American health care

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During the past century or so, medical care in the United States has shifted from individual doctor–patient interactions, typically within an office setting, to interactions in health care facilities that continue to grow larger and more complex. Modern American health care has become more highly specialized, technology centered, and fragmented—a phenomenon that has been anticipated since the mid-19th century. The English sociologist Herbert Spencer (2004) observed that as society increases in complexity, so do its social institutions. The bureaucratic explosion within health care, therefore, seems less a symptom of inefficiency and institutionalized excess and more a part of the necessary, long-term development of spe- cialized sectors within advanced industrialized society (Toulmin, 1990).

Today, early 20th-century forecasts seem to aptly describe the current state of affairs. Physi- cians increasingly work in large, complex medical centers and practice settings and tend to see their scope of professional discretion minimized and finitely defined. The fear of going beyond those clear limits frequently causes physicians to practice medicine defensively, sometimes forgoing the ends of patient care to do so. Practicing under such constraints has its advantages but can also distract physicians from their professional duties. For many patients, medical care has become akin to conveyer-belt production. Continuity of care once meant having the same health care professionals in a lifelong relationship with the patient. In the new era of medicine, care is more likely to involve patients being scuttled between sometimes dozens of different caregivers, very few of whom will even remember the patient’s name or, in some cases, even meet with the patient one on one. As a result, patients may become suspi- cious of their caretakers, sometimes even assuming an adversarial stance where once there would have been warm acceptance (Phillips & Benner, 1994).

Most health care administrators and managers enter the profession with clear priorities on patient care but soon feel incessant economic and regulatory pressures to protect their insti- tution’s finances and public image. This is certainly part of any good health care administra- tor’s job description, but too often the loyalty to this side of the job wins out over the ultimate aim of health care—caring for patients. “No margin, no mission” has become a popular refrain among modern health care leaders, and the statement is certainly true. However, what often gets misunderstood in this pithy slogan is that margin should exist only to further the mis- sion. No mission, no health care organization.

In this chapter we will look at how modern American health care has succumbed to bureau- cracy and how the resulting, unsustainable costs have not translated into proportionately improved quality of care. The chapter will also show how the constraints of institutionalization upon the moral practice of medicine should be a major concern for health care professionals. Finally, we will examine what American society has done to address this major ethical issue.

7.1 The Current State of Affairs American health care continues to be at the leading edge of discovery and innovation. How- ever, in order to get a realistic picture of the current state of affairs, its performance must be examined in comparison to that of other health care systems. That is where the paradoxical success–failure story of American health care comes to light. In this section we will investi- gate how American health care compares to that of other countries and consider the impact of expenditures on quality of care.

Section 7.1The Current State of Affairs

Do Expenditures Equate to Quality of Care? In 2016, the United States spent 17.2% of its annual gross domestic product on health care (see Fig- ure 7.1), almost one-and-a-half times as much as Switzerland, which at 12.4% was the next biggest spender that same year (Organisation for Eco- nomic Co-operation and Development [OECD], 2018). However, despite this large expenditure, the United States is the only high-income country that does not guarantee health care coverage for all its citizens (Schneider, Sarnak, Squires, Shah, & Doty, 2017). Combined with other indicators, it becomes apparent that American health care dollars are not well spent, nor do these dollars afford individuals a greater benefit for this massive investment. When compared to ten other high-income nations (Aus- tralia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom), the United States comes in first in health care dollars spent per capita, but last on nearly every other criterion, including access, administrative efficiency, equity, and health care outcomes (Schneider et al., 2017).

Figure 7.1: Health care expenditures as percentage of GDP, selected countries, 1970–2016

Over the past 50 years, the amount of money countries spend on health care for their citizens has consistently risen. However, the increase is exceptionally high in the United States. What do you think has caused the country to spend so much of its GDP on health care?

Source: Organisation for Economic Co-operation and Development (OECD). (2018). Health expenditure and financing. Retrieved from http://stats.oecd.org/Index.aspx?DataSetCode=SHA#

Cusp/SuperStock The United States spends four times what the average high-income country spends on health care. However, studies have shown that this extra spending is not leading to superior care.

