The Price We Pay: What Broke American Health Care--and How to Fix It

by Marty Makary

Overtesting, overdiagnosing, and overtreatment are now commonplace in some areas of medicine.

A Baltimore cardiologist, Dr. Mark Midei, received a great deal of negative media attention for allegedly placing unnecessary heart stents in hundreds of patients.1 “The Midei headlines had a big impact on the field and sent a strong message to cardiologists,” Chatrathi told me. “It helped clean up the practice of overstenting heart vessels.”

Nonetheless, Chatrathi said, his peers—kings of a past era of stenting heart vessels—have found a new way to use their skills. Or perhaps I should say a new place: the legs. Ignoring guidelines of the U.S. Preventive Services Task Force that clearly state that there is no evidence to support screening for peripheral artery disease,2,3 many of them do a test to see if there are any blockages in the leg arteries, and then follow up with a procedure to improve circulation. Heart stenting nationwide was on the decline. But leg is the new heart.

She would be responsible for a small portion of the cost, but all of us would pay for the rest of her bill through the Medicare program.

The doctors replied that, on average, they believe 21% of everything done in medicine is unnecessary.4 Breaking it down further, the doctors in that survey estimated that 22% of prescription medications, 25% of medical tests, and 11% of procedures are unnecessary. Literally billions of dollars are spent on care we don’t need.

Leg artery procedures can generate $100,000 in one day when a doctor owns the facility. By comparison, I earn about $2,000 per day doing cancer surgery.

The doctor carefully documents that the patient has a diagnosis of “claudication” to ensure that everything will be covered by insurance. Claudication is a rare type of debilitating leg pain that is subjective and nearly impossible to disprove. And even though doctors know that less than 5% of patients with this rare diagnosis benefit from surgery, inserting that single word once in a patient’s chart guarantees the doctor will be paid in full and fend off any lawsuits.

the last century to transmit photocopies across telephone lines.)

young readers, ground mail was a way people sent written documents, like letters, from the 1600s through the late twentieth century.) Two months after I sent

which one person designates an amount of money to be withdrawn from their bank account and given to another person).

Sixty percent of medical care is shoppable, representing a large opportunity for competition to reward centers with high quality and fair prices.

Ironically, once you’re dead, federal law protects you.

58% have taken an extra job or worked more hours to pay a medical bill, and 41% have borrowed money from friends or family to pay a bill. It’s

“They go after everyone: old people, disabled people, people who can’t pay, the insured, the uninsured, and they garnish their wages,” added another administrator, a pleasant middle-aged woman who walked over to join the conversation. “They even garnished an old man’s 401(k) retirement dividends.”

One of her family members was charged for simply going to the hospital, even though they never made it past the waiting room, leaving before getting any services.

The Great Divide As I traveled across America for this book, what I saw was not a Republican/Democrat divide or a conservative/liberal divide. Instead, I felt a widespread sentiment among low and middle-income workers that the system was stacked against them, controlled by the powerful elite who make the rules. Honest, hardworking Americans feel helpless against a ruling class who use power and access to their favor, creating fine print and laws to give themselves the upper hand. The folks I met often pointed out how the process of appealing a hospital bill or an insurance company denial was too complex and utterly exhausting.

The reason our country has so many helicopters is because there’s money to be made, said Frazier, not because people are suddenly having more medical emergencies.

“Air ambulance providers go to great lengths to conceal their billed charges, operating costs, and the availability of other providers,”

when health insurance companies are given these bills, they often pay them and pass the cost on to you in the form of higher health insurance premiums, especially in rural areas.

Dr. Dinner had a routine. When on call, he finished seeing patients in his office by two o’clock. Then he would head to the hospital and perform a C-section on any woman in labor, whether she needed it or not. That way, Dr. Dinner made it home by five.

