Fat profits suck the care out of healthcare

March 1, 2006

More and more I ask myself, When is the U.S. going to fix healthcare? What is going to motivate us to do it? Maybe we'll never fix it, and the system will expand until it is the only industry in the country.

More and more I ask myself, When is the U.S. going to fix healthcare? What is going to motivate us to do it? Maybe we'll never fix it, and the system will expand until it is the only industry in the country.

Healthcare expenditures will be something like $1.7 trillion this year. Where is that money going? It is going some crazy places, in some amazing quantities. Everybody and his brother is getting rich off the system, except providers and patients.

R. Blane Walter, 34, is probably a talented guy. He started a pharmaceutical advertising company in 1997. The company makes those TV ads marketing prescription drugs directly to patients, which is an intuitively ludicrous concept. Amazingly, the concept consumed $4.4 billion last year, and Walter raked in about $149 million of it from his company. I'm not sure he made anyone any healthier.

William McGuire is CEO of United HealthGroup, one of the nation's largest health insurers. He made $124.8 million in pay and options last year. A California study found that one dollar in five of private healthcare spending in that state went to insurance paperwork, with an amazing 34% overall spent on administrative costs. Did McGuire make anyone other than his family feel better?

Interventional radiology is perhaps the best-paid subspecialty in radiology. But everyone knows you only need to invent one good interventional gizmo, and you can earn more than a lifetime of providing interventional care. Healthcare equipment sales and manufacture have become far more lucrative than actual provision of care. Does this make sense?

In my county, I am told, a private primary-care practice is not a financially viable option. All the active practices are owned by hospitals or systems, and they have to be underwritten to the tune of $30 to $40 thousand per physician per year. I find this amazing. Our system showers money on executives, deal-makers, and salespeople, but it can't support physicians.

Of course, Congress is going to fix it. Its latest fix is to decrease payments across the board for in-office imaging. That makes sense. Let's take $11 billion from the guys out there on the front lines seeing, diagnosing, and treating patients, so we'll have more for TV ad executives and insurance CEOs. Or we could use it for a week or two of fighting in Iraq. Bush hasn't figured out a way to bill the war in Iraq as a healthcare expense.

Unfortunately, I don't see any way to fix the system, short of a complete crash. As long as the system is functioning at all, Congress is not going to change it. Our representatives are too dependent on the healthcare dollars being recycled back to them by healthcare lobbyists: men like Billy Tauzin, former Louisiana congressman, who stepped down as chairman of the House committee that regulates the drug industry and who now makes $2 million a year heading up the drug industry's lobbying group.

A lot of people think the solution is single-payer national health insurance. Certainly, that would eliminate the excesses of the insurance industry. But I'm not sure it would solve the underlying problem of taking physicians and healthcare providers for granted. Congress seems to think it can just keep cutting provider incomes, while ignoring the excesses in every other aspect of the healthcare industry. A single-payer system might still have this mentality.

I suspect the system will continue this spiral of lower rewards for those actually doing the work until no one wants to do it. Then the system will fail, and it may get fixed. Fortunately, by then I will probably be retired, but I will probably need the system more than ever.

Dr. Tipler is a private-practice radiologist in Staunton, VA. He can be reached by fax at 540/332-4491 or by e-mail at btipler@medicaltees.com.