When “Profit” Is Just Another Word for “Waste”

More Than Medicine: The Broken Promise of American Health

Robert M. Kaplan

Harvard University Press, 2019, 240 pp., $29.95

The reader of Robert M. Kaplan’s new book is confronted in its early pages with two startling observations:

The state of health in the United States is already worse than in peer countries, and we are losing ground. . . .

If U.S. health care spending were in line with that of our peers, we would save some $1.1 trillion per year, enough to fund all sorts of public goods such as education, infrastructure, industrial policy, social insurance, and defense. We could retire the national debt in about fifteen years.

Many Americans are already aware of the extraordinary cost of health care in the United States. This fact is frequently explained away by asserting that such is the price to be paid for the best health care system in the world. Kaplan’s book shatters that comforting myth and exposes the American health care system for what it is: below average in quality and therefore way above average in cost. And he makes a dire prediction:

Failing to get to average means that more and more resources will be confiscated on behalf of a health care system that produces only mediocre outcomes. Preventable health conditions will continue to limit our workforce, making the economy less competitive. Reform always comes with difficulty, but, in the U.S. case, maintaining the status quo is the riskiest strategy of all.

To back up his main premise that Americans are vastly overspending on health care, Kaplan hits a number of important points. He marshals data about the overall poor quality of the American health care system. He documents the very common application of clinically inappropriate care in the United States, while at the same time noting the American failure to apply best-practice clinical science consistently. He also challenges the commonly held point of view that the pathway to optimum health treks through biomedical intervention. But perhaps his harshest criticism is directed at the poor safety record of hospitals:

Over the past few decades, it has become increasingly clear that medical care is a source of considerable harm. . . . A recent analysis of studies published between 2008 and 2011 finds that preventable medical errors account for between 210,000 and 400,000 deaths nationwide each year. . . . If the higher estimate is right, that means about five people die of complications from medical care for each one who dies of diabetes or Alzheimer’s.

Kaplan has a prescription for improving American health system performance.

The United States would benefit from new research exploring the health effects of quality improvement, social conditions, and behavior. Existing evidence suggests that a health system designed on the basis of this research will improve health by attending to a broader range of health determinants. Happily, other rich countries already demonstrate that such a system is also less expensive than our own. But even if reform saves money in the long run, it will cost a lot in the short term. Where will the funds come from? One possible source is money we could be saving by reducing waste in the health care system. In 2013, the Institute of Medicine estimated that inefficiencies cost us about $750 billion per year in that sector. This suggests that roughly a quarter of health care expenditures yield no benefit.

Kaplan makes a persuasive argument that we Americans are not getting a good return for our investment in biomedicine, which he characterizes as health care devoted predominantly to biological mechanisms to the relative exclusion of social and behavioral determinants such as violence, poverty, racism, workplace policy and stress, and poor education.

Kaplan is particularly effective in outlining the enormous cost of poor-quality care. “Per capita, the United Kingdom spends about $0.40 for each dollar spent in the United States,” Kaplan writes, “Belgium and Denmark spend about $0.50 for each dollar spent in the United States; Spain spends about $0.33.” Kaplan begins the book by speculating that Americans must find the pursuit of good health to be more important than any other objective, because they are willing to spend so much in search of it.

Health care now accounts for the biggest sector in the biggest economy in the history of the world. In 2017, the United States spent $3.2 trillion, or about 18 percent of the gross domestic product (GDP), on health services. Most countries that Americans consider our economic competitors spend less than 11 percent of their GDP on health care. If the U.S. health care system were an independent country, it would have the fifth-largest economy in the world, behind only China, Japan, Germany, and the United States itself.

This high price for biomedicine comes at the expense of opportunity costs for American government at all levels, but it is also pinching the economic status of individual Americans.

Few households can avoid the pinch. On average, American families now pay 23 percent of their income for health insurance premiums. In 1999 that figure was 11 percent. We are getting less in return, as deductibles and copayments increase. These costs also come out of wages and job opportunities. Faced with the high price of insurance, employers are less able to expand workforces and raise workers’ pay.

Kaplan notes that excess health care spending in the United States is not buying Americans better health when compared to that enjoyed in other developed nations; quite the opposite is true. But Kaplan’s strongest observations about the disconnect between health spending and health status are about the variations in health care delivery among the regions within the United States itself. Referring to data published by researchers at Dartmouth University, known collectively as the Dartmouth Atlas, Kaplan writes:

The Dartmouth Atlas, breaking down health care use geographically, makes for stark reading. The maps show that the amount spent on health care and the number of services delivered differs greatly across geographic regions, with no relation to age, race, or sex distributions, or to diagnostic profiles of given communities. . . Evaluations of the Dartmouth data find essentially no relationship between per capita spending and health outcomes across the United States. . . Indeed, a variety of evidence links greater use of care with bad outcomes. Several analyses show that people are slightly more likely to die in communities where more acute hospital care is used.

