Medicine has not only changed in complexity and effectiveness over the last four decades — health care delivery has changed, and that fact is partly responsible for why health care as a business is one of the biggest segments in the U.S.
Unfortunately for most Americans, the focus has switched from health to money.
Health care commands over $3 trillion a year in the U.S., with a large part of that growth occurring in administration.
Health care commands over $3 trillion a year in the U.S., with a large portion of that growth occurring in administration. While the number of medical doctors, nurses, and core care remained relatively flat over 40 years, the administration aspect of health care expanded 3000 percent.
How have we gotten here?
After 1970, medical care expanded into new technologies, drugs, and therapies, and patient care moved from the setup of a family physician to a complicated system of specialists. These specialists connected the patient to new technologies and therapies — but were often expensive. As insurance companies, government, and Medicare worked to “manage the growth,” reporting and billing requirements grew.
The result, according to Joe Caruncho, an attorney in health care law in Coral Gables, Florida, is a system of administration that now overshadows the actual care a patient receives.
“An increasing percentage of the consumer’s insurance premium dollar and, in the case of Medicare, the taxpayer’s money, goes toward the administrative costs of complying with complex requirements, rather than direct medical care,” Caruncho, of Genuine Health Group, told LifeZette.
Dr. Ashvin Dewan, an orthopedic surgeon at Houston Methodist Hospital in Sugarland, Texas, founded Medovate Technologies to eliminate administrative burdens in medicine. His personal experience told him there was a need.
“In my practice, I have two full-time employees dedicated to just calling insurance companies, faxing documents, seeking pre-approvals, and obtaining authorizations,” he said. “Somewhere along the way, the salaries of those two employees are rolled into medical costs, even if the cost is paid by an insurance company.”
It is a system Dewan maintains costs patients more and more, and pushes them further down the priority list. “At the end of the day, there are only so many hours I can spend on the phone talking to insurance administrators and not seeing patients,” he said.
“Most innovation comes from the smaller players,” said one physician. “When they are squeezed out, innovation dies.”
The growth of administrative costs and contentious insurance issues are impacting the patient in another way — by increasing the power of larger health care conglomerates as they buy out smaller companies through mergers and acquisitions, according to Caruncho.
“The pressures on providers are growing more rapidly than ever, and the market is constricting into a small number of national players with the resources to carry the financial burden,” he explained. “This consolidation reduces competition, choice, and, ultimately, quality.”
Bob Mosby, an executive vice president with LifeRose Products in South River, New Jersey, which develops products for health care, agreed. “Most innovation comes from the smaller players. When they are squeezed out, innovation dies,” he said.
“The number of physicians is not growing,” he added. “Quality of care is suffering.”
There is growth in concierge health care, he noted, where doctors serve a small number of patients directly, but the patient pays directly for that service. It’s accessible only for those with the money and incentive to directly pay yearly retainers as well as per-visit fees.
For now, it appears the only ones benefiting from the business sector’s growth are health care administrators and insurance companies. Cigna, UnitedHealth Group, and Aetna made billions of dollars in profit, with UnitedHealth, the largest, hitting the Fortune 500 with $157.1 billion in revenue in 2015, according to SEC filings from 2009 to 2015. Pharmaceutical companies are also earning record-breaking profits, with Pfizer recording $49.6 billion in revenue in 2015.
“In the current setup, I do not see an effective way for physicians to influence the insurance companies,” Dewan said. “Physicians are poorly represented in the policy arena, and are often too engaged in their practice to participate in the policymaking and decisionmaking process — much to our detriment. In contrast, hospitals have active and well-funded lobbies that are aggressive at formulating the national policy agendas that can contest insurance companies and their formidable lobbies.”
Pat Barone, MCC is a professional credentialed coach and author of the Own Every Bite! bodycentric re-education program for mindful and intuitive eating, who helps clients heal food addictions.