How a Once Noble Profession Became a Commodity-Driven Industry

Managed care began with the HMO Act of 1973 during the Nixon Administration. Its purpose was to allow corporations to make money out of healthcare. President Nixon was told, “All the incentives are toward less medical care, because the less care they give them, the more money they make.”


That is how it turned out. What was once a noble profession based on beneficence became a profit-driven corporate-run industry. The practice of medicine used to be a professional interaction between a doctor and a patient. Now it is between the physician, the physician’s employer, and the patient.


That is unethical; a physician should serve only one master: the patient. Today 74% of doctors are employees of profit-seeking businesses, where “you must consider patients as revenue flow,” an executive told me back in 1997. Patients are now just a commodity.


A corporation’s purpose is profit for executives and shareholders. The purpose of medicine is beneficence. The two are incompatible.


How do corporations maximize profits in medical care? There are multiple ways:


Overload physicians with patients and reduce their time with each: ‘Productivity’ is the euphemism for forcing employed doctors to see more patients. The “industry standard” is four patients an hour, but sometimes more. Medicine used to be held to a “medical standard of care,” but the businesspeople who now run medicine seldom observe that anymore. Low reimbursements also force doctors to see more patients per hour just to break even, since the insurance company or government plan controls their billing.


Doctors spend much of those 15-minute visits on the computer entering information to maximize billing. Productive face-to-face time with the doctor can be five to seven minutes or less. That is not practicing medicine. That is assembly-line care prone to missing much and making mistakes, which studies show occur at shockingly high rates. Medical errors are the third leading cause of death (after heart disease and cancer).


Taking a history in depth is the most important part of a medical visit, but that is now often delegated to lesser-trained people, even non-medical personnel, or a computer form. Time is required to build rapport and understanding with a patient, impossible in a few minutes, as is exploring and treating complex and multiple problems. Equally as important is preventive medicine, but there is seldom time for that except for providing a few handouts (of minimal value) and ordering guideline-mandated testing.


Imagine a hypothetical Mrs. Smith, a typical patient seen countless times every day around the country. She is 49 years old, has diabetes, high cholesterol, depression, and rheumatoid arthritis, and has already had a heart attack. Her husband is disabled by his health problems. She takes 12 pills a day and injections. With proper care earlier in her life, her diabetes and cholesterol would have been controlled, and she would never have had the heart attack, preventing the complications she suffers, and her arthritis would not have damaged her joints.


How does a doctor handle all that in seven minutes? Why were her diseases allowed to become so unnecessarily advanced? Such inadequate care makes her and her family’s lives miserable and escalates the cost to the healthcare system.  Delaying care until it is much worse is inhumane; for the accountants, it is penny wise, pound foolish, as those mismanaged diseases become very costly down the line.   Since employees now switch jobs (and thus insurance plans) much more frequently, an insurer can calculate the later cost of worsening problems will be someone else’s expense.


Even a healthy young person can have hidden problems, emotional difficulties, or a lack of understanding of sensible preventive strategies for a healthier life. Therefore, adequate time with a physician is essential for all patients.


Mental healthcare has been neglected and made unobtainable for most, though those problems are just as serious and disabling as physical problems. As the media reports, there is a “crisis in mental healthcare.”


Reduce the number of staff, overloading those who remain. Nursing and non-clinical staff are the hardest hit by this tactic because they are not revenue producers. However, they are beginning to organize and fight back. Doctors cost more in salary, so some are also let go to trim costs.


Replace expensive doctors with lower-paid professionals. A nurse practitioner is required to undergo 500-1,000 hours of supervised clinical training. A physician assistant must undergo 2,000 hours. Both are paid around half as much as physicians, who undergo 15,000 to 20,000 hours of supervised clinical care (by physicians similarly intensively trained), besides didactic lectures much more advanced than in other professionals’ training. NPs and PAs are valuable professionals, but they are not physicians. Nevertheless, being less expensive, they are increasingly replacing fully trained physicians in many roles.


Undermine the significance of a professional degree: It is now nearly universal to call doctors and all other healthcare professionals ‘providers’, an insurance term, thus denigrating the training and dedication that imbues healthcare professionals. Medical school diplomas do not say, “Provider of Medicine.” A nurse is an expert caregiver and a crucial member of the team, not a provider of bedpans. As evidence of the subjugation of doctors, many physicians now also use providers to describe themselves and their work, though most are offended by it.


Non-physician medical professionals of many types are lobbying state legislatures (and winning) to allow non-physicians to practice medicine independently of physicians and to extend the scope of their practices, but not the extensiveness of their training.


