A close examination of healthcare in America leads to the inevitable conclusion that patients are one of the least important players in the healthcare system. I’m the first to admit that this claim is both counterintuitive and provocative, but hear me out. The evidence could not be clearer. This is particularly ironic because the healthcare field is staffed with professionals who were attracted to the field specifically to provide patient care. The problem does not lie with the people in the system; the problem lies in the system itself.
Healthcare in America is a Private Sector Function
Unlike every other developed country in the world, healthcare in America is treated as a profit-making operation. This is true for profit making institutions as well as the non-profit or not-for-profit healthcare organizations. Rather than talk about profit, these hospitals talk about a “surplus” that is required to see the hospital through lean times and fund the purchase of new equipment or grow the institution. This is the first in a series of blogs that will provide ample evidence of this remarkable claim. Stay tuned.
Turning a profit is baked into the very DNA of the American culture. It is part of what it means to be an American. Healthcare is no exception.
But unlike every other business in the country, in healthcare, there is remarkably little focus on the holistic welfare of patients. Every other business in the country – and most throughout the world – have customer service centers that are tasked with handling customer problems as they arise. Customer satisfaction is paramount. At the end of every call I make to customer service departments, the agents always ask, “Is there anything else I can help you with?” That question rarely comes up in healthcare!
Let me give a few examples of the extent to which healthcare in America is a profit-making industry rather than a service to the community.
The Arbitrary Nature of “Master Charge” Lists
Hospitals develop what they call “master charge” lists. These are the prices they propose charging for patients admitted with various admitting diagnoses. In fact, these lists are just starting points for negotiations with insurance companies. During the negotiations, the insurance companies will negotiate deep discounts from these lists and the negotiators will be seen as heroes because they were able to win those discounts. But the negotiation is highly misleading because the “master charge” lists are created only for the purpose of negotiating with the insurance companies. Hospitals and health clinics don’t have any solid data about what it really costs to treat medical conditions because they don’t have cost accounting systems that allow them to develop those costs. They make these lists up out of thin air.
Medicare and Medicaid don’t pay according to these lists. They ignore them. The federal government pays according to its own payment schedule. Hospitals have the choice of charging the government in line with those government payment schedules or not taking Medicare and Medicaid patients. Most hospitals are willing to work with the government payment schedules.
The “master charge” lists vary considerably from one institution to another. This is true for institutions of comparable quality and in the same geography. Further, unlike restaurant menus, these price lists are rarely shown in advance. This makes comparative shopping impossible!
But even if the “master lists” were available, it wouldn’t make much difference in most cases. When a relative is screaming in pain and terrorized by her imminent death, her relatives are unlikely to show the same due diligence in selecting a healthcare provider that they would show, for example, in buying a new car.
With Healthcare in America, those Who Can Afford the Least Are Charged the Most
They only patients who get hit with the “master charge” prices are poor people who can’t afford to buy insurance in the first place. Relatives may take an ailing relative to the hospital in a moment of desperation and sign whatever pieces of paper are put before them. They may not realize they’ve signed legally binding financial commitments with no upper limit.
When the bill comes it could be in the five figures for something as simple as a paper cut. Anything halfway serious is liable to be in the six digits. And the hospitals and clinics are serious about collecting on their bills. They retain a cadre of well-paid debt-collecting lawyers who are first-rate at what they do.
First, they take the sponsor’s savings accounts. Then they go after her retirement funds. Those are easy to pick up. Then they take her home. A sponsor who tries to declare bankruptcy discovers that healthcare bills – like education loans – are exempt from bankruptcy. That means that no matter how little money she may have or how little she may earn, she can’t escape healthcare bills through bankruptcy. It’s not even worth thinking about.
This aggressive bill collecting effort is a clear sign that the welfare of the healthcare institution, not the patient, is what is at stake. I am not trying to argue that people should not pay their bills. But having a different set of rules for collecting healthcare debts than for collecting all other debts tells me there is a double standard.
This odd situation doesn’t mean that hospital administrators are acting in a malevolent way. It means they are acting in a way that our laws and customs endorse. Those administrators have a fiduciary responsibility to their Boards of Directors to collect all the money owed to them. They would be negligent if they did not try collect every account as vigorously as possible.
Fee-for-Service is NOT Geared to Good Patient Care
For the last hundred years or so, general practitioners and specialists have charged on a fee-for-service basis. That means exactly what it says: doctors provide services and bill someone (i.e., the patient, an insurance company, the government) for the service provided. There is no requirement that the service needs to be required in order to improve their patients’ medical condition. None whatsoever. Often hospitals or clinicians carry out tests not because they contribute to their patients’ well-being, but because they protect the medical community in the event of a legal suit.
Typically, patients approach GPs with a complaint of some type. The GPs will refer the patients for a series of tests that they believe will contribute to the patients’ recovery. Often, they also refer their patients to specialists. The specialists may order even more (and often more expensive) tests than the previous tests.
In the end, it really doesn’t matter whether the patients improve or not – although there is a universal hope that the tests and procedures will lead to improvements. But, regardless of the outcome, the laboratories, medical practitioners, and hospitals all charge – and collect – for the work they did, not the results they deliver.
In no other industry will professionals, executives, mechanics, or salesmen get paid for their activities without respect to the achievement of their end goals. Healthcare is unique in this respect.
To put it more bluntly, the welfare of the patients is simply not a key factor in the operation and economics of the healthcare system. I believe that every individual in the system acts in good faith in contributing to the welfare of their patients within the protocols of their professions, their institutions, and the law. Each professional likely plays her own part as well as possible, but the system rarely assigns any one individual to look after the welfare of the patient in a holistic sense. This is a sign of a problem with the system of healthcare in America – not the administrators or medical staff.
We Have an “Illnesscare” System, NOT a Healthcare System
If we are completely honest, we need to acknowledge that, with the exception of public health (which is a marginal component of the overall healthcare system), our healthcare is not primarily concerned with promoting health. There’s no money in it. The real money is in treating patients after they get sick, suffer from cancer, sink into a preventable chronic disease, or break a bone. That’s where the big money is. Saving lives and working minor miracles is heroic. “Illnesscare” galvanizes everyone who witnesses it.
But promoting health by recommending improvements to diets, exercise programs, or cleaning up the environment really doesn’t carry the same WOW factor. It is routine and undramatic. But that is truly right at the heart of healthcare and as far removed from “illnesscare” as one can imagine.
Stay Tuned for More Revelations about How Healthcare in America Works
My claim in the first paragraph that patients are the least important part of the system of healthcare in America needs a lot more justification than I’ve given here. I urge you to read the entire series of upcoming blogs about how the healthcare system works (or doesn’t work). You will learn that we have one of the most expensive and least effective systems in the world. You will learn that our government agencies mandated to protect our health often do exactly the opposite. (And these dynamics started long before Trump came on the scene.) You will learn that Americans are among the least healthy demographic on the planet – and that this poor health is driven by policies that are known to be counterproductive. It is not driven by callous healthcare staff.
Further, what you will read in this healthcare series is NOT a conspiracy theory or a secret. Far from it. In fact, everything I’ll talk about is well known and published in articles and books that anyone can read if they choose to. But, given the pressures of everyday life, people just don’t have the time, energy, and motivation to learn about the greatest threats to their health.