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.

"It's the prices, stupid!". And they won't tell us what they are...

You wouldn’t buy most things if the price were not labelled, and certainly not if price were not available on asking. Sometimes shopping on the Internet is frustrating because that the prices are not always apparent. When I had to get my sewer routed out, the plumber told me what it would cos (a lot), and my only choice was to have a blocked sewer or try to find another plumber who might be cheaper. But I had that choice, and he told me the price. Even in the American bastion of car buying, where “negotiating” is a tradition, and while YOUR first question is “what is the price”, theirs is “what are you trading in [so we can quote a higher price]”, this is changing, with set prices at many dealers and alternative vendors like CarMax and Carvana.

Where it is almost never true is in purchasing health care, and it is worst when you are most vulnerable and in urgent need of a service -- sometimes even more urgent than routing your sewer line! We think we would almost never buy something first in order to find out what it cost – that would be crazy --  but in fact that is the title of a video by Martin Schoeller recently featured in the New York Times: ‘How Much Does Your M.R.I. Cost? Buy It First to Find Out.’ And that is what it shows. The prices aren’t available in advance, there is no published price list, there is no bar code for the clerk to scan, and no one, pretty much, can tell you how much it will cost. It is not just MRIs, of course; that is just the headline; it is all tests, procedures, surgeries, and consultations from specialists.

One of the people interviewed by Mr. Schoeller, who had severe injuries as a result of being two feet from where to bomb blew up at the Boston Marathon in 2013, says “I had these procedures done, and now I’m getting the prices. It should have been the other way; I should have had the prices first.” Of course. But this is the story all of the people he interviews – regular people, just like us, he notes -- whose lives have been upended twice, first by their health problem and then by the cost that they were never told about, “whether it is through surprise bills or straight-up price gouging.”

In an old expression, you might say “there oughta be a law”. The amazing thing is that there is a law, or at least a federal rule. The Hospital Price Transparency Rule went into effect on January 1, 2021. Per the website of the Centers for Medicare and Medicaid Services (CMS)

Hospital price transparency helps Americans know the cost of a hospital item or service before receiving it. Starting January 1, 2021, each hospital operating in the United States will be required to provide clear, accessible pricing information online about the items and services they provide in two ways:

1.      As a comprehensive machine-readable file with all items and services.

2.      In a display of shoppable services in a consumer-friendly format.

This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital.

CMS plans to audit a sample of hospitals for compliance starting in January, in addition to investigating complaints that are submitted to CMS and reviewing analyses of non-compliance, and hospitals may face civil monetary penalties for noncompliance. Access a list of hospitals that have been issued CMPs.

That sounds good, right? There is only one problem. They’re not doing it. The article notes that “A recent study by PatientRightsadvocate.org, a nonprofit group that works for price transparency, revealed that only about 14 percent of the 1,000 hospitals it surveyed were complying with the new rule.” That’s right. Eighty-six percent of the hospitals in the US are NOT posting their prices, in violation of the law. While the language on the CMS website, “This information will make it easier for consumers to shop and compare prices across hospitals and estimate the cost of care before going to the hospital”, could have (actually, as far as I know, may have) come directly out of the mouths of a conservative think tank that advocates “consumer choice” as the solution to the costs of health care, they’re not even doing that. These folks want you to shop for health care like you would shop for anything else, choosing the one that provides you the most value for the best price. This was always a completely bad (I was going to say stupid, but it could be simply malicious) idea, but when you can’t even get the prices to compare, it is completely ridiculous.

Back on March 15, 2009 (“Bargaining down the medical bills”) I wrote about an Oprah Winfrey show on which her guests were the late health economist Uwe Reinhardt and Karen Ignani, the then-head of the trade group America’s Health Insurance Plans (ACIP). At one point

Oprah asked Ms. Ignani (and I paraphrase, I don’t have the transcript): “So if I need a $200,000 procedure, why don’t you just pay it?” Flustered, Ignani said, “Well, you presume that the $200,000 is in fact what the procedure is worth; other hospitals may chart less …” – Oprah interrupted her: “I’m sick!”, she said, “I don’t have time to go shopping around to six different places to see where I can get the best deal!”

I added “Unsurprisingly, the audience, made up of regular people, not pundits, applauded wildly.” But, in fact, in 2022, 13 years later, you still could not find the price for that procedure in 86% of American hospitals! Inadvertently, perhaps, Ms. Ignani points to another concern: your insurance company may refuse to pay for your procedure because you could have had it done across town (presuming you live in an area where there is more than one hospital) for less money. But, as Ms. Winfrey so succinctly put it, you weren’t in a position to comparison shop – you were sick!