Overcharge and push expensive tests and procedures, often unnecessary and potentially harmful: Charges for procedures, tests, medicines, and devices have become exorbitant. A typical MRI in an independent radiology office costs somewhere between $300-$700 in most cases, which is more than high enough. The exact same test in a hospital facility is often billed as much as $3,000-$8,000. Similar unreasonably high costs can be charged for infusions and nearly everything else large systems bill. For example, a recent visit to an emergency room for a fall (without fractures, complications, or loss of consciousness) cost Medicare $16,000 for the visit and a few scans. The care was almost entirely by a PA, with a doctor coming by for just a few moments in the end.


Many expensive tests and procedures are not justified. For example, though multiple studies show little or no value for implanting coronary artery stents in most patients who are not having an acute event, these high-profit money-makers continue unabated. Another example is high-priced MRIs for back pain when needed only a small fraction of the time.


In the opposite direction, hospitals can push patients out of the hospital too soon. Hospital bills are subject to a billing procedure in which they are given a lump sum to cover the entire cost of the hospital stay or a procedure, thus creating a strong incentive to keep that stay as short as possible.


One of my patients, a very bright and active 84-year-old who spent her day helping other elderly people, began to lose strength in her legs. She required major surgery, a laminectomy of her lower spine, which is a very long procedure and requires incision and surgery in two areas. She was admitted one day and discharged that night at 84. She went home in pain. She unsurprisingly developed complications that almost immediately forced her back to the hospital. Prior to corporate medicine, costs were lower, and patients remained in the hospital for the time needed to recover enough to go home, not to save money.


Hospital beds are so expensive to maintain that governments pushed hospitals to pare down beds to a bare minimum. That resulted in a bed-shortage crisis when the COVID-19 pandemic hit, leaving dangerously ill patients bereft of adequate care piled up in hallways. More pandemics and climate disasters are on the way, so having redundancy is a vital preparatory measure.


Cheat: Recent investigative reports in The New York Times have exposed how many large hospital systems flout laws meant to provide healthcare for those who cannot afford it. Some also divert money meant for the poor to more profitable purposes.


Hospitals and large groups employ teams of coding experts in a battle with insurance companies to get the best code for reimbursement from the insurer trying to get the lowest. A single code upgrade can be worth five or six figures. The coders can ‘upcode’ for a higher reimbursement by stretching the rules beyond reason. According to Grandview Resource, medical billing is now a $5 billion industry.


The New York Times estimates that the cost of unreasonable upcoding in Medicare Advantage plans (privatized Medicare) will be as much as $25 billion in 2023 (more than the total budget for NASA). At the same time, the Times reports, “Every year, tens of thousands of people enrolled in private Medicare Advantage plans are denied necessary care that should be covered under the program, federal investigators concluded….”


Outright fraud is rife in the healthcare industry. For federal cases alone, in just one year (2021), the U.S. Justice Department reported collecting “over $5 billion [that] relates to matters that involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.”


Take advantage of the helpless: Hospitals maintain “chargemasters,” a list of costs for every procedure, device, equipment, etc. They give the hospital a higher price level to negotiate down from in battling with the insurer over reimbursements. They are not intended to be actual bills, but when a patient is uninsured, hospitals often charge those extraordinarily high rates to the people least able to pay. Far too often, instead of reducing or writing off the highly unfair bills, they dun the defenseless patients with wage garnishes and debt collectors. Medical debts represent more than half of all uncollected debts and are the largest cause of bankruptcies.


Polls show that most people and doctors are unhappy with our healthcare system. It is far more expensive than any other country, but the US ranks very low on many health measures and life expectancy. Doctors are quitting the profession, and the population is getting sicker, not better. Businesspeople, executives, and investors are getting richer.


Some unions, like the one for which I am the Chief Medical Officer, are self-funded and truly non-profit. The union members choose to put part of their income into benefits, including health insurance. Their elected representatives and employers negotiate what they want to be covered and to what extent. No insurance company decides the members’ medical fate. Overhead is far lower, so the money goes much further. Being non-profit, decisions are solely for the patient’s benefit.


Our doctors see only eight patients a day at most, not the 20-35 everywhere else. They have an hour for a complete exam and many highly effective prevention programs that are not the mere gestures common elsewhere.


This can be scaled up. Cooperatives can organize and pool their resources to do what our and other unions do. That will reduce costs, make healthcare more affordable and accessible, and more effective and tolerable.


Healthcare should not be a profit-driven industry. Healthcare is a right, not a privilege with daunting hurdles to ‘earn’ it. Every American deserves access to effective healthcare; the lack of such is far more expensive than the cost of keeping our citizens healthy and productive. After all, what is money for if people are too sick to have a good life?


Michael E. Makover, MD

Michael E. Makover, MD, is the Chief Medical Officer of the Joint Industry Board of the Electrical Industry (JIBEI) and CEO and Medical Director of its medical department. He received his medical degree at Columbia University. He is a professor of medicine at NYU Grossman School of Medicine and teaches medical ethics and healthcare process at NYU College of Arts and Sciences. He is the author of Mismanaged Care (Prometheus Books).

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