An American Sickness: How Healthcare Became Big Business and How You Can Take It Back

Patients who are empowered to voice concerns to their doctors take a larger role in their own care. While “difficult” patients have often been shunned by the healthcare industry, asking why a doctor is assigning a certain test or the reason a bill is so large can save time and money. It is essential that patients look for doctors they feel comfortable with and check their practice’s business model. Check whether a practice is owned by a hospital or has an affiliated surgery center to avoid additional facility fees. Ensure doctors only refer patients to specialists in their network (or to hear a doctor’s reasoning if they can’t) so that they are not getting caught up in an extraneous business arrangement. Diagnostic samples should also be read by companies in-network. Patients should inquire about extra charges for phone advice or paperwork and availability on weekends or emergency situations.

Additional questions help a patient decide if the cost of a treatment justifies the cure. Patients can save money by asking about the ballpark price range of a treatment, its significance within a care plan, and requesting that their doctor provide cheaper alternatives. Most importantly, patients should ensure that their doctor is not setting themselves up to directly profit off of their treatment by referring them to a surgery center they partially own. Rosenthal also tells readers that there is value in waiting to see if certain non-threatening symptoms (i.e., coughs or rashes) resolve themselves before seeking medical care.

Rosenthal argues that medical training should include discussions on the high costs of healthcare. Most doctors do not hear this perspective during their education, which leads to them inadvertently prescribe treatments far out of a patient’s price range. This problem is exacerbated by the fact that some hospitals’ finance departments make it intentionally difficult for doctors to find accurate pricing records. Business interests encourage this separation, which leads to doctors accidentally providing extraneous treatment that adds to a hospital bill. Hospitals should be required to disclose this data so patients and doctors can be informed about their options.

However, some doctors over-test and over-prescribe, as they fear medical malpractice lawsuits. Most malpractice suits side with doctors, and instances where an actual injustice was committed usually remain unresolved. Comprehensive malpractice reforms would improve doctors’ experiences and increase trust between them and their patients. Placing limits on what is considered noneconomic damage, implementing “judge-directed arbitration” for claims, and warranties from manufacturers would benefit doctors and patients alike.

More doctors are starting to actively advocate for their patients. Dr. Hans Rechsteiner, a surgeon from Wisconsin, rallied his peers to publicly endorse several changes to the American healthcare system. These changes included price transparency, ensuring that nonprofit hospitals reduce their revenue, and banning doctors from having a financial stake in surgical centers, equipment, or treatments that they might recommend to a patient. Similarly, an issue of the journal American Radiology was solely focused on the overuse of radiology tests. Dr. Saurabh Jha, a radiologist who practiced in Great Britain and Australia, expressed his shock “at the batteries of tests Americans routinely received, many of them useless” (260).

The discomfort patients can feel with doctors carries over to hospitals: they are often worried about being considered unruly and have emotional loyalty to one particular facility. This often leads to appreciation for amenities or an emotional history driving a patient’s choices, whether they realize it or not. As a result, patients may end up settling for subpar, overpriced care.

In order to avoid this, patients must research hospitals before they are too ill to make a choice. Many publications, such as U.S. News & World Report, offer rankings of hospitals derived from “reputation within the medical community” and “a published set of statistical metrics, such as nurse staffing ratios and the number of mishaps after seven common procedures” (262). Consultants can manipulate these results, so it’s useful to research a facility’s general safety record, whether it takes Medicare payments (and how much), if they appear to take advantage of high insurance payments to bill patients more, and its IRS Form 990. The Form 990 will show how much a nonprofit hospital’s executives are compensated and the services they provide to the community.

Patients should take steps to ensure they are financially protected while in a hospital. Patients can express their willingness to move to a shared room to avoid facility fees. They can include a clause on their admitting document stating that they will accept any necessary care provided by specialists in their network, preventing hospitals from assigning additional out-of-network care. A patient should clarify whether they are being admitted or kept under observation. Hospitals can legally keep patients in observation for three days (recall the two-midnight policy from Chapter 2), which makes them responsible for much higher deductibles and copays. If they are healthy enough, patients should also keep records of who exactly visits their bedside and who sent them. This prevents the undue accumulation of fees for “consultations.”

Patients should contest bills that don’t seem to add up. Many hospitals will reduce bills as soon as they get a phone call. They should also request a thorough itemization of their bills so that they have a full disclosure of costs. This way, they can check the bill they received against the notes they took while in the hospital and contest any superfluous charges. Even if an itemized bill never arrives, a patient threatened with a collection agency can say they are waiting for an itemized bill. Any contestation should also be expressed over email or in writing, so that there is a record of the issue.

Hospitals must be further regulated. There is no law requiring hospitals to give patients an estimate of treatment prices, though many hospitals keep a master list of prices that is developed in tandem with consultants. Certain states like California require hospitals to publicize this information, alongside the “twenty-five most common inpatient stays, and in each case to list each hospital’s average charge” (271). However, this data is only accessible to uninsured patients.