In a final damning observation about the massive variation in clinical practice in the United States, Kaplan concludes that high utilization is a direct consequence of supplier-induced demand. After noting that discharge rates for high-variation conditions are low where hospital bed space is more restricted, Kaplan offers the following observation:

The correlation between admissions and supply of beds suggests that, where care is available, it tends to be used—that oversupply is inducing high demand and not that supply is growing to keep up with demand that would otherwise be there. . .it is clear that providers create demand for their services by diagnosing more illnesses. . .the level of variation in health care services remains high today. . .That variation doesn’t seem to result in great differences in outcomes, suggesting that greater expenditures aren’t buying us better health.

Kaplan leads us to the point of understanding that the high variation in health care utilization across regions in the United States must document massive use of clinically inappropriate care, meaning care that is rendered without there being any significant chance that the patient’s condition will benefit thereby. Kaplan, therefore, is forcing us to recognize that in the American health care system, business as usual would rather make a sale than really care for a patient.

But that is not even the worst of the American health care system, according to Kaplan. Both the clinical science that provides the foundation of American biomedicine, and the hospital bedside, where biomedicine is practiced upon the patient, are failing to focus on what the ill and injured really need, or more importantly what we all need in order to live well.

Noting that the cutting edge of biomedical research is often dull, Kaplan provides the reader with a brief history of Federal funding for clinical science research, specifically highlighting the growth and development of the National Institutes of Health (NIH). Writes Kaplan: “For all our genius, our research process is beset by systemic flaws that undermine the quality and usefulness of scientific findings.” In essence, he argues that American biomedicine research has not realized anything like the hype surrounding it.

For instance, the Human Genome Project, costing billions, was predicted to “revolutionize the diagnosis, prevention, and treatment of most, if not all, human diseases,” leading to the “complete transformation” of clinical medicine. Now, 20 years later, none of these transformations have taken place. According to Kaplan, genetic research has provided scant incremental value over an old-fashioned medical interview with a family history, taken, in time-honored tradition, by a physician at the patient’s bedside.

The problem is not just unrealized hype, but what Kaplan calls research malpractice. Poor methods, publication bias, research not applicable to clinical settings, inadequate basic science supplies, and overuse of animal models all have a role in creating a clinical science community that has a research product that is incorrect about half the time. As evidence of the failure of the biomedical science community, Kaplan notes that new pharmaceutical innovations are not appearing, which he blames not only on the poor practice of clinical science research, but also on the drug industry:

Its priority is to make money, not to provide better health. Thus companies spend literally billions of dollars tweaking older, effective drugs in order to re-release them before patent monopolies run out. With minor modifications to their products, firms can wrest drugs from the generic market, securing their bottom lines.

Even when effective treatments are available, American health care providers as often as not fail to deliver these treatments to their patients. Kaplan illustrates this conundrum using heart attack, stroke, high blood pressure, and other clinical problems as examples.

In the case of high blood pressure, it has been known for 50 years that untreated high blood pressure leads to cardiovascular disease (heart attack and stroke). Effective treatment for high blood pressure is available. But, as a nation, we still fail to deliver this needed care consistently. Kaplan notes that one-fourth of American patients with high blood pressure do not know they have it, and 40 percent of those aware of their high blood pressure are not being treated. But at Kaiser Permanente, 87 percent of high blood pressure patients are treated and controlled. How is this accomplished? Here’s what Kaplan found:

Kaiser’s approach upends traditional models of medical care. Instead of waiting for a person to make an appointment with her doctor, Kaiser is proactive. Kaiser’s physicians measure blood pressure during every encounter. Patients diagnosed with hypertension hear from a Kaiser worker regularly. . . Kaiser initiates contact and relies on a range of providers, reducing barriers to effective care.

Kaplan effectively argues that U.S. health care business as usual fails to help patients because patients are not the reason health corporations are in the health business; profits are the reason. Distracted by the bottom line, American health care businesses cannot realize the optimum value of our health care dollars. Non-profit organizations, like Kaiser, seem best suited to take on quality improvement in health care delivery, thus saving lives and dollars.

