paid if you are in a car wreck, is called the loss ratio. Of course, you don’t expect (and certainly don’t hope) to be in a car wreck or have your house burn down, but you do (or should) expect to receive medical care. Indeed, a more apt comparison to your house burning down might be made to “major medical” – coverage for costly hospitalizations – but in fact most people will need those if they live long enough. Much more about the cost of MA and the reasons for it can be found in the Health Affairs Blog posts of September 29 (Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 1: The Risk-Score Game), and 30 (Medicare Advantage, Direct Contracting, And The Medicare ‘Money Machine,’ Part 2: Building On The ACO Model) by Rick Gilfilan and former CMS administrator Donald Berwick. Another article on MA can be found in Consumer Reports.

Since not everyone who would be a good health risk is forgoing TM for MA, a new scam (excuse me, option!) has been developed by CMMI, the Centers for Medicare and Medicaid Innovation, a branch of CMS, the Center for Medicare and Medicaid Services, which has been granted authority to implement such changes as they (or the insurance company lobbyists) can come up with without needing further Congressional approval. This one is Direct Contracting Entities (DCEs). A company, particularly a health system or medical group, may send people a complicated letter telling them that (for their benefit!) the group has enrolled them in a DCE. The client has the choice to opt out, but this is disguised in complex legal language, and the benefits(!) are so strongly sold, that many people do not.  Remember, this is not being sent to folks who are in MA, but those who have purposely and specifically chosen TM and NOT MA. Thus, they are not expecting that their providers will try to enroll them, backdoor, in a plan that, while it has benefits(!) – like those of MA – also lets insurance companies (wait, how di I get to an insurance company? I thought I was in TM!) collect a lot more money from CMS – like under MA! What a cool idea! If you resist MA because you are more concerned about your healthcare than insurance company profits, CMMI will find a way to allow you to help the insurance companies anyway! A lot more can be learned from a short (15 minute) youtube presentation by PNHP (Physician’s for a National Health  Plan) member Ana Malinow.

Medicare, along with its parent, Social Security, is the most popular government program in the nation, and for good reason. It actually provides important benefits to the taxpaying American people. Instead of paying out lots of extra money to Wall St. and insurance companies, Congress should expand the benefits available under TM to include all necessary health care, including dental care, vision care, and hearing care. Instead of forbidding Medicare to negotiate drug prices with BigPharma and the Pharmacy Benefits Mangers (PBMs) that control access to drugs, Congress should ENCOURAGE and REQUIRE it. Finally, it should extend all these Medicare benefits to EVERYONE in the country, not just the elderly and disabled.

This would be what the American people need.  But if you want to have this, you are going to need to shout it from the rooftops – and write letters to Congress -- to be heard over the sound of cash flowing from insurance companies into your Congresspeople’s pockets.

Then go to pnhp.org and sign the petition asking Sec. Becerra to close the DCE program!