Section 7.1The Current State of Affairs

Although more than 20 million Americans gained insurance coverage under the Affordable Care Act, many still lack access even to basic health care, and those with coverage “often face far higher deductibles and out-of-pocket costs than citizens of other countries” (Schneider et al., 2017, p. 8). (See Figure 7.2 for a breakdown of the number of Americans without health insurance.) Rampant expenditures continually threaten to wreak economic havoc, and exor- bitant administrative costs further emphasize the unsustainability of the current system. Consumer satisfaction continues to dwindle as trust erodes amidst constant news reports of health care professionals and organizations committing malfeasance. Meanwhile, health care professionals have resorted to practicing medicine behind a defensive barricade, guarding against malpractice lawsuits from one side and economic pressures from the other.

Figure 7.2: Americans under age 65 without health insurance coverage, 2016

A significant number of Americans are currently without health insurance, with the largest group being men between the ages of 25 and 34. This chart shows the percentage of persons in the United States under age 65 without health insurance coverage at the time of interview, broken down by age group and gender.

Source: Clarke, T. C., Norris, T., Schiller, J. S. (2017). Early release of selected estimates based on data form the 2016 national health interview survey. Retrieved from https://www.cdc.gov/nchs/data/nhis/earlyrelease/earlyrelease201705.pdf

Do Standards Ensure Quality? One of the ways that health care has attempted to identify and resolve areas of low per- formance and compromised quality is to develop and promote practice guidelines. Profes- sional organizations review the medical literature, undertake empirical surveys of current

Section 7.1The Current State of Affairs

standards of care, and debate among their members and the public what minimal standards of acceptable care and professional performance should be expected from their field. These standards of acceptable care can be influential as public assurances of minimal competencies and thresholds of quality. They also can be used to help determine when negligence has taken place. Because standards of care are important for everyday clinical practice, practitioners must keep up-to-date about them. Why then do some ethicists and health care practitioners question the morality of using professional standards?

When managed care organizations (MCOs), including health maintenance organizations (HMOs) and preferred provider organizations (PPOs), first gained prominence in the Ameri- can health care system, many felt that the guidelines proposed by various medical entities for clinical care amounted to little more than an institutionalized means to limit treatment and maximize profit for providers and insurers (La Puma, 1995). In some instances, compliance with specific practice guidelines influenced physician compensation, thereby creating finan- cial incentives and disincentives for physicians’ clinical decisions. For example, physicians participating in a specific MCO might receive a bonus at the end of the year if reduced patient use of expensive medical services contributed to a positive financial bottom line for the MCO (Miles, 2005). (See Figure 7.3 for a breakdown of medical care participants by plan type.)

Figure 7.3: Percentage of medical care participants by plan type, private industry, 2017

Sixty-eight percent of medical care participants receive insurance through preferred provider organizations (PPOs). Health maintenance organizations were the second most popular plan. What do you think creates the interest in PPOs?

Source: U.S. Bureau of Labor Statistics (BLS). (2017). NCS: Health and retirement plan provisions in private industry in the United States, 2017. Retrieved from https://www.bls.gov/ncs/ebs/detailedprovisions/2017/ownership/private/table01a.pdf

Section 7.1The Current State of Affairs

Another potential problem with practice guidelines is that they may be applied inflexibly. There is no guarantee that strict adherence will always result in better care. For example, a physician following earlier guidelines that recommended annual mammography screening for older women might subject patients to radiation and the risk of false positive results, lead- ing to unnecessary and even harmful anxiety, follow-up testing, or even aggressive surgical intervention—all without a meaningful corresponding benefit for the patient in terms of lon- ger and enhanced quality of life.

Stop and Clarify: Managed Care Organizations

Managed care organizations take many different forms. The common characteristic of all MCOs, however, is that they combine the insurer and provider functions into the same cor- porate (for-profit or nonprofit) structure. This combination of functions creates a financial incentive for the MCO and its participating physicians to deliver care as efficiently and cost- effectively as possible. MCOs have been developed in reaction to the traditional third-party payment system, in which the health insurer, the patient, and the provider all had their own, often inconsistent, incentives—an inconsistency that inevitably resulted in escalating health care costs.

