An Orchestra in Need of a Conductor: US Health Care
I have lived in the US now for 48 years. So for almost half a century I have been a patient of America’s health care system and have had to make life-and-death choices for my near and dear ones.
While serving on the boards and advisory boards of health care providers for over 20 years, I have learned about the challenges of the business model of health care systems. In board rooms and social settings, I have also heard experts, consultants, and physicians candidly sharing their thoughts about patient care.
The doctor-patient relationship in the US is sacred. I have yet to come across a patient who does not trust his or her own doctor. The health care system is however much too complex to navigate through, for most.
By no means do I know the answers for fixing it, but a new directional move is mandatory.
The closest analogy to health care is the college education system in the US. We have very affordable community colleges, public universities, private universities, and then private ivy league colleges. The costs from one to the other vary considerably.
Similarly, in N. California we have community hospitals, membership-driven hospitals like Kaiser, private hospitals, and University hospitals like UC San Francisco and Stanford.
Comparing health care to colleges will make further sense when we examine it further.
Business Model
In America, the government pays for those 65 years and older and the very poor. The government pays “significantly less (e.g., 30–50 percent) than the physician’s usual fee… as well as for surgical and diagnostic procedures.” On top, there are 31 million uninsured, who also need to be taken care of.
An estimated 10,000 people turn 65 every day in America, moving to government-provided Medicare. They are placing an increasing financial burden on the medical systems.
In California, S.B. 1953 requires all California hospitals to spend billions of dollars by 2030 to comply with new requirements to improve their resistance to earthquakes, but the state did not provide the funding for retrofitting.
Privately insured and their employers are making up for the shortfall. In not-for-profit health care systems and university medical centers donations also help.
Bob Reed, the former CFO of Sutter Health and an industry veteran testified recently in a recent antitrust trial against Sutter that running hospitals in California is “a very difficult economic proposition.”
However, cost-sharing is necessary for the providers when they balance out the higher premium paying employers with government-paid insurances, just as insurance companies average the risk of sicker patients with the healthier ones to offer affordable prices.
Price of Choices
American consumers like choices.
When patients exercise preferences for certain physicians and/or want more timely appointments, the doctor must leave open space on their schedule to accommodate same-day appointments. If the same-day drop-in patients don’t come, doctors’ time gets wasted, driving costs higher.
Then there is a choice of which medical system the patient may go to for different procedures or specialty doctors. American consumers like the flexibility to choose which makes the volume less predictable and the cost of care higher.
Even though the US ranks low among high-income countries in traditional international measures of healthcare, patients around the world, who can afford, would want to be treated for life-threatening illnesses here and nowhere else. We remain the gold standard.
Admittedly, our costs remain high but also the quality of care is high.
According to Bob Reed, “health care is probably best delivered in a nonprofit setting.” He admitted that it is a bad model for a provider to get paid for patients’ ailments. Illness cannot be a source of making money for any organization. A not-for-profit has no shareholders, so profits can be plowed back into the business to take care of the community. Under this model, the system will achieve its mission. Bob Reed is a very astute observer.
Public health is too important a mission to be left to a capitalist, market-driven approach.
In Jan 2018, “Haven, the joint venture formed by three of America’s most powerful companies Amazon, Berkshire Hathaway, and JPMorgan Chase was announced to lower costs and improve outcomes in health care”. Haven folded in February 2021. “The move to shutter Haven may be a sign of how difficult it is to radically improve American health care”, the same CNBC journalist concluded.
There are no magical movements. And trying to change America’s health care system overnight can be dangerous. However gradual shift towards a single-payer, with employers’ participation and multiple categories of providers, could serve us well, just like our college education system. If both private university Stanford and public university UC Berkeley can deliver great education and produce Nobel Laureates, so can multiple healthcare providers under different umbrellas, without sacrificing quality.
We have individual musicians in this orchestra in place but need a conductor who can get them to play in harmony.
