Unwinding the healthcare dystopoly

The year 2013 marks my twentieth anniversary as a healthcare journalist. Seventeen of those years have been focused on the business sector exclusively.

That's a long time to devote a portion of your career to a specific niche, but healthcare is a constant puzzle and challenge. And while I have some regrets about being not being more of a generalist, the fact is I probably wouldn't be in journalism today had I covered a different topic.

I recall a friend of mine saying I had gained some expertise on the subject after I had been writing about it for three years. Looking back, that makes me laugh. I am just now coming up with a unified theory about the business of healthcare.

And what is it?

Compared to the rest of the world, healthcare delivery in the United States is a bottom-line capitalist endeavor rather than a social service or a right.

Of course, you knew that already.

However, unlike, say, the hospitality or automobile manufacturing industries, it is a business whose participants have devoted a large portion of time to stifling competition that would keep prices down. Not since the railroad barons or John D. Rockefeller's Standard Oil Co. in the 19th century has a sector have been so single-minded in this effort.

But given that healthcare accounts for nearly 20 percent of the entire U.S. economy, it has succeeded at levels the railroad or oil trusts could only dream of. Care costs twice as much as anywhere else in the world, while outcomes and life expectancy lag behind other industrialized nations.

For lack of a better word, I've invented one to describe the U.S. healthcare system: Dystopoly.

Yet unlike the oil and railroad trusts, I don't believe there have been a handful of greedy operatives driving the current situation. Rather, an ultimately corrosive event and culture fused.

The event occurred during World War Two, when wage freezes in the midst of a dramatically contracted labor pool prompted employers to offer healthcare benefits as a recruiting incentive. That helped attract workers, but it created a precedent to separate them from the cost of the care they received.

The culture was the paternalistic and often patronizing relationship between providers and their patients. Things have changed since the "your doctor is always right; don't ask questions" atmosphere encouraged in the post-war years, but not by much. Most patients are still dealing with a gauntlet of medical professionals who often appear high-handed and who are definitely short on time. Frank communication is rarely encouraged, and given many patients are still divorced from costs, many believe it's not required.

If the price and rationale aren't requested, they won't be disclosed. No pricing transparency or rationale, no real competition. And in the wealthiest and most entrepreneurial country in the history of the world, there are plenty of parties willing to man a competition-free vortex.

Two articles have been published in the past three months that support my theory more than any others (I wish I had written them myself; but oh, well).

The first one was Steven Brill's Time Magazine article "Bitter Pill." It discussed at great length how hospitals all but kept their chargemasters locked in a nuclear-proof vault away from their patients while using them at the same time to keep costs and bills sky-high.

More recent is the first in a series the New York Times is publishing on healthcare costs. It is a clear-eyed explication of the culture surrounding American healthcare delivery. News celebrity Katie Couric undergoes a colonoscopy on television, causing demand to explode. The law of supply and demand would cause costs to rise to begin with, but in a dystopoly, parallel forces multiply rapidly.

These include the shift to performing the procedure in physician-owned outpatient centers, where doctors get to keep more of the revenue. As a result, every time a gastroenterologist buys into one of these practices, their volume of colonoscopies increases by an average of 27 percent, and their compensation soars. And while it's not a procedure that requires general anesthesia, anesthesiologists muscle their way in anyway, using their lobbying groups to ensure their labor is included and costs are tacked on. Meanwhile, patients such as Maggie Christ, featured in the Times article, are staggered by their bills: More than $9,100 in her case for what is supposed to be a routine preventative procedure--enough to buy a used car.

As disheartening as these articles are, they represent cracks in the dystopoly. Brill's article prompted the Centers for Medicare & Medicaid Services to release hospital pricing data for popular inpatient and outpatient procedures, although the database is so massive that I don't see a practical application for consumers just yet. And if the Times' article gets some patients actually shopping for their next colonoscopy, it's a start.

Moreover, the healthcare exchanges that are a cornerstone of the Affordable Care Act have created a bit of a surprise: The health plans seems to be making a conscious effort to keep premiums down. Getting lumped into a marketplace where you're offering the same product as a half-dozen of your competitors tends to do that.

I don't know what the next 20 years holds in store for the healthcare business. I do suspect though that the practices of the last 70 years that have contributed to its current state will be slowly, if not painfully unwound. One thing I can guarantee: It should continue to keep people like myself remarkably busy.  - Ron (@FierceHealth)

Related Articles:
A chat with Steven Brill on the evolution of 'Bitter Pill'
AHA disputes 'Bitter Pill' assertions
Healthcare cost microcosm viewed through colonoscopies
CMS releases hospital price-comparison data
After CMS releases chargemaster data, hospitals mull price changes
On a quest for price transparency, drop confidentiality clauses
Cancer patients more likely to go bankrupt, but few ask about  cost of care

Suggested Articles

Humana filed suit Friday against more than a dozen generic drugmakers alleging the companies engaged in price fixing.

Medicare Advantage open enrollment kicked off last week, and insurers are taking new approaches to marketing a slate of supplemental benefit options. 

Health IT company Cerner announced a definitive agreement to acquire IT consulting and engineering firm AbleVets as a wholly owned subsidiary.