In 1976 I graduated from medical school and proudly joined the medical profession. Thirty-seven years later, I retired as an employee of the biggest business in the country. In 2016 the medical industry was responsible for 3.3 trillion dollars of expenditure, comprising 18 percent of the United States GDP. For perspective, there are only four countries with a GDP more than the amount spent on health care in the United States.
Health care in the U.S. is characterized by the most advanced diagnostic and therapeutic techniques and the highest-quality physicians in the world. However, the enormous expense of medical care severely limits access to and the scope of care available to millions, thereby, adversely impacting the country’s population health. Despite spending 25 percent more per capita than any other nation, the U.S. ranks 42rd for life expectancy, 46th for maternal mortality, 55th for infant mortality and 10th for diseases of the circulatory system. A 2014 study placed U.S. health care last in overall quality and efficiency among 11 industrialized nations.
While there is no single cause for the expense of health care, it is the metamorphosis from profession to business that emerges as a fundamental contributor. Sound business practices should and generally do improve health care quality and efficiency, however, the primary goal of business is to generate profit. In addition, business culture insidiously migrates the health care mission from being patient-centered to revenue driven. This brings with it enlarging administrative structures, excessive leadership compensation, and growth driven as much by marketing as a by-product.
Competition in industry can promote operational enhancement. In the health care arena, it often results in inefficient duplication of services and failure to optimize utilization of local resources. In my community with a single NCI designated cancer center, another health system has chosen to partner with a cancer center a thousand miles away rather than collaborate locally. Another hospital promotes its affiliation with a medical specialty system in another state rather than work with or rely on experts of equal regard nearby.
The business of medicine fosters the creation of health systems that swallow up individual hospitals and physician practices. The motivation is to create consortia that can compete more effectively for payor contracts and assure a steady flow of complex patients with better compensation to tertiary care facilities within the systems. Relationships between physician groups and health systems facilitate funds flowing from the hospital to physician practices. While this can provide salary support and relieve physicians of onerous operational concerns it also renders the physician to employee status and reduces their input into the care delivery model.
Hospitals and large health systems are managed by an increasing number of generously compensated administrators led by CEOs with salaries averaging about $1 million with some taking home between $4 and $15 million . Additional expense comes from the millions spent on print, billboard and media advertising designed to attract patients with glitz rather than outcomes.
Health systems strategize to attract patients with complex diseases associated with more favorable payment margins. Patients with common maladies are categorized as “commodity medicine.” Commodity — a term traditionally used to categorize precious metals, soybeans, and corn — is being used to characterize large swathes of the patient population.
The business of medicine encompasses the entire range of products and services. Big pharma invests tens of billions in the development of life-altering drugs and treatments that clearly improve the human condition, however, it spends even more on the promotion of these agents. Slick television ads flood daily television programming luring patients with unrealistic imagery to high-priced agents rather than relying on physician knowledge and judgment. The U.S. is one of only two countries allowing direct to consumer medication advertising.
Private insurers offer products that can protect patients from financial ruin consequent to severe illness but also consumes 12 percent to 19 percent of each premium dollar for administrative cost and profit — compare that to Medicare with an overhead of two percent. Add to the insurer’s expenses the cost of hospital and physician billing. This process has become increasingly byzantine requiring providers to spend countless hours on documentation and coding and revenue collection experts to decant records to meet payor requirements. This overhead component alone can consume 10 percent of each dollar collected.
CEOs of big pharma and large insurers “earn” salaries in the tens of millions. One insurance chief executive received just shy of $1 billion dollars in compensation in his last year of employment. One of the nation’s largest insurers had net profits of about $9 billion in 2017 with a payout of about $3 billion in dividends to its stockholders.
Attempts by at least one major insurer to deny payment for some emergency department visits can be hazardous to patients and reflects a profound lack of understanding of disease presentation and the diagnostic process.
While, on average, physicians and nurses are well compensated, it is often those in administrative roles and furthest from the patient’s bedside receiving the highest salaries.
Personal injury and product liability attorneys have been mining medicine for decades. The considerable expense associated with patient awards and litigation defense is eclipsed by costly changes in medical practices not developed out of sound care principles but deployed attempting to immunize against lawsuits.
The crushing cost of health care has been an issue for decades and continues unabated. Most efforts to orchestrate change have been dominated by politicians, economists and special interest groups. They tend to vilify a single component of the cost equation or lobby lawmakers for fiscal advantage. These efforts are ineffective and often distract from the pursuit of the more challenging comprehensive solutions.
The entire health care delivery system needs review and adjustment. The effort should be led by those that face the patient and patients themselves. Excising the grand profits and perversions of Big Business while preserving sound operational business practice can generate dramatic savings. This will allow for a comprehensive, high quality, inclusive and sustainable health care system. Perhaps as a by-product, medicine will regain some characteristics of the profession I joined 40 years ago.
David A. Guss is an emergency physician.
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