One type of MCO is the HMO. In return for the prepayment of a prospectively set monthly or annual premium, a closed-panel HMO provides comprehensive health services to an enrolled patient through physicians who are either employees of the HMO (staff model) or employees of a private physician group that contracts with the HMO (group model). In a closed-panel HMO, the patient must receive care from the HMO’s employed or contracted physicians; otherwise they must pay a non-HMO physician directly out of pocket. In an open-panel HMO (independent practice association), medical care is provided by privately practicing physicians who, in addition to treating their other patients and billing insurance companies for that treatment, also participate in the HMO’s network. When a network phy- sician treats a patient who is enrolled in the independent practice association, the associa- tion pays that physician for the treatment according to a predetermined methodology that varies considerably among independent practice associations.

The other main type of MCO is the PPO. Like the HMO, a PPO promises comprehensive coverage to enrolled patients in return for a monthly or annual prepaid premium. The PPO contracts with a network of physicians and other providers (such as hospitals) to serve its patients; to participate in the PPO, the provider must agree in advance to accept an amount of payment for specific services that the PPO is willing to pay. In return for receiving the provider’s best price, the PPO makes the provider “preferred” by informing patients that the full cost of their care will only be covered if the patient uses one of the preferred provid- ers. Otherwise, the patient will have to pay all or part of the provider’s fee directly out of pocket.

In a point of service plan, the patient gets to choose at the time of service whether to use a provider inside or outside the patient’s MCO. The patient then accepts the financial conse- quences of that choice.

Section 7.1The Current State of Affairs

Medical practice requires careful discernment and discrimination; it takes many years for a practitioner to develop genuine expertise. Professionals in any field know the value of guide- lines but also realize that true experts know when to judiciously disregard them. On the other hand, when standards of practice were vague and totally individualistic, physicians often tended to provide costly and unnecessary care either under the guise of “thoughtful, careful medical practice” (La Puma, 1995, p. 51) or in accordance with the ethical principle of respect for autonomy (since patients requested it). This total discretion in treatment resulted in soar- ing health care costs, waste, and often less than optimal health care outcomes. It was not long before the public began asking for a different kind of accountability to be sought through MCOs and for a way to distinguish good health care from bad.

What Defines Quality? Though many would agree that quality is not mere compliance with practice guidelines, it is much more difficult to come up with a positive definition of the term. Furthermore, quality is inherently difficult to measure.

To help answer the question of what constitutes quality, the Rand Corporation conducted its “Medical Outcomes Study” in the 1990s (La Puma, 1995). Health outcomes are defined as “a change in the health status of an individual, group, or population that is attributable to a planned intervention or series of interventions, regardless of whether such an intervention was intended to change health status” (World Health Organization, 1998). In this study, Rand researchers came up with seven different components: financial accessibility, organizational accessibility, continuity, comprehensiveness, coordination, intrapersonal accountability, and technical accountability (Rand Corporation, 1990). This enumeration of factors constituting health outcomes is useful because it conforms to the common belief that health care assess- ments should focus on both the technical as well as the interpersonal dimensions of care. The Rand project built upon the seminal work of Avedis Donabedian, a leader in the theory of health care assessment. Donabedian proposed that technical care is “the application of the science and technology of medicine, and of the other health sciences, to the management of a personal health problem” (1982, p. 4). He added that managing the social and psychologi- cal relationships between patients and practitioners is also a part of technical care, although it makes up the art of medicine facet of the term. According to Donabedian (1980), quality in technical care pertains to applying medical science and technology in such a way so as to increase health benefits without increasing health risks.

For Donabedian, quality in health care’s interpersonal dimensions were more difficult to define. Yet together with excellence in the medical-technical aspects, quality of care is the maximization of a patient’s overall well-being given the attendant risks and benefits typically present in the process of care (Donabedian, 1980). In other words, measuring quality of care must ultimately focus on the impact of care on patients’ quality of life.