Similarly, states have no authority to regulate prices set by chargemasters. There is also no consistency for how charges are written. Rosenthal includes a few lines from a knee surgery, one of which is “SURG LVL 4 ADD 15M […] $2190.43” (271). There is no clarity as to what constitutes a “level 4” procedure and what the 15 minutes was in relation to. Fortunately, California’s law sets a precedent for states and other regulators to demand more transparency in billing. Hospitals also ought to be forbidden from intentionally prescribing treatment from out-of-network specialists (unless in an extreme emergency). New York has laws forbidding surprise out-of-network charges, stating that a patient is only obligated to cover what their own insurance would pay for a given treatment. Some states are trying to crack down on hospitals’ tax-exempt designation to curb some of their more egregious behaviors. Instead of considering them nonprofits, they would be treated like other big corporations, who can write off documented acts of charity when they file their taxes.

State attorney generals and antitrust regulators should consider pursuing hospitals under existing antitrust legislation. The Sherman Antitrust Act of 1890 banned all monopolies to prevent undue price hikes; and its successor, The Clayton Act, prohibits any behavior that stymies competition in a given industry. Some legal scholars speculate that commonplace behaviors in the medical industry, like doctors making exclusive deals with patients, could be shut down under liberal interpretations of antitrust laws. Lawsuits of this variety would need to be prompted by action from the Federal Trade Commission (FTC) and Department of Justice (DOJ). These entities currently evaluate whether “the gains in efficiency achieved by a merger outweigh the loss of competition,” and can move to block it (275-76).

The FTC is currently leery about taking on these cases, as it lost several of them around 20 years ago. However, these cases occurred when hospital mergers were regarded as positive cases of cooperation. In today’s market, where it is common for one or two hospitals to have complete control over a given region, prices have reached a point where re-visiting this issue would be warranted. To accommodate potential setbacks in these cases, the FTC should take a proactive role in stopping excessive consolidation when they first observe it, instead of waiting for sudden mergers.

Finally, patients should demand comprehensive standards for billing and collections. There is no set legal standard to determine the point when an account reaches delinquency. Similarly, there is no way of predicting how far hospitals will go in demanding money. Some will merely send pesky notices; others will go as far as putting a lien on a patient’s home. The US Consumer Financial Protection Bureau released recommendations for medical reform, including standardizing timetables for collections. However, many attempts to legislate this have been shut down by powerful credit agencies. Patients ought to put pressure on Congress to mandate that hospitals enact reasonable delinquency periods, preferably one that would allow time for insurers to process their share of the pay. Similarly, patients should not be penalized for any bill they are actively contesting.

Patients often run into trouble selecting insurance plans. This is partially because it can be difficult for individuals to anticipate exactly what kind of healthcare they will need. While the Affordable Care Act offers services from “navigators” to choose from public options, they cannot help those seeking private insurance. Finding the best insurance program requires research into five key factors: the premium (the monthly cost to keep a plan active), the deductible, (the amount of money a patient must pay out of pocket before insurance will act), the copayments and coinsurance (the amount a patient is expected to contribute for medical services), the out-of-pocket maximum (the maximum amount a patient has to pay in a year), and the network (the doctors and hospitals available under a plan’s stated benefits).

All patients, regardless of how they receive their insurance, should closely examine the deductible. Some are incredibly high, meaning they will not kick in unless patients pay thousands of dollars out of pocket. Therefore, it is essential that patients are informed about what their deductible is and how it is calculated. For example, those on family plans should be aware if their deductible is measured per person or for the family as a whole. It is also important to know that most plans will only count care received in-network towards a deductible.

Copays fluctuate depending on the treatment or service provided. Medical copays depend on whether a particular drug is included in the plan’s formulary. Copays associated with doctors’ visits are usually more stable, so patients should consider what treatments they need the most frequently and use that to guide their choice in plan.

Out-of-pocket maximums can only be applied to treatment an insurer approves. This means anyone seeking this kind of care must be consistent about seeking approval well ahead of time, even if their deductible has not been met.

Finally, patients need to be very intentional about choosing a network. Certain plans only cover patients in a specific state, so a young adult going to college outside of their home state may lose coverage while they are at school. Rosenthal suggests patients strategically evaluate what they like about their current healthcare setup. So, if they like their current doctor, they should see what other plans their practice accepts. New plans should ideally offer a wide variety of local specialists. It is also important to check if a specialist meets an individual’s personal requirements, for example, women who prefer female gynecologists. Review what hospital services are covered; some people prefer a plan that covers a wide variety of specialized care, even if it is unlikely they will need it.

