Introduction
In "An American Sickness," Elisabeth Rosenthal takes a deep dive into the complex and often frustrating world of the US healthcare system. This eye-opening book explores how the American approach to healthcare has evolved over time, transforming from a humble service-oriented industry into a profit-driven behemoth. Rosenthal, a medical doctor turned journalist, uses her unique perspective to shed light on the various factors that have contributed to the current state of affairs in American healthcare.
The book is divided into several sections, each focusing on a different aspect of the healthcare system, from hospitals and doctors to pharmaceutical companies and medical device manufacturers. Through a combination of historical context, personal anecdotes, and in-depth analysis, Rosenthal paints a vivid picture of how the pursuit of profit has come to dominate the healthcare landscape, often at the expense of patient care and affordability.
As we delve into the key ideas presented in "An American Sickness," we'll explore the origins of the current system, examine the various players involved, and uncover some of the strategies used to maximize profits in the healthcare industry. We'll also look at the impact of these practices on patients and discuss potential solutions for improving the system.
The Evolution of American Healthcare
From Humble Beginnings to Big Business
The American healthcare system has come a long way since its inception around 1900. Initially, health insurance policies were designed to compensate workers for income lost during illness. The earliest insurance companies were nonprofits, aiming to help both hospitals and patients. Blue Cross and Blue Shield were the dominant players for many years, operating with a focus on service rather than profit.
However, the landscape began to change dramatically in the 1950s. As more Americans began purchasing health insurance, for-profit companies recognized the potential for substantial earnings in this sector. This shift marked the beginning of a new era in American healthcare, one driven increasingly by the pursuit of profit rather than the provision of care.
The Rise of Profit-Seeking Behavior
The transformation of healthcare into a profit-driven industry is exemplified by the case of Jeffrey Kivi, a New York chemistry teacher with psoriatic arthritis. Kivi's treatment, which once cost $19,000 every six weeks, suddenly skyrocketed to $130,000 per infusion when his doctor moved to a different hospital. Surprisingly, his insurance company readily covered the astronomical increase.
This seemingly counterintuitive behavior from insurance companies is a result of regulations introduced by the Affordable Care Act (ACA). The ACA requires insurers to spend at least 80 to 85 percent of every dollar earned on patient care. As a result, insurance companies actually benefit from higher medical costs, as it allows them to spend more while still maintaining their profit margins.
The Corporatization of Hospitals
From Charity to Corporation
Many American hospitals trace their roots back to the 19th century when they were established as charitable institutions by religious groups. However, the 1970s marked a significant turning point in hospital management. Business consultants were brought in to introduce concepts like "strategic pricing," fundamentally altering the way hospitals operated.
This shift towards a more business-oriented approach had profound implications for patient care and costs. Hospitals began manipulating bills and raising prices to optimize profits, often at the expense of patients. The case of Heather Pearce Campbell, who received a $44,000 bill for a relatively simple procedure to remove an ectopic pregnancy, illustrates the extent of this price manipulation.
Incentivizing Profit Over Care
The corporatization of hospitals also led to changes in how doctors were compensated. "Productivity bonuses" were introduced, incentivizing doctors to charge patients more. This system essentially turned medical professionals into salespeople, with their paychecks directly tied to the amount they billed.
Hospital structures were also reorganized to prioritize profitable departments over less lucrative ones. For example, dialysis units might be outsourced to make room for expanding more profitable areas like orthopedics or cardiology. The result has been a staggering increase in hospital service fees, with the average cost of a day in a US hospital reaching $4,300 in 2013 – ten times more than a stay in a Spanish hospital.
The Entrepreneurial Doctor
From Healer to Businessman
The role of doctors in the American healthcare system has undergone a significant transformation. While doctors were once primarily focused on providing care, many have now become entrepreneurs looking for new revenue streams. This shift is reflected in the removal of language about setting reasonable fees from the American College of Surgeons' pledge in 2004.
Today, a surprising 27 percent of America's wealthiest one percent are doctors. This wealth accumulation is partly due to new revenue streams that have turned the medical profession into a hybrid of healthcare provider and entrepreneur.
New Revenue Streams for Doctors
One example of how doctors have found new ways to generate income is through ambulatory surgery centers (ASCs). These facilities, often run by individual doctors or investors rather than hospitals, charge hefty "facility fees" for their high-end suites, similar to exclusive hotel room rates.
Another lucrative avenue for doctors is the private-practice business model, particularly for specialists like anesthesiologists and radiologists. These "no patient contact" (NPC) specialists have moved away from hospital employment to form private practices, contracting their services back to hospitals at premium rates. As a result, a visit with an NPC can often be the most expensive item on a hospital bill.
The Pharmaceutical Industry's Profit Playbook
From Tonics to High-Priced Drugs
The pharmaceutical industry in the United States has its roots in small 19th-century businesses selling tonics and potions. While the science behind modern drugs has certainly advanced, the industry's focus on profits through clever marketing has remained largely unchanged.
What has changed dramatically, however, are the prices. Drugs that were once sold for pennies or a few dollars now command astronomical prices. For example, the ulcer treatment drug Mesalamine costs around $12 for a monthly dose in the United Kingdom, while US patients pay between $700 and $1,200 for the same amount.
Manipulating Patents and Prices
Pharmaceutical companies have become adept at manipulating patent laws to maintain their monopolies and keep prices high. One common strategy is to create "new" drugs using existing, non-patented ingredients, thereby securing a new patent. Another tactic involves combining old drugs to create a new patented medication.
The case of Martin Shkreli, who raised the price of the HIV medication Daraprim from $13.50 to $750 per pill, is an extreme but illustrative example of how pharmaceutical companies exploit their market position to maximize profits.