No doctor wants to get called out in the middle of the night. Instead, Dr. Dinner used what we in medicine call the “one-hammer approach.” C-sections all around.

our methods of measuring quality are flawed. We focus on the results of a procedure, not on whether the procedure was appropriate. Hospitals track how often C-section patients get an infection or bounce back to the hospital after discharge, but they are not evaluating the most important question: Did the patient even need the surgery in the first place?

orthopedic knee surgeons have suggested that as many as one third of knee replacements are unnecessary.

the power of peer benchmarking,

Here’s where things get interesting. Mohs surgery typically takes one or two precise stages. On rare occasions, a third stage may be necessary. Surgeons get paid well for Mohs procedures. And it turns out that they get paid per stage. Cut a little extra here and there and you get a bigger paycheck, whether the extra cuts are necessary or not. As a surgeon, I was familiar with these types of financial “carrots” lying around the operating room. Albertini explained that over the last several years, the association’s leadership had heard multiple reports that some doctors appear to be doing the operation in too many stages. It may be that the doctors need further training. Or they could be motivated by money. Albertini proposed a pattern we could examine for the Improving Wisely project. We could look at the average number of stages each surgeon used during the procedures. We would see who was making the most cuts. “Most surgeons fall in a certain range,” Albertini told me. “But some are going to be way out there adding time and expense to the procedure and unnecessary surgery for patients.”

they were getting paid a lot more for being outliers.

a fraction of doctors performed hemorrhoid banding on nearly every patient they evaluated.

endoscopy centers, the average is 24%. Then we found the outliers. A small group of GI doctors performed the procedures on separate days every time! And a bunch more did it on two different days more than half the time—a threshold GI experts called indefensible. This not only creates a lot of hassle and expense for patients, it’s risky, because the patient must go under anesthesia a second time.

Repairing the mitral valve is a much better option for patients when possible. Among other benefits, patients are spared the need to take expensive and risky blood thinners for the rest of their lives. But deciding to do a repair requires a heat-of-the-moment decision, since inspecting the valve during surgery is part of the process. The cardiac surgeons told me it’s possible to repair the valve in up to half the cases. But some of their colleagues take the one-hammer approach and replace them all.

It should be rare, less than 10%. But the data showed that for about one in five surgeons, doing the operation on kids under age four was the rule, not the exception.

If a dentist drills every cavity and never applies silver diamine fluoride, that dentist is probably not presenting the drops option to patients. Dental procedures for cavities are a common Medicaid expenditure. Silver diamine fluoride costs $109, about a quarter to half the price of a filling, depending on who’s doing it.

gee, I thought, there is a natural way to cure heartburn that I learned in medical school and then stored deep in the attic of my brain. Let me see if I can remember what it involves: (1) No eating before bedtime, (2) No eating between meals, and (3) No processed foods. The thought of monitoring and changing my eating habits was already making me tired. I felt betrayed by those who taught me Nexium was perfectly safe. I reluctantly agreed to try the lifestyle modification protocol. I stopped eating a bowl of cereal before going to bed. I removed the jar of peppermint patties I had been dipping into at my front office desk. And I stopped buying processed foods altogether in favor of whole foods. It worked perfectly. My heartburn was cured, this time without medication. With little effort, I had successfully avoided the risks of a drug, cut out the daily routine of popping a pill, and saved a lot of money for me and all the people paying premiums to my health insurance plan. In total, I saved myself $480 a year, and I saved my insurance plan $1,440. Sure, the nonprocessed foods cost more, but net-net I came out on top. And I felt great. My own experience was a powerful lesson—getting off lifestyle medications can improve health and lower medical costs.

He also took the opportunity to say that U.S. doctors are well known in the international cardiology community to overmedicate, overstent, and overtreat.

Overtreatment is not just a side issue in medicine. It is the root cause of some of our greatest public health crises.

unnecessary medical care. They don’t hold back. A general surgeon from Sudan told me of a patient who was told by another surgeon that she needed a mastectomy of both her breasts for a small lump in one breast that was never biopsied. Not only that, the woman was told she needed to have the surgery within 24 hours to prevent the cancer from spreading. Of course, the recommendation was bogus, and the tight time frame was nothing more than a technique to manipulate patients into having surgery and not getting another opinion so the surgeon doesn’t lose business. A pediatrician in North Africa told me a child was taken for heart surgery and only had the skin cut open, then immediately sewn shut at the time of surgery. The parents were told by the surgeon that a heart operation had been performed. Another surgeon told me of a doctor who, while doing a colon operation, removed a kidney to transplant into another patient without asking the patient. The scandal of inappropriate medical care can sometimes be criminal.

