Pervasive Greed Destroying US Health Care

January 31, 2023

Summary: Esteemed medical care quality leader Donald Berwick condemns the pervasive and crippling role of financial gain-seeking in US health care. As he said recently, single payer is the solution.

Salve Lucrum: The Existential Threat of greed in US Health Care
JAMA
January 30, 2023
By Donald M. Berwick

The grip of financial self-interest in US health care is becoming a stranglehold, with dangerous and pervasive consequences. No sector of US health care is immune from the immoderate pursuit of profit, neither drug companies, nor insurers, nor hospitals, nor investors, nor physician practices.

Rapidly increasing pharmaceutical costs are now familiar to the public. Eye-popping prices for new, essential biological and biosimilar drugs, enabled by the failure of any serious drug price regulation, have yielded enormous profits for drug companies even though much of the basic biological research funding has come from governmental sources.

Particularly costly has been profiteering among insurance companies participating in the Medicare Advantage (MA) program. By gaming Medicare risk codes and the ways in which comparative “benchmarks” are set for expected costs, MA plans have become by far the most profitable branches of large insurance companies. According to some health services research, MA will cost Medicare over $600 billion more in the next 8 years than would have been the case if the same enrollees had remained in traditional Medicare.

Hospital pricing games are also widespread. Hospitals claim large operating losses, especially in the COVID pandemic period, but large systems sit on balance sheets with tens of billions of dollars in the bank or invested. Hospital prices for the top 37 infused cancer drugs averaged 86.2% higher per unit than in physician offices.

Recent New York Times investigations have reported on nonprofit hospitals’ reducing and closing services in poor areas while opening new ones in wealthy suburbs and on their use of collection agencies for pursuing payment from patients with low income.

Windfall profits also appear in salaries and benefits for many health care executives.

Avarice is manifest in mergers leading to market concentration, which, despite pleas of “economies of scale,” almost always raise costs. That is what is happening as hospital consolidations proceed largely unchecked in many urban markets and as physician practices are purchased by for-profit firms. Mergers, acquisitions, and public offerings have been occurring throughout health care, often at valuations that defy logic.

Profit may have its place in motivating innovation and higher quality in health care, as in any industry. But kleptocapitalist behaviors that raise prices, salaries, market power, and government payment to extreme levels hurt patients and families, vulnerable institutions, governmental programs, small and large businesses, and workforce morale. Those behaviors, mostly legal but nonetheless wrong, have now accumulated to a level that poses an existential threat to a sustainable, equitable, and compassionate health care system.

What to do about greed? No answer is easy, not least because of the political lobbying might of individuals and organizations that are thriving under the current laxity. The cycle is vicious: unchecked greed concentrates wealth, wealth concentrates political power, and political power blocks constraints on greed.

Health care professionals in all disciplines need to become noisier about the conflict between unchecked greed and the duty to heal.

The glorification of profit, salve lucrum, is harming both care and health. Health care should not be an engine for excessive private gain.

Comment by: Don McCanne

Considering that we have by far the most expensive heath care system in the world, yet one with mediocre outcomes by international standards and one that shamefully leaves so many without coverage and a great many more with unacceptable exposure to financial hardship, we should certainly take a serious look at the role of greed in producing this despicable performance. If we would simply eliminate the impact of greed and apply the proceeds to the operation of a well-crafted, universal, equitable, health care financing system – a single payer system – we would have a system that would be the envy of all nations.

What an idea. Having so much good come out of the elimination of an evil such as greed. How could anyone not join that bandwagon, except maybe for the greedy, who we can certainly do without.

Single payer… not only health care for all, but finally unifying the people to end the greed that has been permeating health care.