An American Sickness: How Healthcare Became Big Business and How You Can Take It Back by Elisabeth Rosenthal.

4/5 rating. 330 pages.

Book #25 of 2022. Read June 1, 2022.

This is a really sobering view of the state of our healthcare system.

The healthcare industry in this country is absolutely broken. I love nurses and have a ton in my life (as everyone should, they’re awesome!), and this speaks nothing about them as they would be the first to tell you this. I believe that almost everyone agrees. People are happy complaining about it, but threaten a change and all of a sudden things are just fine and any change to it isn’t worthwhile

If you want to know why nurses and doctors are burning out, part of the reason is that they are trying their damnedest to help their patients. They are pouring their hearts into it, but because of how broken our system is, it’s not doing near enough good.

This book lays out all of the sad realities happening in this industry:

• “In no other industry do prices for a product vary by a factor of ten depending on where it is purchased, as is the case for bills I’ve seen…”
• According to the World Bank in 2014 Singapore spent only 4.9 percent of its GDP on healthcare compared with the United States’ 17.1 percent. Meanwhile, Singapore ranks sixth in the World Health Organization’s assessment of health system performance while the United States ranks thirty-seventh.”

It then lays out some great ways to begin to help! While the main things come down to actually getting some people with guts in congress and trade associations to make big changes. Even as a patient, being cognizant of what you’re paying for, and not being ripped off is important. While price transparency needs to become law, there is some shopping around that we as consumers can do.

I highlighted soooo many quotes from this book: most of them disturbing. I think it’s important to know the reality we have and if people were more aware how we’re all paying so much for such mediocre care because of everything the caregivers have to deal with, maybe we could improve their lives, and in turn healthcare in general!

Quotes:

“We regard high prices as an inescapable American burden. We accept the drugmakers’ argument that they have to charge twice as much for prescriptions as in any other country because lawmakers in nations like Germany and France don’t pay them enough to recoup their research costs. But would anyone accept that argument if we replaced the word prescriptions with cars or films?”

“In no other industry do prices for a product vary by a factor of ten depending on where it is purchased, as is the case for bills I’ve seen for echocardiograms, MRI scans, and blood tests to gauge thyroid function or vitamin D levels. The price of a Prius at a dealership in Princeton, New Jersey, is not five times higher than what you would pay for a Prius in Hackensack and a Prius in New Jersey is not twice as expensive as one in New Mexico. The price of that car at the very same dealer doesn’t depend on your employer, or if you’re self-employed or unemployed. Why does it matter for healthcare?”

“For that, the U.S. health system generally delivers worse health outcomes than any other developed country, all of which spend on average about half what we do per person.”

“These days our treatment follows not scientific guidelines, but the logic of commerce in an imperfect and poorly regulated market, whose big players spend more on lobbying than defense contractors.”

“She tried to tell me that, although she had no idea how much profit NYU is making, she was sure that it couldn’t be all that much. After all, there are shipping costs, storage costs, and other administrative costs associated with a hospital facility. Really? Enough to justify $120,000 billed to EmblemHealth for a single dosage administered? In the end, she said that I should pay no attention to how much money my insurance company was being forced to pay. After all, it’s not costing me anything.”

“The original purpose of health insurance was to mitigate financial disasters brought about by a serious illness, such as losing your home or your job, but it was never intended to make healthcare cheap or serve as a tool for cost control.”

“The medical loss ratio at the Texas Blues, where the whole concept of health insurance started, was just 64.4 percent in 2010.”

“First, it’s less trouble for insurers to pay it than not. NYU is a big client that insurers don’t want to lose, and an insurer can compensate for the high price in various ways—by raising premiums, co-payments, or deductibles. Second, now that they suddenly have to use 80 to 85 percent rather than, say, 75 percent of premiums on patient care, insurers have a new perverse motivation to tolerate such big payouts. In order to make sure their 15 percent take is still sufficient to maintain salaries and investor dividends, insurance executives have to increase the size of the pie. To cover shortfalls, premiums are increased the next year, passing costs on to the consumers. And 15 percent of a big sum is more than 15 percent of a smaller one.”