The woman who was severely injured in the Boston Marathon bombing tells Mr. Schoeller that she had no idea that these surprise bills were coming, because everyone in the hospital was so nice. The fact is that none of those nice people, nurses, doctors, technicians, clerks, was being devious – they didn’t know the costs either. Mr. Schoeller says that it is not just patients, but employers, unions, even the government that cannot get the prices. And neither can staff. While most people would not buy groceries if the prices were not listed, some more well-off folks might. But only a very few would buy a car, or a house, or something else that might cost $200,000 without knowing the cost – unless it was medical care. Obviously, this hits the poor and uninsured worst, as does everything of the sort, but being insured – and even being well-insured – is not a guarantee that you will not be hit with surprise charges. And that you won’t end up like those who speak to Mr. Schoeller. One says “I just ignore the bills now,” and he asks if this might keep her from getting a loan or a credit card. “Of course,” she says. Life ruined?

So medical system IS systematically not only engaged in price gouging, but in fact hiding those prices in clear and direct violation of a federal rule that was put in place to address this problem. It is a system clearly and unequivocally built not to provide health care but to make money for the investors (in “for-profits”) and large organizations (“non-profits”) that provide the care, as well as insurance companies and drug companies and lots of large corporations, at the expense – in dollars and health – of all of us.

The same Uwe Reinhardt mentioned above, when asked why US health care was so expensive, was fond of saying (and co-wrote an article entitled) “It’s the prices, stupid!”. ‘“We depend on hospitals in our communities to take care of us,” Mr. Schoeller says, “But our hospitals are putting profits before patients.”’ He calls for there to be diligent enforcement and stronger penalties for violation of the price transparency rule.

It’s a good idea, but I call for more than forcing hospitals to post their prices. I call for those prices to be reasonable, and to require insurance companies to pay them, and for everyone to have health insurance that does. A universal national health insurance system, such as improved and expanded Medicare for All.

And the elimination of profit from the health care industry.

High spending, poor outcomes: the health results of inequality in the US

A recent article in JAMA, “Health care spending in the United States and other high-income countries”, by Irene Papanicolas, Liana Woskie, and Ashish Jha, is the latest in the almost continuous series of articles on this topic that have been appearing for decades. The dramatic difference between how much we in the US spend (per this paper, the US spends 17.8% of GDP on “health care” compared to 9.6-124% for the other 10 highest-income countries—United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, the Netherlands, Switzerland, and Denmark) and our health outcomes (e.g., lowest life expectancy and highest infant mortality) continues to be striking. This information appears regularly, in one form or another, from reliable sources such as the Commonwealth Fund, the Kaiser Family Foundation and its Kaiser Health News. It is the subject of many academic studies and books by experts, such as “An American Sickness: How Healthcare Became Big Business and How You Can Take It Back”, the 2017 book by Elisabeth Rosenthal, now editor of KHN. I have addressed this topic extensively both in my book, “Health, Medicine, and Justice: Designing a fair and equitable healthcare system” (Copernicus Healthcare, 2015) and in many of my blogs (e.g., US Health Rankings remain low and #Trumpcare will make them worse!, June 18, 2017).

So what is new in this current study? Why is it important? As best as I can tell, it is the spin being put on it by a variety of commentators, and in articles that point out those aspects that seem to be different from what has been published before, such as in "Why Is U.S. Health Care So Expensive? Some of the Reasons You’ve Heard Turn Out to Be Myths” by Margot Sanger-Katz in the New York Times March 13, 2018. The original title of that article, preserved in the hyperlink URL, was “United States healthcare resembles rest of world”, an amazingly hard claim to make given the data that the study itself presents. The Sanger-Katz piece manages to do this by both cherry-picking some data points, including that “…the United States sends people to the hospital less often, it has a smaller share of specialist physicians, and it gives people about the same number of hospitalizations and doctors’ visits... while its spending on social services outside of health care, like housing and education, looked fairly typical.” Maybe, but the important findings, even mentioned in the Times article, are not suggested by the headline, such as “The nation did rank near the top in its use of certain medical services, including expensive imaging tests and specific surgical procedures, like knee replacements and C-sections.”

