Diagnosing Modern Medicine

Ever since 2010, with the signing of the Affordable Care Act (ACA), I’ve harbored some contempt for health policy experts. During the forty years prior, tens of thousands of people earned advanced degrees in health policy. They wrote journal articles. They spoke at conferences. They spent years lecturing the rest of us on how to fix health care. Millions of dollars went into their training and later their salaries. The ACA was to be the return on our investment and the health policy field’s crowning achievement, meant to fix health care once and for all. Yet when it arrived, the best these health policy experts could come up with, besides the insurance exchanges, was . . . an expansion of Medicaid. Come now. A street activist without any knowledge of health policy or even a college degree could have come up with that solution. We wasted our money on the health policy industry, I thought. 

Yet reading Big Med by David Dranove and Lawton Burns, both PhDs and professors of health care management, has given me hope. These two men know what they’re talking about. Indeed, theirs is probably the finest book on health policy I have ever read. It excels on several levels.

First, the book is highly readable, even punctuated with pleasant moments of dry wit. Usually, health policy books brim with academic or insider jargon, boring and opaque to most people, even very bright ones. Not this book. The book’s first chapter is especially valuable. They say the sign of an intelligent person is the ability to write a summary. The first chapter summarizes clearly and concisely the lay of the land in American health care prior to the 1990s (the point at which events in the book start to unfold). This is no easy accomplishment, given the health care system’s complexity. 

We tend to think of the last thirty years in health care, and especially the last ten, as being revolutionary and unprecedented, starting with the push toward managed care in the 1990s and later with the ACA. Not so, Dranove and Burns explain, and this is one of the most important points made in the first chapter. The same tensions between hospitals, physicians, insurance companies, and government existed throughout much of the twentieth century, as did the same motivations and even some of the same schemes. Reformers in that earlier era dreamed the same dream as reformers today do, in the form of a triad—lower health costs, better health care, and improved patient experience—packaged in slightly different phrasing. 

Most doctors have little business experience and little interest in becoming Organization Men and Women. Meanwhile, business professionals in charge of health care companies are businesspeople to the core.

American health care even has many of the same players from those early years, which the book’s authors observe is highly unusual. In other industries, innovation usually causes companies to come and go. Companies innovate with a new product and gain market share, then new innovators come along and put them out of business. Health care is the big exception. “One is hard pressed to find a dominant provider or insurer that started less than seventy-five years ago,” the authors observe. Even the “newcomers,” like United Healthcare and Sutter, are forty years old.

The book also has what I call perfect pitch. It dives deep into the psychology of the various players, accurately explaining their hopes and fears. An example of hope is the dream of hospital administrators of becoming the next Kaiser Permanente, considered the gold standard for managed care operations. An example of fear is the evolving experience of primary care doctors between the 1990s and 2010s. They once salivated at the idea of selling their practices to large companies for big profit. By the 2010s, they sold more out of fear that their window for doing so was about to close. At that point, they would be forced to become salaried employees in any case, while having missed their one and only chance at a big payout. The book’s authors catch these subtleties and use them to important effect. 

They also catch the nuances of health care culture to explain why the different players in health care so often clash. For instance, the authors note how most doctors have little business experience and little interest in becoming Organization Men and Women. Meanwhile, business professionals in charge of health care companies are businesspeople to the core, with all the facts at hand, speaking in geometric terms about human affairs (e.g., “The exponential increase in the annual case load . . .”). The two groups have different values, personalities, and goals, which throw a monkey wrench into any “rational” economic plan to make health care function with perfect efficiency. 