“In fact, history shows that once a procedure is covered by insurance, its sticker price generally goes up because patients are largely insulated from the cost.”

“‘You saved 96%!’ crowed Cigna about an overpriced one-night hospital stay at NYU Langone, a calculation explained like this: of the hospital’s $99,469 bill (not including doctors’ fees), Cigna paid its negotiated discounted rate of $68,240 and the patient had to contribute $3,018. Is that overwhelming cost really something to be upbeat about?”

“In a world populated by doctors, nurses, and nuns, no one really knew how to figure out how much it cost the hospital to remove an appendix, for example. But there was no harm in aiming high, because insurers usually paid whatever was requested.”

“The crazy-quilt phenomenon of some patients paying less and some more for exactly the same care evolved the same way: hospital business departments realized if Medicare or a powerful insurer wouldn’t agree to pay a big enough proportion of the rate they wanted, they had the leverage to insist that smaller insurers—and people with no insurance—pay more.”

“‘While it’s legal, it felt ethically dubious and not good for patients,’ reflected Ms. Zeff, who is no longer in the business.”

“For the business departments of hospitals and doctors on staff, the discovery was transformational. The billed price of an item could be completely decoupled from its actual cost. Items that had previously been included in the charge for the operating room or a hospital stay could be billed separately.”

“In 2015, 71 percent of physician practices supplemented salary with productivity bonuses. Bonuses can motivate doctors, just as they do bond traders.”

“Facility fees are a unique construct of American healthcare and its business model. Hospitals in Europe don’t have them. Nor do other types of businesses in the United States. As Yevgeniy Feyman, currently of the Harvard T. H. Chan School of Public Health, observed in Health Affairs Blog, ‘When you buy anything—a watch, a car, even groceries—you pay a single price for the goods. The Walgreens down the street doesn’t add a separate charge to cover its rent, utilities, or the cost of refrigeration units.’”

“The chief medical officer and his advisers were expected to find new profitable lines of treatment and to reevaluate the old money-losing departments to see if they could be ‘turned around.’ If not, the department or the service often had to go. ‘I have worked in an ER for the past ten-plus years and the administration was very frank that the ER was expected to generate revenue,’ said Jacqui Bush, a nurse in California.”

“The American Medical Association’s code of ethics has been similarly diluted. Through the 1960s and 1970s it said that physicians’ fees ‘should be commensurate with the services rendered and the patient’s ability to pay‘ (emphasis mine). But this latter exhortation did not survive into the 1980s.”

“‘I’m not terribly sympathetic to the argument that healthcare costs so much because of medical school debt—I think it’s a red herring,’ said Dr. Joanne Roberts, sixty-four, chief medical officer at Providence Hospital, Everett. ‘Even if it’s two hundred thousand dollars, that’s easy to pay off on a doctor’s salary.’”

“‘There is a bizarre martyr complex that permeates medicine—people think they are working harder and longer for less money than everyone else in America.’”

“At one point, Medicare declared that anesthesiologists could not bill for supervising more than four operating rooms at once. It briefly decreased payment for each subsequent room, but lobbying undid the plan.”

“Since high payments were often tied to the length in time of the infusion as well as the dose, Medicare ruled that doctors couldn’t simply slow down the infusion to clock up the minutes. But when the agency announced there would be one payment for the first hour and a half (many chemotherapy medicines can be easily administered in this time), with a second for any part of each hour thereafter, it started receiving bills for lots of infusions that lasted ninety-one minutes.”

“Cataracts can be detected during an eye exam long before they become a real bother to patients, so there is much discretion about when to perform surgery. Studies have shown that the rates of cataract surgery are highly dependent on how much doctors are paid to do the procedure. In one study in St. Louis, the number of cataract surgeries performed dropped 45 percent six months after a group of doctors went on salary and were no longer paid per surgery.”