Patients may also consider looking into HMOs (Health Maintenance Organizations). While they will sacrifice complete choice in doctors, they will still receive quality care. Since all doctors and specialists coordinate with each other through the HMO, they can work together to provide incredibly specialized care. The Department of Veterans Affairs (VA) provides a framework of what a publicly run HMO could look like. The VA is transparent with their data, and patients are aware of what their care will cost. It is able to use its federal power to negotiate discounts on drugs, and follows clear, consistent guidelines for how often patients should receive certain tests. All treatment is paid for via one budget, which prevents over-testing. Similarly, all of its records exist in a centralized database, so doctors know what care patients have already received from their colleagues. The VA can offer all these amenities because “long-term financial incentives support good HMO care” (287). Patients treated by the VA rarely leave, which allows doctors to take preventative care measurements that keep their patients healthier in the long term.

Modern-day private sector HMOs take a similar approach to offering holistic care. They will also have more available amenities and more comprehensive services. A well-known HMO is Kaiser Permanente, which operates in California, the Northwest, and Washington, DC. Kaiser has hospitals run under strict protocols. Doctors are salaried and receive bonuses for keeping patients healthy. They are also encouraged to communicate frequently with each other, meaning that a general practitioner could evaluate a patient’s rash, send a photo to a Kaiser dermatologist, and receive a second opinion within one appointment (288). Patients can even video chat with specialists if they have symptoms of a life-threatening condition. These reasons make Kaiser a highly sought out HMO. Patients considering joining an HMO should try to ensure it has these qualities: a complete system-wide integration of services, salaried physicians without productivity bonuses, a physician-managed system, meaningful technology and genuine communication between physicians across disciplines, and a record of referring patients with cases outside of the HMO’s scope to reasonably priced outside providers.

The biggest issue with the current insurance system is that a lack of transparency hinders patients from making informed choices about their care. This could be resolved if employers and insurance regulators enforce their mandates more liberally and apply currently existing laws. State insurance commissioners often do not intervene as much as they should. Most of them come from insurance backgrounds and favor firms, refusing to act unless there is enough public outcry. However, some commissioners, like Dave Jones of California, act proactively. Jones, who previously served as a legal aid lawyer, mandated insurers keep updated rosters of healthcare professionals that policyholders could access. This lowered out-of-network charges for Californians and set a precedent for what the public can demand from their commissioners.

People should ask their insurance commissioners to ensure that network provider contracts are enforced in tandem with the health insurance policy. They should also demand coverage of any ancillary services associated with a covered procedure. Insurance providers should be required to keep accurate and up-to-date directories with clear designations. Some providers “describe doctors and hospitals [...] as ‘in-network but not available’ or ‘not in network for that procedure’” (292). These classifications are confusing and do not bring a patient closer to finding care.

Finally, statements defining annual out-of-pocket maximum payments should be sent well in advance. The Affordable Care Act provides a pathway to the enforcement of these demands, but it still has some way to go. Most notably, insurance commissioners often do not have the required authority to get major concessions from insurers. For example, they have little power to deny rate increases. They also rely on nebulous standards to evaluate insurance plans, sometimes making decisions based on whether a price increase checks out based on past market patterns and vague mathematical calculations.

There are certain innovative patient-centered plan features that are sorely underutilized. One of these is reference pricing, which gives hospitals the power to work with insurers to create “well-priced all-inclusive packages for common procedures like joint replacement, cataract surgery, and colonoscopy” (294).

CalPERS, an agency that manages health benefits for California’s civil servants and retirees, pioneered this system after learning it was paying tens of thousands of dollars for procedures that should cost much less. After developing a “reference point” of $30,000, CalPERS was able to work with its insurance partners to ensure that they would cover any procedure whose cost was at or below that amount. Patients could still choose to go to hospitals that would charge more, they just had to agree to pay the difference and the copay. CalPERS enforced this plan because it represented a large portion of the state that hospitals could not afford to lose. A big benefit of reference pricing is that patients can seek out care knowing exactly what their insurance will cover and will know to seek hospitals within their price range.

Bundling is another strategy insurers could employ; a tactic currently used by Medicare. Bundling ensures that patients receive payments that are inclusive. Medicare bundles hospital-related costs in tandem with a patient’s DRG (diagnosis related group) classification. For example, all Medicare patients admitted to a hospital for pneumonia would pay the exact same price, regardless of the duration of the stay or services provided. Recently, Medicare has considered bundling all facets of treatment. Medicare seeks implement bundling in its chronic illness treatment plans, which would involve paying one doctor a monthly management fee for any visits associated with a chronic condition, which would take away their incentives to over-test.

In a fully realized form, bundling could evolve into a payment system called “capitation,” in which a patient would pay a yearly fee for all of their required healthcare. Bundled payments will only effectively regulate costs if insurers clearly define what is part of the bundle and enforce it rigorously. If they fail to do this, hospitals could swoop in and charge exorbitant prices for vital services that aren’t explicitly within the bundle. For example, a new mother could be stuck with the cost of epidural anesthesia if it is not a specific part of the childbirth bundle (298).