The authors’ awareness of culture goes hand in hand with their important truism about American health care, which they utter early and often: in the U.S., all health care is local. Hospital, physician, and patient cultures vary from region to region. A policy that works in one city might not work in another because the psychologies of the players differ. In part, this is because politics is often local. A hospital holds enormous sway in its local community. Business leaders vie for prestigious seats on local hospital boards. If an outsider comes in with a new policy, board members tend to look suspiciously on that person, for they never question whether their own hospital offers high-quality care or operates efficiently. Nor do they see any reason to rock the boat when the hospital administrators they work with daily frown on the new policy. But there are also regional differences in medical practice patterns. In my own specialty of anesthesiology, for example, anesthesia groups in some cities are more likely to give spinal anesthesia than general anesthesia to women undergoing a Caesarian section. It’s simply because of how the anesthesiologists graduating from that city’s residency programs were trained. Few health care policymakers recognize this point, let alone factor it into their recommendations.

The authors’ perfect pitch—knowing exactly what the various players are thinking and feeling, and why—merges into the book’s third great value: the book rings true. I practiced anesthesiology for thirty years during the timeframe the book covers. Pretty much all the small details mentioned in the narrative are consistent with what I observed first-hand. I lived what the authors wrote, and what they wrote is true. Indeed, the fact that the authors know all these small details amazes me. 

They know, for example, that Kaiser often drafts its doctors right out of training to put them in step with the Kaiser program early on, thereby making it uniquely successful. Sure enough, I was on a shuttle going to an anesthesia convention during my senior year of residency when a Kaiser official approached me to work for them. (I declined.) They know that Kaiser on the east coast differs from Kaiser on the west coast, and that the former had some quality issues during the 1990s and 2000s. I saw this too. They know that some hospital executives not only subscribe to former Center for Medicare and Medicaid Services director Dr. Donald Berwick’s reformist vision for health care (another variation on the age-old golden triad), but follow it blindly, elevating Berwick to guru status, while also ignoring the particular culture of the health care institutions in which they work, sometimes with bad consequences. An example is Berwick’s obsession with the concept of “patient-centered care,” which had the patient dictate care as much as the doctor did, sometimes leading to serious complications. I saw this too—for example, a patient dictating how she would go under anesthesia, causing her to suffer from aspiration pneumonia as a consequence. The authors know that doctors struggled with the computer interface when Electronic Health Records (EHR) first came out in the 2000s, making health care less efficient rather than more. I saw this too. The book is littered with many such accurate details corroborated by my own experience. 

The book examines one of the major events in health care over the last thirty years: the rise of what the authors call “megaproviders.” In health care parlance these megaproviders take several institutional forms, including Integrated Delivery Networks (IDNs) and Accountable Care Organizations (ACOs). Northwell Health in Long Island and Cleveland Clinic in Ohio are examples. But these different forms are variations on the same theme, with hospitals, physicians, and other health care providers integrating to create ever-larger organizations, seeking the golden triad of less costly health care, better quality health care, and better patient experience. In the past there was a fair amount of horizontal integration, meaning hospital mergers. But with the rise of megaproviders, there was also vertical integration, with hospitals buying up physician practices, outpatient surgery centers, and other health care delivery vehicles. The hospital became a “health system.”

The initial wave of megaprovider growth during the 1990s arose from events in the 1980s. A drop in Medicare reimbursements, employers balking at rising insurance premiums, and new managed care payment methods caused hospitals to fear for the future, which drove integration. The anticipated purchasing pressures from the aborted Clinton Health Plan only intensified their fears. Yet the first wave of megaproviders largely ended in failure, the authors note. The hospitals bought up physician practices, but did not change physician practice patterns. Instead, they relied on bureaucratic structures to control costs (for example, utilization review experts who constantly second-guessed physicians), which alienated many doctors. Some hospitals also took on insurance responsibilities, but failed to accurately estimate insurance risk, causing a few of the new health systems to go bankrupt. 

Although doctors’ fees make up only a small fraction of the health care pie, doctors are responsible, either directly or indirectly, for 85 percent of health care costs.

During the 2000s, vertical integration was put on hold while hospital mergers continued. Many doctors during this decade enjoyed a momentary respite of traditional fee-for-service, solo-practice medicine. Then in the 2010s came the second wave of megaproviders, and it was relentless. The private sector had initiated the change in the 1990s. In the 2010s, the private sector was responding more to government action in the form of the ACA. The fear all around was greater. This second wave is still ongoing. 