“On April 10, 2014, I gave a talk to six thousand attendees at the annual meeting of the American College of Physicians in Orlando, Florida. This happened to be an awkward landmark day in modern American medicine: the day before, in response to a lawsuit filed by the Wall Street Journal, Medicare for the first time had released data showing how much it had paid every individual doctor. Thousands of physicians made more than $1 million each from Medicare in 2012 and dozens more than $10 million. Of course, doctors have expenses like office overhead, but these were still tidy payments from an insurer that doctors often complain is stingy.”

“An in-depth data investigation by the Milwaukee Journal Sentinel and MedPageToday in 2014 revealed that, thanks to surrogate endpoints, 74 percent of cancer drugs approved by the FDA during the previous decade ultimately did not extend life by even a single day.”

“Direct-to-consumer drug advertising rose from $166 million in 1993 to $4.2 billion in 2005, and by 2006 it made up nearly 40 percent of total pharmaceutical promotional spending.”

“In 2000 Merck spent more advertising its new painkiller, Vioxx ($160 million), than Budweiser ($146 million), Pepsi ($125 million), or Nike ($78 million).”

“Despite episodes like these, drug advertising is now a constant in our lives. The Supreme Court has protected drug advertising under the guise of free speech. We are one of two countries that allow it, along with New Zealand.”

“FDA panels don’t consider the cost of the products they review. When Hetlioz received approval, Dr. Sack assumed it would be maybe $10 or $15 a pill. In fact, Hetlioz was later priced at $96,000 a year, $8,000 a month, or $267 per dose. ‘So now we have a prescription medicine for over two hundred dollars a day that is not as effective as melatonin used properly—which you can buy for six dollars over the counter for a bottle of one hundred,’ Dr. Sack said. ‘It is eye-popping that we could get in this situation. And that it would be advertised on TV.’”

“The agency’s criteria for efficacy stipulate only that a new drug has to be shown effective when compared with a placebo, so Hetlioz was never compared with melatonin.”

“Now that we rely on the profit incentive to motivate drug research, we learn only what the industry deems it profitable for us to find out.”

“In 2011 Horizon Pharma—a small five-year-old company—received approval for its first product, Duexis, a painkiller. Duexis is a combination of two familiar off-the-shelf drugs: ibuprofen (an anti-inflammatory, brand names Advil and Motrin) and famotidine (a stomach-lining protector, brand name Pepcid). The price at Costco for the two drugs separately is about $9 monthly, but Duexis is covered by five patents and costs over $1,600.”

“The number of pay-for-delay arrangements has increased dramatically since 2010, and the result is no generic drug competition to produce cheaper alternative versions for a growing number of brand-name drugs. The Federal Trade Commission (FTC) says these anticompetitive agreements cost consumers and taxpayers $3.5 billion in higher drug costs every year, but the agency has not been able to halt them.”

“Around the same time, the FDA issued a black box warning linking droperidol, the other generic injectable antinausea medicine, to life-threatening arrhythmias. Hospital risk managers became reluctant to stock it. Anesthesiologists were stunned, complaining that the drug, the one they most often prescribed for postoperative nausea, had been used safely for decades. They noted too that the cost of preventing postoperative nausea and vomiting was $149 for Zofran, compared with $2 to $3 for droperidol, which studies showed worked equally well. Some doctors went so far as to file a Freedom of Information Act request to secure the documents that had led the FDA to issue the warning, which effectively handed over a very lucrative market to Glaxo. When the doctors reviewed the evidence, they discovered that the abnormal heart rhythms that prompted the warning had occurred at doses fifty to one hundred times higher than those typically used in the United States, and that the same arrhythmias resulted when newer antinausea drugs like Zofran were used.”