One of Kaplan’s more interesting observations is contained in the book’s chapter about the social determinants of health. Noting that there is good reason to “believe that social forces are not only associated with ill health but are also sources of it—sources we can try to address,” Kaplan argues that higher social spending in European countries is the explanation for Europe’s advantage in life expectancy over the United States, because “this spending helps reduce poverty, improve school performance, mitigate the handicaps of discrimination, and promote healthful behaviors such as eating well, exercising, and refraining from smoking.”

Pre-eminent among these social determinants of health, according to Kaplan, is educational attainment:

Education is more important to health than are other social effects. If we could eliminate homicide there would be about 12,000 fewer deaths in the United States per year. Eliminating fatalities from automobile collisions would reduce deaths by about  30,000 per year. Eliminating diabetes, itself powerfully influenced by social factors affecting diet and exercise, would reduce the number of deaths by about 80,000 per year. But ensuring that everyone gets a high school education could prevent an estimated 240,000 deaths per year.

Kaplan backs this startling observation by citing multiple studies of large populations of Americans which find that “there is in fact a systematic relationship between educational attainment and life expectancy” which is not accounted for by income or other demographic differences, not is it due to medical and behavioral risk factors. He acknowledges that there is no unifying hypothesis which would explain this robust relationship.

This observation brought to my mind a study conducted by McKinsey and Company ten years ago entitled “The Economic Cost of the U.S. Education Gap,” by Auguste, Hancock, and Laboissiere. Noting that deficits in American education were identified in a landmark national report in 1983 (“A Nation At Risk”), the McKinsey authors asked how the failure to close the gap between American education and high performing nations by 1998 affected the economy. Their answer? The 2008 GDP was $1.3 to $2.3 trillion smaller that year due to the poor educational performance of U.S. schools. Why did our nation fail to close the international education gap by 1998, 15 years after the first President Bush declared himself to be the education President? Could it be that Kaplan is correct, one of the opportunity costs of spending $1.1 trillion too much on health care each year in the United States is that we are failing to improve the education of our kids? Apparently that opportunity cost is twofold because it both leads to 240,000 premature deaths each year and costs us $2 trillion in annual lost productivity.

Kaplan is a scholar, and so takes a very measured tone. Given his startling findings about the failure of American health care delivery, a more determined look at the business factors affecting how we Americans do health care might have been useful. It’s simply not true that the problems in cost and quality that Kaplan identifies are due merely to a misapplication of biomedicine. This is not just a philosophical problem. There are hints sprinkled throughout the book that he sees the business issues as the issues.

In the final chapter of the book, entitled “A Way Forward,” Kaplan discusses six systemic pathologies responsible for waste in American health care, based upon the work of Donald Berwick and Andrew Hackbarth. These six pathologies are failures in health care delivery, poor care coordination, overtreatment, administrative bloat, pricing, and fraud and abuse. Between the lines written about these six pathologies is, I believe, what has to be understood as a criticism of the core business model of American health care corporations. With the exception of fraud and abuse, these pathologies all come about because the focus of health business in the United States is not on what the patient really needs, but how best to exploit a patient’s pathology for profit. What Berwick and Hackbarth (and by extension Kaplan) call waste, American health care business calls profit.

Kaplan’s reticence to push hard on the U.S. health care business model leads to one truly regrettable sentence, found on page 3: “That same faith (in biomedicine) fuels runaway prescription drug prices: only because we believe we need them are we willing to pay so much for them.” Here Kaplan ignores an obvious reality. People with diabetes, for instance, don’t believe they need insulin, they know it. But the pharmaceutical firms also know they need insulin, which is why they can increase insulin prices by orders of magnitude. Unlike a market, demand for health care goods and services doesn’t change with price. No one ever had an appendectomy because it was on sale. And no insulin-dependent diabetic ever stopped trying to buy insulin because the price was too high.

Kaplan is correct that the time for radical change in American health care delivery has come. Personally, I have long since preferred single-payer health system reform. If we already had such a system in the United States, Kaplan’s preference for a greater emphasis on the social determinants of health would be more likely to occur, because we would already be saving the hundreds of billions of dollars now annually wasted on the inefficiencies of health insurance. Reduced public spending on health care would create the opportunity to increase social spending, for instance on education. For readers not yet ready to embrace radical reform like single-payer, More Than Medicine: The Broken Promise of American Health will offer a genteel, scholarly view about the dumpster fire that is the American health care system. That would be a good place to start.

The post When “Profit” Is Just Another Word for “Waste” appeared first on The American Interest.

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Author: <a href=’https://www.the-american-interest.com/v/joseph-q-jarvis/’>Joseph Q. Jarvis</a>

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