Donabedian’s definition of quality remains one of the earliest and most influential holistic attempts to clarify what is now more commonly referred to as health outcomes—that is, the actual impact of care on patients’ quality of life. Later definitions—such as the IOM’s “degree to which health services for individuals and populations increase the likelihood of desired

Section 7.2Causes of Overspending

health outcomes and are consistent with current professional knowledge” (Lohr, 1990, para. 11)—offer a clearer focus on desired results but also incorporate the idea that professional standards should still play a role in deciding what constitutes quality care. This is because achieving a desired result may not be indicative of the quality of the care received. It may be a coincidence that things turned out the way the patient or health care provider wanted; the result may have been good despite a poor quality of care, or the result, while desired or even good, may still pale in comparison to the result that might have occurred had better- quality care been rendered. The IOM definition also judges care that does not conform to cur- rent professional knowledge to be of poor quality, despite the health outcomes obtained. For instance, while unnecessary care that causes harm is obviously of low quality, it is not clear that unnecessary or even futile care will be considered low quality if the patient or clinician are pleased with the results. However, under the IOM definition, these types of wasteful and potentially harmful therapies are excluded from the definition of quality care, regardless of their outcome.

As the foregoing discussion indicates, the concepts of quality of care and quality of life are related but not synonymous. The former is concerned primarily with professionally deter- mined measures of the process of providing health care services. Quality of life, by contrast, is concerned, from the patient’s perspective, with the impact of the process of care on the patient’s functioning and enjoyment. So, for instance, a surgery performed according to state- of-the-art standards and techniques might be judged by professionals to constitute excellent quality of care, but the quality of life evaluation would be poor if, despite the excellent process, the surgery resulted in pain, other side effects, and poor function on the part of the patient. The quality of care/quality of life distinction is illustrated by the old saying, “The operation was a success, but the patient died.”

7.2 Causes of Overspending The value of health care is a function of comparing the quality of life outcomes for patients with the costs of achieving those outcomes. Value can be enhanced by improving outcomes— that is, the impact of care on patients’ quality of life. Value may also be enhanced by control- ling the costs incurred in pursuing desired outcomes. Hence, we must consider the question of health care costs.

Overspending on health care threatens Americans’ and health care organizations’ financial well-being as well as the sustainability of any health care delivery and payment model. Apart from these very important economic concerns, overspending is a moral issue, due to the cen- tral importance of health care to human well-being. The fact that the United States currently does not possess the resources to meet the demand for beneficial health care means that some people do not receive the care they need and want. This constitutes an ethical tragedy that wasteful spending, greed, inefficiencies, and fraud exacerbate by making it less likely that the United States can maximize the health benefits and minimize the harms for its people. In this section, we will analyze the most prevalent and important causes of overspending in our health care system and investigate the different legal avenues developed to keep costs at acceptable levels. (See Figure 7.4 for a breakdown of U.S. health care expenditures.)

Section 7.2Causes of Overspending

Figure 7.4: Percentage of United States health care expenditures by source, 2016

In 2016, the majority of the health care expenditures in the United States came from a combination of Medicare and Medicaid (37%). Private insurance alone comprised 34% of the nation’s health care expenditures. The remaining came from out-of-pocket payments.

Source: CMS. (2017). National health expenditures 2016 highlights. Retrieved from https://www.cms.gov/Research-Statistics- Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf

Differing Regional Practices and Medical Cultures In his 2009 New Yorker essay, “The Cost Conundrum: What a Texas Town Can Teach Us About Health Care,” Dr. Atul Gawande told a story of two similar coun- ties in Texas. Both counties rest on the border with Mexico and have very simi- lar patient demographics and socioeco- nomic characteristics. In Hidalgo County, where the city of McAllen sits nestled between the rugged deserts of Mexico and Texas vacation destinations on the Gulf of Mexico, Medicare spending per capita is greater than nearly anywhere else in the country—about $15,000 per enrollee in 2006 (Gawande, 2009b; Dartmouth Insti- tute for Health Policy & Clinical Practice & Commonwealth Fund, 2010).

Fuse/Thinkstock Studying two border cities in Texas, researchers found that overspending on health care was due to a culture of overtreatment and lack of effective caregiver assessments.

American health care

American health care

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