“But some paranoia about Glaxo was justified, given that the company had previously been caught undertaking dubious market interventions to promote Zofran: In 2008 the company was taken to court for an elaborate Lupron-like scheme in which it lied about Zofran’s wholesale price in order to give doctors who prescribed it in their offices more profit. Glaxo listed the drug’s average wholesale price as $128.24, when it was actually charging doctors $22.61, the Kansas attorney general, who spearheaded the case, said.”

“Zofran lost its patent in 2008 and there are now cheaper generic versions on the market, but they are still far more costly than the older drugs. In the United States, generic Zofran now runs about $10 and branded Zofran about $60 per IV dose. A pill is still $23. The same pill is 75 cents in New Zealand. Meanwhile, the supply of the older, cheaper antinausea drugs remains erratic.”

“He was shocked to discover that the sticker price in the United States for the twelve pills of albendazole was now $1,200, or $100 per pill. ‘For cancer drugs, research is an arguable excuse. Here, we are talking about an old, off-patent, generic worm medicine that sells profitably in most of the world for a nickel a tablet. No research or marketing costs. Why does it cost $100?’ He ordered the treatment for $1 a pill from an online pharmacy in Canada.”

“The explanation was simply the business strategy of one company, Amedra Pharmaceuticals, to corner a niche market for a pharmaceutical agent and then to raise prices for captive patients to once-unthinkable levels.”

“It is true that we sometimes get cures first in the United States—but only if the treatment has a good business model.”

“Mr. Miller asked the hospital how much the defibrillator would cost. ‘They said, “We don’t know.” I said, “Why not?” They said, “OK about thirty thousand dollars.”‘ Mr. Miller called the manufacturer to check on the wholesale price to see if he could buy it himself, but they wouldn’t or couldn’t tell him how much it cost.”

“Medical devices essentially have no real price at all. These pieces of sterilized equipment could rationally sell for a few hundred dollars but sometimes cost more than a small house. That huge, notional number on your bill is the result of serial negotiations by a long list of intermediaries and their business decisions. For a hip implant, the chain includes joint implant manufacturers, joint brokers, joint distributors, joint device salespeople, and the purchasers at the hospital or surgery center. Each year, more people seem to get involved, and each takes a commission or adds a markup as the device moves along the long road from the factory into your body. The sales representative takes 16 to 18 percent, the distributor 30 percent, and hospitals then raise the charge by 100 to 300 percent more, according to a doctor who owned a small private surgery hospital.”

“‘A defibrillator costs $40,000, even though it’s just a battery, two wires, and pads,’ said Peter Cram, a doctor and an MBA at the University of Toronto who studies health economics. ‘I’ve often asked why couldn’t we make hip implants in China. The answer gets into regulatory policy and patents, and companies defend these ferociously.’”

“The program allowed companies to keep selling cleared class 2 products even if the ‘predicate device’ to which their device was ‘substantially equivalent’ had been recalled because it had proved harmful.”

“From 2005 to 2009, 70 percent of the high-risk-device recalls involved products that had gone to market through the 510(k) program, said Dr. Diana Zuckerman, a health researcher who testified at the hearing. Many of these devices should never have been in class 2 at all, she said.”

“Ms. Baxter’s Stryker Rejuvenate implant is not mentioned by name. Nor does the letter mention that the Stryker Rejuvenate had been recalled six months earlier, which Ms. Baxter only later discovered on Google. The company was under no legal obligation to notify patients; the letter, she noted, ‘does not even say “we’re sorry.”‘”

“One of the most common blood tests, an electrolyte panel (also known as a CHEM-7), measures sodium, chloride, potassium, bicarbonate, blood urea nitrogen, creatinine, and glucose. It is a single test performed simultaneously on one red-topped tube. When I most recently checked in my area, the commercial labs were charging $17.25 to $22.69 for an electrolyte panel. But on hospital chargemasters the same single test is now often billed as seven separate tests—about $50 to $70 apiece, for a total of $350 to $490.”