The Lucrative World of Medical Devices
Limited Competition and Oversight
The medical device industry operates with little competition and oversight, leading to inflated prices and potential safety risks. A small group of companies, often referred to as "the cartel," controls the market for devices like knee and hip implants. This limited competition allows these companies to set high prices with little pushback.
The pricing structure for medical devices is complex and opaque, involving various intermediaries who each take a cut. Sales representatives, distributors, and hospitals all add their margins, resulting in exorbitant final costs for patients. For example, Robin Miller ended up paying $30,000 for his brother's implantable defibrillator.
Safety Concerns and Lack of Regulation
Perhaps even more concerning than the high costs is the lack of safety oversight in the medical device industry. Unlike pharmaceuticals, medical devices often receive very little regulatory approval or clinical testing before being used in patients. This lack of scrutiny has led to several medical disasters, such as faulty surgical clips that have caused patient deaths during routine procedures.
Hospitals as Profit Centers
Unnecessary Tests and Services
Hospitals have discovered that, much like restaurants make their real money from expensive drinks, they can generate significant profits through testing and ancillary services. Physical therapy sessions, for instance, are often prescribed for extended periods after procedures like hip replacements, even when research suggests they may not be necessary.
The drive for profits has also led to an increase in unnecessary testing. Physician assistants and nurses are often allowed to order tests before a doctor has even seen a patient, leading to situations like Björn Kemper's son receiving an unnecessary $7,000 CAT scan for a simple stomachache.
The Rise of Medical Conglomerates
Another factor driving up healthcare costs is the emergence of medical conglomerates. These large healthcare networks act like monopolies, driving out competition and allowing them to raise prices at will. Research shows that areas with such conglomerates tend to see healthcare costs increase by 40 to 50 percent.
Sutter Health in California is an example of such a conglomerate, comprising 24 hospitals, 34 outpatient surgicenters, nine cancer centers, and thousands of affiliated private practices. In some areas of California, patients have no choice but to use Sutter Health facilities, regardless of the cost.
The Business of Healthcare
Shifting Focus from Patients to Consumers
The language used in healthcare has evolved to reflect its increasingly business-oriented nature. Where once there were "patients," now there are "consumers." "Illnesses" have become "high-value disease states." This shift in terminology is indicative of a broader change in how healthcare is approached and delivered.
The Impact on Research and Innovation
The business-first mentality in healthcare has also affected medical research. Dr. Denise Faustman's struggle to find funding for her type 1 diabetes research at Harvard Medical School illustrates how potentially groundbreaking work can be overlooked if it doesn't promise immediate commercial profits. The healthcare industry often prefers treatments that require lifelong use over one-time cures, as the former provides a more stable revenue stream.
The Affordable Care Act: A Step Towards Change
The Affordable Care Act (ACA), also known as Obamacare, attempted to address some of these issues by shifting the focus back to patient care. One of its most significant achievements was making it illegal to deny coverage based on pre-existing conditions. The ACA also succeeded in reducing the percentage of uninsured Americans from 18% to 11.9% between 2013 and 2016.
However, while the ACA improved access to healthcare, it did little to address the underlying cost issues plaguing the system. Further reforms are needed to truly transform American healthcare into a more affordable and patient-centered system.
Solutions and Strategies for Patients
Learning from Other Countries
To address the healthcare cost crisis, the United States could look to other countries with successful and affordable healthcare systems. Some potential strategies include:
- Setting a national fee schedule for drugs, procedures, and devices, similar to countries like Germany, Japan, and Belgium.
- Implementing a single-payer system, as seen in Canada, Australia, and Taiwan, where the government covers most healthcare costs, reducing the role of private insurers.
Individual Actions to Reduce Costs
While systemic changes are necessary, there are steps individuals can take to manage their healthcare costs:
- Ask questions about the necessity and cost of treatments and tests.
- Seek cheaper alternatives for medications and procedures.
- Ensure that referred doctors are within your insurance network.
- Choose hospitals and insurers carefully, using online reviews and rankings.
- Negotiate hospital bills and ask for itemized breakdowns.
- Consider buying medications from reputable foreign pharmacies if costs are prohibitive in the US.
Empowering Patients
Perhaps the most important takeaway is that patients should not be afraid to speak up and advocate for themselves. Many doctors are just as frustrated with the current system and are willing to work with patients to find more affordable options. By being informed and proactive, patients can play a role in pushing for a more equitable and affordable healthcare system.
Conclusion
"An American Sickness" provides a comprehensive and eye-opening look at the complex issues plaguing the US healthcare system. Elisabeth Rosenthal's analysis reveals how the pursuit of profit has come to dominate every aspect of healthcare, from hospitals and doctors to pharmaceutical companies and medical device manufacturers.
The book serves as both a warning and a call to action. It highlights the urgent need for systemic reform while also empowering readers with knowledge and strategies to navigate the current system more effectively. By understanding the forces at play and the tactics used to maximize profits, patients can make more informed decisions about their healthcare and advocate for change.
Ultimately, the path to a more equitable and affordable healthcare system will require a combination of individual action, policy changes, and a fundamental shift in how we approach healthcare as a society. "An American Sickness" provides a crucial starting point for this conversation, offering both a diagnosis of the problem and potential remedies for a system that has lost its way.
As we move forward, it's clear that addressing the issues in American healthcare will require sustained effort and engagement from all stakeholders – patients, healthcare providers, policymakers, and insurers alike. Only by working together can we hope to create a healthcare system that truly prioritizes patient care and well-being over profits.