American healthcare is beyond broken

The United States has dramatically higher healthcare prices than other advanced economies. This is the case for surgical procedures, diagnostic tests, prescription drugs, and almost any other type of healthcare service. Administrative healthcare costs are higher as a share of GDP in the United States than in other countries. These administrative (i.e., nonclinical) costs take several forms: claims processing and payment, prior authorization and eligibility determinations, and quality measurement, among others.

Amazon believed it could do for health care what it had done for shopping. Hailed as “the future of medicine,” the Amazon Care telehealth and house-call service was pitched to employers as “high-quality care, convenience, and peace of mind.” Last week, though, the company announced it would shut down Amazon Care at the end of this year. For the second time in two years, Amazon has had to concede failure to take on the American health care system. In other words, our healthcare system is too complicated for even Amazon.

Any company claiming its innovation will revolutionize American health care by itself is selling a fantasy. There is no technological miracle waiting around the corner that will solve problems caused by decades of neglectful policy decisions and rampant fraud. And a fix aimed at just the upper crust of employer-sponsored health coverage has no hope of making health care more accessible to those who are truly being left behind.

NY Times

Spending on U.S. health care has grown steadily, rising from $2,900 per person in 1980 to $11,200 per person in 2018 (measured in 2018 dollars)—a 290 percent increase. That growth has slowed at times, as in the mid-to-late 1990s and early 2010s, but since 1980 it amounts to annualized growth in actual per capita spending of 3.6 percent. From 2005 to 2018, growth has been slower (2.0 percent per year).

While the media love to blame pharma, roughly a third of all healthcare spending goes to hospital care, making clear that the functioning of the U.S. hospital system is crucially important when healthcare expenditures are considered. Professional services make up roughly a quarter of spending. (Professional services are those provided by physicians and nonphysicians outside of a hospital setting, including dental services.) The combination of long-term care, nursing care facilities, and home health care account for 13 percent of total health expenditures. Prescription drugs are next at 9 percent, and net health insurance costs (i.e., premiums earned fewer benefits paid) account for 7 percent of total spending.

There are 784,626 companies in the U.S. healthcare sector, and they all want a slice of healthcare dollars. 14% of U.S. adults are employed in the healthcare industry and learning good money.

By 2024, different healthcare sectors are forecasted to earn the following profits:

  • Healthcare I.T.: $27.9 billion;
  • Distribution and pharmacies: $18.9 billion;
  • Payer: $116.6 billion;
  • Provider: $197.8 billion;
  • Medtech: $72.1 billion;
  • Pharma: $169.9 billion.

That’s a hell of a lot of money.

McKesson is the most prominent U.S.-based healthcare company, with annual revenue of $208.3 billion.

This is followed by:

  • UnitedHealth Group: $201 billion;
  • CVS Health: $184.7 billion;
  • AmerisourceBergen: $153.1 billion;
  • Cardinal Health: $129.9 billion;
  • Express Scripts: $100 billion;
  • Anthem: $89 billion;
  • Kaiser Permanente: $72.7 billion;
  • Aetna: $60.5 billion;
  • Humana: $52.7 billion.

With so much money at stake, is it any wonder our healthcare system is broken? Money will always come before people & patients. Until we acknowledge the complexity and greed of our system, any legislation is simply a tiny band-aid for a massive leak.