“In 2012 the Fire Department of the City of New York raised its base charges for a ride from $515 to $740, even though Medicare determined it was worth only $243.57.”

“In her typical postsurgical appointment, Ms. Ciesinski spent the first ten minutes walking on the treadmill, followed by side steps against resistance from an elastic band, some squats and other exercises, and finally sometimes icing. ‘It was very informal—once you knew the exercises you did a lot on your own,’ she said. Those appointments were billed in fifteen-minute segments of, for example, ‘therapeutic exercise’ ($183.41), ‘neuromuscular education’ ($189.37), and ‘gait training’ ($168.96). That did not include supplies, such as the $94.09 ice pack.”

“Studies have showed that hospitals charge patients who are uninsured or self-pay 2.5 times more than they charge those covered by health insurance (who are billed negotiated rates) and three times more than the amount allowed by Medicare.”

“These wasteful bureaucratic processes have been a lucrative job creator for the business of healthcare. They also siphon hours away from what patients want from their doctor and what good doctors want to provide: human contact.”

“Dr. Faustman discovered that BCG was powerful enough to reverse established type 1 diabetes in genetically predisposed mice. More exciting still, she found that mice with diabetes of long duration would start producing insulin once again after treatment with BCG. The results were heralded as thrilling and widely circulated when published in 2001, but further testing was obviously needed with human trials. ‘When we first discovered this, we went to pharma and they said, “It’s really interesting but we’ve got a problem: Tell us how it will ever make us money?”‘ she recently recalled. ‘You’re working with a generic drug.’”

“‘It looks like a beeper,’ said Catherine Hayley of Memphis, a thirty-six-year-old diabetic whom I got to know during my reporting in 2014, describing the pump on the waistband of her jeans. ‘It’s made of plastic and runs on triple-A batteries, but it’s the most expensive thing I own, aside from my house.’”

“Collectively, the medical industry has become the country’s biggest lobbying force, spending nearly half a billion dollars each year. In 2015 the oil and gas industry spent $130 million, securities and investment firms about $100 million, and the defense/aerospace industry a mere $75 million.”

“It seemed like a shoo-in when Illinois state representative Daniel Burke proposed a bill in 2012 requiring physicians to inform patients whether they were in a patient’s insurance network before rendering treatment to avoid surprise out-of-network charges. It didn’t pass. A parade of doctors, called into action by the Illinois State Medical Society, blocked the legislation, testifying that it would burden office staff and “could harm patients as care would often times have to be delayed.” In the same legislative session, the Illinois State Medical Society helped defeat acts that would allow physical therapists to treat patients without a doctor’s referral and psychologists to prescribe medicine, as well as another that would effectively protect physicians from enhanced scrutiny for Medicaid fraud. On the other hand, the society successfully championed legislation allowing doctors to supervise up to five full-time physician assistants and bill as if they delivered the care themselves. A doctor in Illinois can now be in six places at once.”

“At a certain point, the major effect of consolidation was simply a huge rise in prices, economic research has now shown, because hospital conglomerates that have driven out competition can raise prices with abandon. The existence of one dominant healthcare system in a region can result in price increases as high as 40 to 50 percent. A study in California established that premiums are 9 percent higher in San Francisco, Sutter Health territory, compared with those in Los Angeles, even though LA boasts high-end hospitals like Cedars-Sinai and Ronald Reagan UCLA Medical Center, because there are more players in the LA market. Also, a 2012 study in California determined that hospital mergers were associated with more cardiac procedures and an increase in inpatient deaths, suggesting that the patients had been subjected to ‘suboptimal care’ and ‘overtreatment’; hospitals without competition could more easily get away with rendering only profitable services, the authors suggested.”

