The Medical Industrial Complex

For many years I have stated the premise that medicine is a business, that we are its customers and that we should govern ourselves accordingly.  A new book by a physician turned reporter addresses this premise in great detail and presents compelling evidence that our health care system is broken and out of control.  The book is “An American Sickness: How Healthcare Became Big Business” by Dr. Elisabeth Rosenthal.  Dr. Rosenthal graduated from the Harvard Medical School.  Following graduation, she trained as an internal medicine specialist and worked in emergency departments.  She left the practice of medicine and worked as a reporter for the New York Times for 22 years reporting on the health field.  She is currently the Editor-in-Chief of the Kaiser Health News, an independent publication dedicated to health care and health policy.

Dr. Rosenthal’s book traces the development of health insurance from its benign beginnings to the gigantic industry it is today.  She discusses how its development spurred the medical profession, drug companies and device manufacturers to create billing machines which every day cost the American public hundreds of millions of dollars.

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Every attempt by insurers or the government to rein in the ever rising cost of treatment is met by armies of professionals working to find loopholes in the regulations.  When the rule was announced that only a certain amount would be paid for treatments lasting less than one hour, treatments magically began taking one hour and one minute to complete.  You only have to read a medical record to see all the tortured language used by the physicians to justify extra payment for what they just did for the patient.

One of her most important contentions is that prices for treatment and drugs will increase to the maximum amount the traffic will bear and, when the payer is a health insurance company, what the traffic will bear is a huge number.  By way of illustration, she recounts the story of a patient who underwent a one hour infusion of a drug for which his insurer was charged $120,000.  The charge was outrageous given that the wholesale cost of the drug to the hospital which administered it was only $1,200.  That the hospital had an interest in the patent to the medicine may or may not have played a role in its decision to charge such an astronomical amount.  To the patient’s surprise and dismay, his insurer paid almost the entire amount sought by the hospital.  The hospital was surprised that he was upset since it considered the matter to be one between it and the insurer.  After all, the hospital reasoned, he wasn’t the one paying the outrageous bill.  Of course it wasn’t the patient paying it, it was all of us who have health insurance who were being charged for this and for all the other outrageous bills hospitals, doctors and drug companies send.

My seven year old grandson was diagnosed with Type 1 diabetes when he was three.  Without insulin, he dies.  A Canadian physician, Dr. Frederick Banting, invented insulin in 1921.  He gave away the patent for insulin so that no one would ever be denied the insulin they needed to live.  Today the drug companies sell designer insulin at high prices.  While a few years ago, it cost $100-$200 for a month’s supply of insulin, today it costs $400-$500 for the same amount.  When you ask why, everyone in the distribution chain blames someone else in the chain.  In the meantime, everyone but the diabetic patient makes big money on the sale of insulin.

Our health care system needs to change.  Perhaps Dr. Rosenthal’s book will spur some much-needed conversation.


Posted in Doctors, drug companies, Fee for Service, Health Care Costs, Health Insurers, Hospitals, Medical Costs, Medicare |