The Price We Pay

1. The hidden costs of health care: Predatory billing and price gouging

"If the baby dies, you don't want to be responsible, do you?"

Predatory billing practices are rampant in the American health care system. Hospitals often sue patients for inflated bills, sometimes garnishing wages and ruining credit scores. These practices disproportionately affect low-income and minority communities.

Price gouging is common, with hospitals charging vastly different amounts for the same procedures. For example:

• A CT scan costing $487 at Johns Hopkins might be billed at $13,000 elsewhere
• Air ambulance rides can cost up to $630,000 for a service that should cost under $20,000
• A simple two-hour ER visit resulted in a $69,000 bill for one patient

Many hospitals use aggressive tactics to collect payments, including:

• Suing patients
• Garnishing wages
• Placing liens on homes
• Sending bills to collections, damaging credit scores

2. Overtreatment and unnecessary procedures plague the medical system

"If you want to reduce prescription drug costs, policymakers must demand greater transparency from PBMs."

Unnecessary medical care is estimated by doctors to account for 21% of all care provided. This overtreatment takes many forms:

• Excessive C-section rates (some doctors perform C-sections 95% of the time)
• Unnecessary vascular procedures
• Overuse of diagnostic tests and screenings
• Prescribing medications when lifestyle changes would suffice

Factors contributing to overtreatment:

• Financial incentives for doctors and hospitals
• Defensive medicine to avoid lawsuits
• Lack of price transparency
• Patient expectations and demands

The consequences of overtreatment include increased costs, potential harm to patients, and resource waste. Addressing this issue requires a shift in medical culture, better alignment of incentives, and increased transparency in medical decision-making.

3. The opioid crisis: A symptom of systemic overprescribing

"To address the opioid crisis, we need to take away the matches, not just put out the fires."

Overprescribing opioids has led to a national crisis. The author admits to previously prescribing opioids "like candy," unaware that 1 in 16 patients would become chronic users. This practice stems from:

• Lack of education on proper prescribing practices
• Pressure to treat pain aggressively
• Pharmaceutical industry influence

Solutions to address the crisis:

• Developing procedure-specific opioid prescribing guidelines
• Educating doctors and patients on non-opioid pain management
• Changing insurance policies to cover non-opioid alternatives
• Using data analytics to identify and address outlier prescribers

The author's team developed opioid prescribing guidelines for common procedures, recommending far fewer pills than typically prescribed. This approach, if widely adopted, could significantly reduce the number of opioids in circulation and prevent addiction.

4. Insurance brokers and pharmacy benefit managers inflate costs

"The dirty little secret in health care that no one is talking about is the way we brokers get paid."

Insurance brokers often receive kickbacks and commissions from insurance companies, incentivizing them to sell more expensive plans rather than what's best for clients. This system leads to higher costs for employers and employees.

Pharmacy Benefit Managers (PBMs) engage in several practices that inflate drug costs:

• "The spread": charging employers more than they pay pharmacies for drugs
• Keeping pharmaceutical company rebates instead of passing savings to patients
• Steering patients to their own mail-order pharmacies

These practices are often hidden from employers and patients, creating a lack of transparency in drug pricing. Reforms are needed to align incentives with patient and employer interests, such as:

• Transparent, flat-fee pricing for brokers and PBMs
• Eliminating conflicts of interest in PBM ownership of pharmacies
• Requiring full disclosure of rebates and pricing practices

5. Group purchasing organizations and wellness programs: More harm than good?

"Most of it is fluff. And I might add expensive fluff."

Group Purchasing Organizations (GPOs) were created to help hospitals save money on supplies, but their business model may actually increase costs:

• GPOs charge manufacturers fees to be included in their catalogs
• These fees can be up to 94% of a product's sale price
• Costs are passed on to hospitals and ultimately to patients

The current GPO model may contribute to drug shortages and stifle innovation by limiting competition.

Workplace wellness programs, a $6 billion industry, often lack scientific evidence of effectiveness:

• Many programs are based on outdated health information
• Overscreening can lead to unnecessary procedures and anxiety
• Privacy concerns arise from extensive health questionnaires
• Some programs sell employee health data to third parties

Instead of these programs, employers should focus on evidence-based interventions and creating healthier work environments.

6. Disrupting health care: Patient-centered models and price transparency

"We had the advantage of starting completely from scratch."

Innovative health care models are emerging to address systemic issues:

Iora Health:

• Focuses on relationship-based primary care
• Employs health coaches to support patients
• Reduces hospitalizations and emergency visits
• Lowers overall health care costs

Price transparency initiatives:

• Florida law requiring hospitals to disclose actual paid amounts, not just charges
• Healthcare Bluebook: shows fair prices for medical procedures
• Direct contracts between employers and health systems, bypassing middlemen

These models demonstrate that patient-centered care and price transparency can improve outcomes and reduce costs. Widespread adoption of such approaches could transform the health care system.

7. Medical education reform: Emphasizing empathy and practical skills

"We select people based on self-awareness and empathy."

Traditional medical education focuses heavily on memorization and individual achievement, often at the expense of crucial skills like communication, teamwork, and empathy. This approach is outdated in the age of readily accessible information.

Innovative medical schools are reforming their curricula:

• Thomas Jefferson University: selecting students based on emotional intelligence
• Boston University: using a holistic admission process
• Teaching practical skills like effective communication and recognizing burnout

Areas for improvement in medical education:

• Reducing emphasis on rote memorization
• Increasing focus on teamwork and interpersonal skills
• Teaching about health care economics and systemic issues
• Promoting humility and lifelong learning

These changes could produce doctors better equipped to navigate the complexities of modern health care and provide more patient-centered care.

8. Empowering patients and employers to drive change in health care

"Employers should refuse to be a part of any PBM that sends auto-refill requests to doctors' offices without a request from the patient."

Patients can take action to combat health care system issues:

• Use apps like GoodRx to compare medication prices
• Request itemized bills and challenge inflated charges
• Avoid unnecessary tests and procedures by asking questions
• Support independent pharmacies when possible

Employers can drive change through their health benefits:

• Demand transparency from insurance brokers and PBMs
• Consider self-insuring or joining self-insurance pools
• Implement tools to guide employees to high-value care
• Engage in direct contracts with health systems

Systemic changes needed:

• Repeal laws exempting PBMs and GPOs from anti-kickback regulations
• Implement price transparency laws similar to Florida's
• Reform medical education to produce more patient-centered doctors
• Encourage competition based on value rather than marketing

By taking these actions, patients and employers can help restore medicine to its original mission of serving patients and communities, rather than prioritizing profits.

Last updated: January 24, 2025