“The ACA did little directly, however, to control runaway spending. President Obama had initially included several ideas in the bill that would have done so—like national negotiation for pharmaceutical prices. To get a healthcare bill passed and to win support from powerful groups like PhRMA, the AMA, the American Hospital Association, and America’s Health Insurance Plans, the administration had to cave on anything that would directly limit the industry’s ability to profit.”

“Medicare Part D worked just as intended to make drugs more affordable to seniors—but only for a very few years. The medical industry soon developed strategies to benefit financially from the policy, undermining its patient-centered ambitions. Basic drugs for common conditions in the elderly, such as high blood pressure and rheumatoid arthritis, had to be cheap in the decades before Medicare Part D picked up the tab. But once all seniors were guaranteed drug coverage and were paying only a co-payment, drug companies raised prices—a lot. Insurers then responded by charging higher-percentage co-payments to discourage use. Steve Carlson’s NovoLog insulin has become more and more expensive under Medicare Part D. It had previously been covered under another Medicare program and dispensed as a medical supply, at no cost. Now Mr. Carlson’s insulin, which set him back under $20 a month in the 1990s, costs about $700, a part of which he pays himself.”

“But a 2015 study found that when patients were switched into a high-deductible health plan, they didn’t become smarter, more cost-conscious shoppers for medical care. The exorbitant prices demanded by the U.S. healthcare system meant that they mostly just avoided any interactions with medicine at all.”

“In the United States, doctors now spend one-sixth of their time on administration and medical practices to hire extra staff to wrangle with insurers. A sonogram of the heart costs anywhere from $1,000 to $8,000 in the United States. The 2014 negotiated fixed price in Japan and Belgium was under $150.”

“The ministry ensures competition by publishing prices and bills from different hospitals and tiers of care on its Web site, allowing patients to make informed choices. It limits the purchase of expensive machines for pricey tests and treatments, because studies show that abundance leads to overuse. It seems to work: According to the World Bank in 2014 Singapore spent only 4.9 percent of its GDP on healthcare compared with the United States’ 17.1 percent. Meanwhile, Singapore ranks sixth in the World Health Organization’s assessment of health system performance while the United States ranks thirty-seventh.”

“It should be considered a doctor’s obligation to provide you with financial information. That includes, at the very least, a cash price list of services rendered in the office.”

“In Australia, it is now considered every doctor’s professional obligation to obtain informed financial consent as well as medical consent from patients. Here’s the policy as stated by the Australian Medical Association: ‘Every medical practitioner is responsible for ensuring that their patient is aware of his or her fees and for encouraging open discussion with their patients about health care costs.’ The primary doctor for a procedure or a hospitalization is responsible for getting fees in advance from any ancillary doctors.”

“Remember, scientific studies do not demonstrate a correlation between price and quality of care.”

“One study found that over 90 percent of hospital bills contained mistakes, and others have detected errors in 50 percent of bills or more.”

“Hospitals and doctors get away with unconscionable prices and practices because they think patients will be too timid to call them out on their greed, but they are very sensitive to bad publicity, to being exposed, or to the prospect of losing the confidence and support of a big local employer.”

“Hospitals, physicians’ groups, and drug and device manufacturers, used to charging whatever they want to for their services, are opposed to the concept. If our complicated healthcare system were to switch to bundled pricing, then all the players would have to fight with one another to get their share of the spoils—instead of just robbing us.”

“The healthcare industry spends $15 billion a year on advertising, about the same as auto manufacturers. These are not public service ads: their purpose is to get you to spend money.”

“Jublia, a topical drug for toenail fungus approved in 2014, was advertised during the 2016 Super Bowl. A little bottle of the solution sells for between $550 and $650 and the full forty-eight-week course of treatment for all your toes costs over $20,000. But Jublia’s cure rates are under 20 percent. Lamisil (terbinafine), a pill that does the same with a higher cure rate, costs under $20. Of course, that isn’t mentioned in the ad.”

“List prices for drugs increased more than 12 percent in 2015 alone.”

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