The article in JAMA is accompanied by four editorial commentaries, taking different approaches; they are well and accurately analyzed by Don McCanne in the “Quote of the Day” piece he wrote on it. The most important is that by Howard Bauchner and Phil B. Fontanarosa, “Health Care Spending in the United States Compared With 10 Other High-Income Countries: What Uwe Reinhardt Might Have Said” (JAMA. 2018;319(10):990-992. doi:10.1001/jama.2018.1879, full text requires subscription). Reinhardt died a few months ago, but the authors do an excellent job of pointing out the important issues that he had already called attention to in previous articles, and would likely emphasize regarding this one.

Importantly, the article by Sanger-Katz goes on to say

There were two areas where the United States really was quite different: We pay substantially higher prices for medical services, including hospitalization, doctors’ visits and prescription drugs. And our complex payment system causes us to spend far more on administrative costs. The United States also has a higher rate of poverty and more obesity than any of the other countries, possible contributors to lower life expectancy that may not be explained by differences in health care delivery systems.

Let us look separately at these two, higher prices and high administrative costs, and high rates of poverty and obesity. Higher prices and higher administrative costs are, shock, a major reason that our medical care costs so much! The higher administrative costs, which the study estimates at 8% compared to 1-3% for other countries, are a huge driver; so are prescription drug expenses, $1443 per capita in the US vs a range of $466 to $939 in the other countries. What all this is about is profit. It is the elephant in the room in all these discussions. In the US, “healthcare” spending includes the enormous profits made by insurance companies, pharmaceutical companies, device makers, and providers (especially hospitals and health systems, as well as some very expensive specialists). This is money being taken out of the system, and is not about providing medical care, not to mention “health” care or certainly “health”. And while the study shows that US physicians (even primary care physicians, although this is very variable country to country) make more, this important graphic, recently updated, shows how much of this cost is related to the increase in the number of “administrative” personnel compared to doctors in the US over the last few decades. I first saw this graph in about 1995, and while the relative increase was huge

it is dwarfed by the phenomenal increase since then, as shown in the full graphic:

(Note that after the ACA went into effect, the uptick was even steeper.)

The other point identified by Sanger-Katz is that the US has a “higher rate of poverty and more obesity than any of the other countries”. These go hand in hand to some degree (the easy and cheap availability of calorie-dense low nutrition foods to poor people), but both are about blaming the victims. The higher rate of poverty is most important. The damning fact is that the US tolerates this and does not have, like other rich countries, social service programs in place to both decrease the rate of poverty and to mitigate its most malignant effects on health such as lack of food, housing, warmth and education. And, of course, health care, which is available either free or at prices people at different income levels can afford (much less for poor people) in those other nations. The US is very unequal economically; the growth in wealth has been so disproportionately to the top <0.1% that the three richest Americans now have as much wealth as the bottom half of our population. Our inequality-adjusted Human Development Index (HDI) is lower than most of the wealthiest nations of the world (#19).

Arguing that the fault in our cost and quality of healthcare is the result of higher poverty levels (and for the record, I don’t think that this is what either the study’s authors or Sanger-Katz is doing) is somewhat parallel to saying we have worse health because of our ethnic and racial diversity (which has been done). The important 2015 Case and Deaton study, which I have previously discussed (Rising white midlife mortality: what are the real causes and solutions?, November 14, 2015), showed increasing mortality for poor white non-Hispanic people. This was shocking, but it would be shocking even if it included Hispanics, or Blacks, or Native Americans. There is an old joke about the person who murders his parents and pleads for mercy because he is an orphan; this is pretty analogous to the issue of poverty and health.

Bauchner and Fontanarosa note that Uwe Reinhardt was very critical of insurance companies for having, on top of nearly 3% profit, 18% “operating costs” (only 79% was spent on actual health care) that included, among other things, “…marketing, determining eligibility, utilization controls (e.g., prior authorization of particular procedures), claims processing, and negotiating fees with each and every physician, hospital, and other health care workers and facilities. These operating costs are about twice as high as are the overhead costs of insurers in simpler health insurance systems in other countries.”

To say we have worse health status because we have more poor people is an indicting tautology; we should identify and address the causes of poor health which are mostly “upstream”, the social determinants, and very tied to poverty. Our healthcare dollars should be spent on delivering healthcare and not profits; our overall dollars should be spent on decreasing the impact of the tremendous economic and social inequities that exist in the US.

This is the way to both a more healthy and more just society.