New Perspectives: What is Wrong with Healthcare

Editor’s Note: The views and opinions expressed in this article do not reflect those of The Collegian.

Dr. Marty Makary’s “What is Wrong with Healthcare” puts forth the idea that the United States healthcare system is unable to provide quality healthcare at affordable prices because the incentive to maximize profit leads healthcare providers to put overtreatment before quality care. 

Overtreatment is the system of healthcare practices that are predatory in nature or do little to improve the health outcome of the person being treated, according to Makary. One of the reasons that he gives for the practice of overtreatment is because of asymmetric information between healthcare providers and patients, allowing healthcare providers to use their expertise to convince people to agree to medical interventions whether they are helpful or not.

Doctors are incentivized to over-treat patients because under the current health system,which is dominated by both private companies and the federal government,  hospitals are reimbursed for every medical intervention they provide. This results in healthcare providers placing more emphasis on curative rather than preventative care, as this nets greater profits. 

Given that financial incentives compel healthcare providers to overtreat patients, a way to make healthcare more accessible is by changing the incentives that healthcare providers face. One of the more prominent hospitals that based their healthcare model on this idea is ChenMed.

ChenMed is a national, private healthcare provider that specializes in delivering high-quality healthcare for seniors who are Medicare Advantage beneficiaries. It works based on a system of capitated payments in which the company assumes the risk for caring for the patients and makes money by keeping them out of the hospital. ChenMed does this by elevating primary care to increase access to services, enhance care coordination and address social determinants of health. 

Based on results, ChenMed’s business model has been a success. They have 50% fewer hospital admissions compared with a standard primary-care practice and recently made over $500 million in revenue using this model. Other high-profile companies that use this model include Iora Health, Oak Street Health and CareMore Health System.

Another way to address overtreatment that Makary suggests is changing the way quality health is measured. Currently, healthcare is measured based on the success of a medical intervention. However, Makary believes that measuring the appropriateness of care will help reduce instances of overtreatment. 

Appropriateness of care are defined as health interventions that have medical benefits for the patient. Given the subjective nature of medicine, Makary suggests that rather than examining individual cases, appropriateness of care can be measured by looking at the overall caseloads of doctors and coming up with a maximum percentage of their overall cases that should undergo a certain medical intervention. 

To make it effective, the rates would be calculated based on procedures in each medical procedure according to discipline. For example, a heart surgeon will have a different set of criteria to measure their performance from a brain surgeon. Within these specialties, there will be a different set of statistics for the number of their cases that should undergo a specific medical intervention according to different problems the respective surgeons might encounter.

Although it is time-consuming work, there have been instances where gathering these statistics have resulted in positive health outcomes. Makary illustrates this in his book through the story of Dr. Jon Matsunaga, the chair of the OB/GYN department at St. John’s Hospital in Santa Monica, California.

Matsunaga was dissatisfied with the rate of caesarean section operations, also known as C-sections, because they had been the highest among the 12 hospitals in the region. C-section operations are not preferred except in special circumstances because vaginal births are safer for both the mother and the child. 

In an attempt to lower the numbers, he anonymously shared the rates of C-sections operations by doctors in the department with each other, and as a department, the C-section rates plummeted. 

Matsunaga said that sharing the data helped drop C-section rates because it made doctors reflect on how their biases affected the quality of care they provided and adjusted their behavior accordingly. Additionally, knowing the rates at which their peers performed C-sections established a range that they tried to stay within. 

Another way to address the problem of overtreatment might be to reduce the financial incentives present in healthcare altogether. 

Under the current health system, hospitals negotiate discounts with insurance companies, which are accessible to people through their health insurance plans. This system leads to high healthcare costs because the relative size of a firm affects their bargaining power. Therefore, if a hospital is bigger, it might be able to negotiate larger discounts from an insurance company or vice versa.

The negotiations between hospitals and insurance companies, which Makary calls the “mark-up and discount game,” leads to a wide range of prices for the same procedure. For example, Makary states that for a heart bypass surgery,  hospitals quoted prices ranging from $44,000 to $448,000. 

Makary also states that there is no correlation between heart surgery and price, meaning that this relationship is artificially increasing healthcare costs. It is also important because relative to the size of its population, the U.S. spends more on healthcare with less comparable results.

This leads me to believe that the problems brought about by this relationship can be solved by considering adopting a universal healthcare system.

Most other developed countries, like England, the Netherlands and Japan, have either public or private health insurance plans to which all citizens compulsorily subscribe. There are optional private health insurance plans that people can subscribe to, as well. This takes away the financial incentive from healthcare by making it free and standardizing the prices for medical interventions when people do have to pay for healthcare.  

Most importantly, it [a universal healthcare system] prevents a scenario where a person is unable to access healthcare because they are uninsured or because the cost is too high even with insurance.

In “What is Wrong With Healthcare,” Makary demonstrates how financial incentives in healthcare are a large reason why healthcare costs remain high without any corresponding increase in quality. Financial incentives present themselves in the form of an insurance system that reimburses solely for medical interventions and confidential price negotiations between hospitals and insurance companies that prevent people making informed decisions about where they get their healthcare. These factors encourage doctors to use their expertise to convince people to undergo unnecessary medical interventions rather than provide appropriate care. 

Through a careful analysis, Makary shows that these problems can be fixed through interventions like an industry-wide pivot to capitated payments that will make  healthcare providers prioritize preventative care and the use of stricter quality metrics to assess physician performance. An alternative could be a complete overhaul of the US healthcare system and adopting a basic universal healthcare system.

Contact columnist Abdulghaffah Abiru at ghaffah.abiru@richmond.edu.