The authors believe the second wave might end up being more successful than the first. Physicians are more fed up with ever-increasing administrative hassles, rising malpractice premiums, and fights with insurance payers, making salaried employment seem more attractive than ever. In addition, information technology has improved since the 1990s. With electronic health records (EHRs), megaproviders can more easily integrate patients into their systems, track them, and direct them to cost-effective specialists. EHRs also come with high expenses, giving physicians another incentive to go on salary rather than go it alone.

Still, as of 2022, the current wave of integration seems no more successful than the last one, according to the authors. “Prices are up, quality is unchanged at best, and the quest for efficiencies continues,” they write. At the very least, as the authors put it, the evidence on physician-hospital integration is “unambiguously ambiguous.”

The book’s final two chapters suggest how to improve health care delivery given today’s lay of the land. Their advice is sound, because the authors are sane. They avoid sweeping recommendations from the political right or left, grounded in ideology, and impractical in the current political stalemate. Instead, they lower their sights and focus on small but important fixes. They do have principles, the first being that they believe in competitive markets, and the second being that competitors must know how to create value for their customers. The authors are more conservative than progressive. Still, they do not support a libertarian free-for-all or fragmented markets.

The authors believe we should think not in terms of megaproviders but, instead, in terms of “value chains.” Value chains are similar to megaproviders in that there are linkages between hospitals, physicians, and payers. The chains cover the entire medical process. But in a value chain, a megaprovider does not necessarily own all the pieces. To preserve the competition needed to keep costs down and quality up, the goal, the authors write, should be to maintain at least three competing value chains in any given region, and to make sure that at least one value chain consists of independent providers. In regions where only one value chain exists and no competition is possible, the authors suggest using regulation (yes, that means government) to repress the sole chain’s monopolistic behavior. To avoid the chaos and inefficiencies of a completely unfettered health care market, they also grudgingly admit that reviving the old certificate of need (CON) program from the 1960s and 70s might be necessary. The CON program required a hospital to show proof of how the local community needed another provider of services or technologies before allowing that hospital to go forward with its development plans. It would sometimes prevent an unnecessary duplication of services.

The book’s final chapter is in some ways the most interesting, at least for me as a physician, as the authors recognize that doctors are one of the two keys needed to solve the health care puzzle. (The other is the judicious use of emerging technology, such as AI.) Although doctors’ fees make up only a small fraction of the health care pie, doctors are responsible, either directly or indirectly, for 85 percent of health care costs. Thus, to reform the health care system we have to change physician behavior. 

Yet changing physician behavior involves more than just using better carrots and sticks. I have argued in other venues that doing so requires a fundamental re-design of what it means to be a physician. In the last century and a half, we have seen doctors as benefactors, as technicians, as scientists, and as gentlemen (and ladies). We have seen a synthesis of these various types, which prevailed throughout much of the twentieth century. That synthesis has since broken down. Today we have the doctor as worker. Doctoring is a job. Yet none of these visions for the doctor have led us to the golden triad. None has controlled costs. A new vision of the doctor is needed, a new psychology.

All action begins with a thought, and thought is the product of psychology. To get more cost-effective actions, we need more cost-effective thoughts among doctors. That might mean doctors who see themselves not as technicians or scientists (mindsets that tend to lead to the ordering of more tests and procedures than necessary) but as leaders of a health care team, particularly in primary care.  Doctors as leaders add value through supervising, governing, and coordinating, whether in the care of a single patient or a large demographic group. They legitimate a patient plan and give it binding force. Doctors as leaders do not vindicate their existence by performing ever more procedures. Indeed, in the future, those procedures might increasingly be performed by non-M.D. technicians or even robots. They realize their value in an entirely new understanding of what it means to be a physician.

As the last thirty years of U.S. health care demonstrate, all this demands more than just thoughts generated through incentives and punishments. Cost-effective thoughts begin with doctors seeing themselves and their roles in a new way.