What if hospitals published a menu of prices

His son needed a standard procedure. Jeffrey looked up the billing code and called the hospital to ask how much it would cost. The first place he called said it would be $37,000, but not to worry, his insurance would pay most of it. That didn’t sit right with Jeffrey. He had to pay the first $5,000 himself because of his deductible. He became curious about the system and asked how they came to their price. He knew of other, much more invasive procedures that didn’t cost as much. Since he had the billing code, he wondered if they could cut through the fluff and explain why it cost so much. The hospital representative got flustered and said she would call him back. When he got the return call, the price had dropped to $15,000 once she factored in a possible network discount. Again, the hospital employee assured him his insurance would pay everything above his $5,000 deductible. Jeffrey said “Thank you” and called the surgeon who would be doing the operation. “Do you do this same operation at any other facility?” Surgeons often work at multiple hospitals. And sure enough, this surgeon said yes. The surgeon directed him to a different facility and assured him that the operation would be the same quality at either place. Jeffrey called the new facility for a quote and they told him $1,500. His son had the surgery at that facility and everyone left happy. Jeffrey mulled over the experience in the following months. He couldn’t let it go. The first price quote had been almost 25 t...

Bluebook has an incentive program that rewards employees with a bonus check of $50 if they choose a facility with a green rating.

The business model is genius: If an employer saves $20,000 as a result of a patient’s choosing a fair-priced hospital over an overpriced hospital, why not share the savings?

kickbacks from insurance companies, ranging from $30,000 to $100,000 (often referred to in the industry as “bonuses,” “overrides,” “persistency bonuses,” or “contingent income”).

We suffered the financial crisis of 2007 in part because people were buying and selling products they didn’t understand.

A PBM can charge an employer almost any price for a drug, and it gets paid. In the above table, a PBM billed an employer $188 for bupropion but paid the pharmacy nothing. In that case, the employee copay covered the entire cost of the medication, but the employer got charged an arm and a leg anyway. Similarly, a PBM can set any copay for patients regardless of the medication or the true cost. One patient paid a $285 copay for a $40 medication.1 This is not an extreme case of criminal fraud, it’s perfectly legal. It’s the business model of most of today’s PBMs.

The PBMs have gone to great lengths to keep the real prices secret, using a fog of fees, rebates, and discounts that make a true value too complicated for anyone to determine.

pharmacists are gagged under their PBM contract to not disclose what they are paid by the PBM. When I learned that many pharmacists were contractually gagged, I couldn’t believe it. I had heard of hospitals encouraging doctors to use their own MRI machines but never contractual gagging—restricting what a clinician can tell a patient. Gagging a health professional violates everything that sets medicine apart as a noble profession. It compromises our heritage of trust, a craft rooted in compassion, and undermines our commitment to do what’s best for the patient.

one of the biggest problems he’s seeing with PBMs is that they now often own the pharmacies filling the prescriptions. “PBMs claim they are saving you money by managing your medication costs,” Simon said. “But the more the pharmacies sell, the more they make. It’s a conflict of interest.”

Insurers may offer less expensive health insurance premiums. But then they use their PBM to achieve a greater profit margin.

secret shoppers

These fees are particularly problematic when GPOs invite a manufacturer to pay a premium fee to become a sole supplier, allowing a manufacturer to essentially purchase market share, rendering hospitals and patients dependent on a single manufacturer’s supply chain. Sole

For a much larger fee, the manufacturer can even be the sole supplier listed in the catalog. It’s a simple pay-to-play setup. What’s hard to believe is that it’s legal.

To create a more transparent supply chain and to address avoidable drivers of price inflation, pay-to-play payments should be ended, or, at a minimum, disclosed to hospitals and the public. Hospitals can play a lead role in changing the business model of medical supplies by refusing to work with GPOs that charge pay-to-play fees