An American Sickness (Part I)

As part of my annual (soon to be semiannual) physical I had some tests done earlier this month at Overlook Hospital where they signed me up for mychart where I can, among other things, review my test results and billing:

This bill made my next book choice for me. First excerpts follow.

In the past quarter century, the American medical system has stopped focusing on health or even science. Instead it attends more or less single-mindedly to its own profits. (p-age 1)

These days our treatment follows not scientific guidelines, but the logic of commerce in an imperfect and poorly regulated market, whose big players spend more on lobbying than defense contractors. Financial incentives to order more and do more – to default to the most expensive treatment for whatever ails you – drive much of our healthcare. (page 5)

Between 1940 and 1955, the number of Americans with health insurance skyrocketed from 10 percent to over 60 percent. That was before the advent of government programs like Medicare and Medicaid. (page 17)

By the 1990s, the Blues, which offered insurance in all fifty states, were hemorrhaging money, having been left to cover the sickest patients. In 1994, after state directors rebelled, the Blues’ board relented and allowed member plans to become for-profit insurers. Their primary motivation was not to charge patients more, but to gain access to the stock market to raise some quick cash to erase deficits. This was the final nail in the coffin of old-fashioned noble-minded health insurance. ()page 18)

In 1993, before the Blues went for-profit, insurers spent 95 census out of every dollar of premiums on medical care, which is called their “medical loss ratio.”….The average medical loss ration is now closer4 to 80 percent…The framers of the Affordable Care Act tried to curb insurers’ profits and their executives’ salaries, which were some of the highest in the U.S. healthcare industry, by requiring them to spend 80 to 85 percent of every premium dollar on patient care….[N]ow that they suddenly have to use 80 to 85 percent rather than, say, 75 percent of premiums on patient care, insurers have a new perverse motivation to tolerate such big payouts. In order to make sure their 15 percent take is still sufficient to maintain salaries and investor dividends, insurance executives have to increase the size of the pie. To cover shortfalls, premiums are increased the next year, passing costs on to the consumers. And 15 percent of a big sum is more than 15 percent of a smaller one. (page 19-20)

Healthcare has become a great way for the Catholic Church, in particular, to collect money. From 2001 to 2011, the number of American hospitals affiliated with the Catholic Church grew by 16 percent, as the number of public and secular nonprofit hospitals drop0ped 31 percent and 12 percent, respectively. Eight of the ten largest nonprofit hospital systems in the United States have religious affiliations and names. (pages 24-5)

Medicare had initially paid hospitals their “usual and customary charges,” but in the mid-1980s it began paying according to a diagnosis related group (DRG). The payment for a hospital stay for an appendectomy or for pneumonia would be a fixed amount depending almost entirely on the diagnosis. The hospital would make money on patients who healed more quickly and efficiently – and lose money on those who did not. (pages 30-1)

Not-for-profit hospitals are now just as profitable as capitalist corporations, but the excess money flowing in isn’t called “profit” – it’s “operating surplus.” Charity Navigator, a group that rates nonprofit organizations based on their governance and use of donated funds, doesn’t even rate not-for-profit health systems because they function on such a different model. (page 49)

But in 2010, despite fierce hospital protests, a provision of the Affordable Care Act started requiring the IRS to collect each hospital’s quantitative enumeration of charitable activities and their value. Every year, on a form called Schedule H (Form 990), they now have to list how much money-losing  care they dispense – and how they calculate that number…A survey of the forms conducted by the California Nurses Association concluded that 196 hospitals received “$3.3 billion state and federal tax exemptions and spent only $1.4 billion on charity care – a gap of $12.9 billion.” (page 50)

There are likely easier paths to get really rich than entering medicine. But every profession involves its own form of hard labor to establish position. Lawyers have clerkships. New investment bankers work around the clock. Aspiring writers wait tables or write blog posts without pay. Few paths are as secure as medicine. I know unemployed lawyers; I know unemployed bankers. I know lots of unemployed journalists. I’ve heard of few, if any, unemployed doctors. (page 58).

By the 1980s, just as in the hospital sector, Medicare responded to runaway bills by trying to define what it should and would pay, regardless of what the doctor might bill. (page 61)

Neurology is one of the most challenging corners of medicine, and yet today neurologists are often poorly paid compared to their medical colleagues. (page 62)

Within the new system, constant updates were needed to determine fair value and payment. In a decision that might today seem ill advised, Medicare assigned the task to a multimillion-dollar organization, the American Medical Association (AMA), medicine’s most powerful industry group, which at the time still possessed more of a veneer of wise professional association with commendable ethics than it does today. (page 63)

Pathologists tend to be quiet, antisocial types and have never been very good at forming alliances or lobbying. (page 65)

When I worked as an ER doctor in the mid-1990s, we were all hospital staff. By 2014,m 65 percent of the nation’s five thousand hospitals had contracted out their emergency department staffing/management function….Then, around 2010, many of these doctors’ groups, who worked at in-network hospitals, simply stopped contracting with any insurers at all leaving unsuspecting patients with tens of thousands of dollars in surprise medical bills. (page 68)

By law, hospitals had to offer [emergency] service, but high-paid specialists signed contracts, like the one that Olga Baker said governed her daughter’s care: the neurosurgeons would cover the ER and, in exchange, get the exclusive right to see new, well-insured patients and bill them however they chose. Ms. Baker said that people like her daughter, “with good insurance and money are kept in, conditioned with fear, upsold on questionable procedures in a hurry, in order to create undisclosed, and unconsented, exorbitant ’emergency’ bills.” (page 71)

Many bills still include full freight charges for both the anesthesiologist and the extender because doctors know that commercial insurers aren’t as vigilant or as parsimonious as Medicare. (page 74)

Such business models have made anesthesiologists some of the best-compensated doctors in American medicine, though their training is not terribly difficult. It galls others in hospitals. As one wrote to me: “The ability of the anesthesiologists to ‘monitor’ multiple patients and bill for this monitoring (while sitting in the lounge monitoring their portfolios) is damaging our society. To pay a nurse near $150k and the ghost doctor another $500k to do the same task is just an example of how the medical community is pilfering.” (page 74)

In the United States oral prescription drugs are legally dispensed only in pharmacies. But there are an increasing number of intravenous and injectable drugs that, with outpatient medicine flourishing, could now be administered in doctors’ offices for a fee and with a markup. (page 77)

Oncologists prospered buying chemotherapy drugs from manufacturers and infusing them in the office, generally with a hefty markup, a practice known as “buy and bill.” (page 78)

Ophthalmology journals ran articles titled “Are Lasers Good for Business?” as many physicians were seemingly unconcerned about whether they were good for people with cataracts. (page 84)

Patients with kidney failure are generally covered by Medicare, under a 1972 act of Congress that allows them to join the federal insurance program earlier than the standard age of sixty-five. (The somewhat miserly idea was that the expense wouldn’t be great because patients couldn’t live very long.) Because Medicare payments are typically far lower than those of commercial insurers, kidney doctors often look to supplement their patient income by investing in dialysis centers and for4ming partnerships with or collecting directorship fees from dialysis companies. (page 85)

MEDICINE IS A BUSINESS. It won’t police itself,” said William Sage, a doctor and a lawyer who is a professor of health law at the University of Texas. “People had a lot of faith in the American medical profession – that they would act differently than other businesses – but they were wrong.” (page 86)