U. S. Health Care — Down the Rabbit Hole

Reprinted from:  Louisville Medicine, VOL. 69 No. 6/ November 2021, https://glms.org/

AUTHOR Michael Flynn, MD

Michael B. Flynn, MD

All of the other first world/industrial countries have health care systems whose function is to provide health care to all the citizens of each country. The purpose is simple in that the goal is to provide universal health care managed by the government. The method varies from government provided health insurance to a totally government-run health care system as in the United Kingdom. Funding also varies involving an assortment of taxation methods ranging from general taxation to multiple source funding, such as combinations of taxation (central and local), employer, employee and out-of-pocket sources. Some countries allow private health insurance, regulate fees, supervise and regulate drug costs. Health insurance is mandatory/compulsory in most and some countries do not allow for-profit health insurance.

The Scandinavian countries, the European Union, the United Kingdom, Canada, Australia, New Zealand, Japan, South Korea, Taiwan and some South American countries all have different forms of universal health care, functioning market economies and have not been bankrupted by providing this benefit to their citizens.

In the US, we have a health care industry, which functions in a magical arena, the competitive medical market place. While all those other first world countries consider health care an essential public service, in the US health care is a commodity to be exploited by an assortment of profit-seeking entities.

Most other first world countries have health care systems managed by the central government. In the US, we have a patchwork or more correctly a crazy quilt of different entities, some focused on providing health care and others focused on extracting profit from the health care industry. Medicare is government health insurance for older citizens and some with disabilities. Medicaid provides government health insurance as a federal/state collaboration for the poor and individuals with certain disabilities. Medicaid covers different things in different states. The US Public Health Service is trained to respond to national health crises and emergencies. The Army, Navy and Air Force all have health care systems within the Department of Defense providing health care to active-duty military and their families, retired military and dependents and politicians. Senators McCain and McConnell and Presidents Reagan and Trump were all treated at military facilities without cost. The VA health system, while not without challenges, generally does a good job caring for veterans.

And then we have the uniquely American approach to health care, over 1,000 for-profit health insurance companies whose primary goal is profit, not providing health care. Actually using the revenue from premiums charged to customers anticipating health insurance is considered a “Medical Loss Ratio”.1 The Medicare administrative costs are in the 2-3% range, for-profit health insurance companies are allowed to keep 20% as administrative cost as per the ACA and often find ways to keep higher amounts in certain plans.2 Each health insurance company may have 10-30 different plans with a range of premiums and coverage. The end result is an insanely complex and confusing health care environment inflicted on the American public.

How did we get into this mess? From the mid-1970s to the mid-2010s, the number of administrators/managers has increased by an astonishing amount: over 3,000%. There are now 10 managers/administrators for each physician.3 These people do not work in ICUs or ERs, they do not do COVID-19 tests or vaccinate. They may help, but they also interfere and are paid salaries that are often multiple times higher than the nurses, respiratory therapists and physicians who provide medical care.

The pharmaceutical industry functions without restraint, a very different situation compared to most other first world countries. Medicare is prevented by law from negotiating with the pharmaceutical companies, an astonishingly stupid economic policy.4 The for-profit health insurance companies extract hundreds of billions of dollars annually out of our health care as profit, outrageous administrative costs, advertising, political contributions and investor dividends.5 Over 60% of bankruptcies filed in the US are the result of citizens unable to pay medical bills, a situation that simply does not exist in most other first world countries.6

As disturbing as the current situation is, it is already getting worse. Private equity firms are purchasing nursing homes, hospitals, health systems, physician practices, outpatient surgery centers, laboratories, imaging facilities and whatever else they can get their
hands on.7

The Wolves of Wall Street are about to devour US health care. The process involves buying the non-professional component of a practice, “improving efficiency” with the expectation of a return on investment of 15-30% annually and selling for a profit in three to five years.8 This is not meant to be a long, happy marriage. The investor invasion into health care creates the fundamental conflict of interest. “You can’t serve two masters. You can’t serve patients and investors”.7 About 70% of US nursing homes are investor owned.9 The resulting “improved efficiency” involves reduced staffing, increased use of medications and decreased quality of care.

The horror stories of patients left on toilets for hours, or lying in bed with unchanged loaded diapers abound. In one nursing home in Florida, a patient died from a feces-contaminated decubitus ulcer.10 When the family was understandably unhappy and hired a lawyer to determine accountability, they encountered a nightmare corporate structure. One company owned the building, another company obtained the license to run a nursing home, another company provided professional staff and another the custodial staff. The owners and managers had spread control among 15 companies and five layers of firms.

A large dermatology practice in California purchased by a private equity company produced a disturbing lesson in corporate governance.7 The practice’s “nonclinical” assets were bought by the private equity company, leaving the physicians in control of all medical decisions after agreeing to pay a management fee to handle administrative tasks such as billing and marketing. The new management team established daily and monthly financial goals, rewarding the offices meeting the goals with cash rewards. The performance of revenue enhancing procedures, Botox, laser treatments and Mohs surgery, for instance, was encouraged. Private equity groups buy existing labs and hire pathologists. The doctors are encouraged to send biopsy specimens to company owned labs and pathologists. Corporate approval was necessary to get office supplies, even toilet paper. Without consulting the medical staff, a manager changed to a cheaper brand of sutures and needles. The quality was so poor that needles would break off during injection and physicians had to dig them out of the skin and repeat the injection.

These are just a few examples of the litany of conflicts of interest between the goal of providing good patient care and the goal of feeding the investors’ profit demands. Sadly, we are left with the unanswered fundamental question of whether health care in the US is a commodity, to be exploited by for-profit companies and private equity investors, or is it an essential public service and a government responsibility. The rest of the first world knows the right answer.


1 www.healthinsurance.org/definitions

2 healthcare.gov/health-care-law-protections

3 New York Times, Business Section, June 9, 2019

4 cnn.com/2015/09/28/health/us-pays-more-for-drugs

5 New York Times, Sunday Review, November 17, 2019

6 Am J Med 2009, 122:741-6

7 www.bloomberg.com/news/features/2020-05-20/private-equity-is-ruining
health-care-covid-is-making-it -worse

8 pe-insights.com/news/2020/05/21/hoe-private-equity-is-ruining-ameri-

9 New York Times, Sunday, September 6, 2020

10 www.nytimes.com/2007/09/23/business/23nursing.html

This article was based on a number of radio programs on health care issues that were discussed on Single Payer Radio on Forward Radio WFMP-LP 106.5 FM. These programs are archived and can be listened to as podcasts by logging onto forwardradio.org-programs-single payer radio.

Dr. Flynn is a retired surgical oncologist.