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Money-Driven Medicine: The Real Reason Health Care Costs So Much
 
 
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Money-Driven Medicine: The Real Reason Health Care Costs So Much [Hardcover]

Maggie Mahar (Author)
4.3 out of 5 stars  See all reviews (26 customer reviews)

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Book Description

May 9, 2006

Why is medical care in the United States so expensive? For decades, Americans have taken it as a matter of faith that we spend more because we have the best health care system in the world. But as costs levitate, that argument becomes more difficult to make. Today, we spend twice as much as Japan on health care—yet few would argue that our health care system is twice as good.

Instead, startling new evidence suggests that one out of every three of our health care dollars is squandered on unnecessary or redundant tests; unproven, sometimes unwanted procedures; and overpriced drugs and devices that, too often, are no better than the less expensive products they have replaced.

How did this happen? In Money-Driven Medicine, Maggie Mahar takes the reader behind the scenes of a $2 trillion industry to witness how billions of dollars are wasted in a Hobbesian marketplace that pits the industry's players against each other. In remarkably candid interviews, doctors, hospital administrators, patients, health care economists, corporate executives, and Wall Street analysts describe a war of "all against all" that can turn physicians, hospitals, insurers, drugmakers, and device makers into blood rivals. Rather than collaborating, doctors and hospitals compete. Rather than sharing knowledge, drugmakers and device makers divide value. Rather than thinking about long-term collective goals, the imperatives of an impatient marketplace force health care providers to focus on short-term fiscal imperatives. And so investments in untested bleeding-edge medical technologies crowd out investments in information technology that might, in the long run, not only reduce errors but contain costs.

In theory, free market competition should tame health care inflation. In fact, Mahar demonstrates, when it comes to medicine, the traditional laws of supply and demand do not apply. Normally, when supply expands, prices fall. But in the health care industry, as the number and variety of drugs, devices, and treatments multiplies, demand rises to absorb the excess, and prices climb. Meanwhile, the perverse incentives of a fee-for-service system reward health care providers for doing more, not less.

In this superbly written book, Mahar shows why doctors must take responsibility for the future of our health care industry. Today, she observes, "physicians have been stripped of their standing as professionals: Insurers address them as vendors ('Dear Health Care Provider'), drugmakers and device makers see them as customers (someone you might take to lunch or a strip club), while . . . consumers (aka patients) are encouraged to see their doctors as overpaid retailers. . . . Before patients can reclaim their rightful place as the center—and indeed as the raison d'être—of our health care system," Mahar suggests, "we must once again empower doctors . . . to practice patient-centered medicine—based not on corporate imperatives, doctors' druthers, or even patients' demands," but on the best scientific research available.


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Editorial Reviews

From Publishers Weekly

Mahar, a financial journalist whose previous book (Bull!) tracked the history of the stock market from 1982 to 1999, here applies her keen analytic talents and economic savvy to America's complicated and increasingly dysfunctional health-care system. Mahar's diagnosis: our privately managed yet mainly publicly funded system produces the worst of both worlds—high costs, rampant inefficiencies and intense competition among providers that doesn't benefit patients. She traces how today's market-driven medical system emerged over the past century thanks to trends that gradually stripped power from doctors and gave it to corporations, turning patients into profit centers. No one is spared in Mahar's thoroughly researched and carefully reasoned study: she criticizes frustrated (and increasingly money-minded) physicians, self-serving insurance companies, for-profit hospital chains and pharmaceutical companies driven by inflated Wall Street expectations. Mahar uncovers isolated pockets of good news, including the VA hospital system, which provides excellent care at modest cost thanks largely to its exemption from the pressures of competition. But her goal is not to offer any programmatic solution. Instead, she wants to show why the most common economic assumptions about health care—especially those that extol the magic power of free markets—are false and stand in the way of real reform. (May)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

From Booklist

As Americans, we pride ourselves on having the best of everything, but when it comes to health care, compared to other industrialized nations, we pay more for the same services; receive more complex, unnecessary procedures; and leave the most neediest of our population uncared for. That's because a profit-driven health-care system tends to do what's best for shareholders rather than what is in the best interest of the patient. Mahar does an excellent job of explaining how we went from the individual family doctor who made house calls to the bureaucratic, faceless, broken system we have today. As far back as 1970, it was recognized that health care in this country was wasteful and inefficient, so much so that President Nixon actually sided with the Left and proposed a national health-care system in 1974 (it was derailed by Watergate). Whether the fault of drugmakers, insurers, doctors, hospitals, HMOs, big government, or trial lawyers, American health care is careening off a cliff, and Mahar is to be praised for bringing clarity to one of the most complex issues of our times. David Siegfried
Copyright © American Library Association. All rights reserved

Product Details

  • Hardcover: 480 pages
  • Publisher: HarperBusiness; 1 edition (May 9, 2006)
  • Language: English
  • ISBN-10: 006076533X
  • ISBN-13: 978-0060765330
  • Product Dimensions: 9.1 x 6.4 x 1.7 inches
  • Shipping Weight: 1.6 pounds (View shipping rates and policies)
  • Average Customer Review: 4.3 out of 5 stars  See all reviews (26 customer reviews)
  • Amazon Best Sellers Rank: #299,011 in Books (See Top 100 in Books)

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Customer Reviews

26 Reviews
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Average Customer Review
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62 of 62 people found the following review helpful:
5.0 out of 5 stars Medical Care or Industry., July 10, 2006
By 
Edwin Bradley "Physician" (Vacaville, Ca United States) - See all my reviews
(REAL NAME)   
This review is from: Money-Driven Medicine: The Real Reason Health Care Costs So Much (Hardcover)
A straghtforward, credible and comprehensive survey of contempory American medical care. As a physician with many years of experience with our medical system, I can attest to its accuracy. Its major thrust is the elucidation of how our medical system has been taken over by those who seek profit rather than the welfare of the patient. The author explores the methods used by insurance companies, pharmaceutical houses, device manufacturers, hospitals and some physicians to capitalize on the vulnerability of the sick.

She points out the gross inefficiencies that contribute to the high cost of medical care and suggests ways to improve that care.
With information such as this we may be able to change the "Health Care Industry" back to the medical care of the patient.
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67 of 71 people found the following review helpful:
5.0 out of 5 stars Excellent!, July 21, 2006
This review is from: Money-Driven Medicine: The Real Reason Health Care Costs So Much (Hardcover)
Mahar begins by reviewing health care trends: In 1970, health care spending was 7.1% of GDP; by 2005 it was 16%, and is predicted to reach 21% by 2020. At the same time, in 2005 nearly 48 million had no health insurance, including about 1 in 3 households earning over $50,000. (A 2002 IOM report concluded that lack of insurance was associated with a 25% greater chance of dying - 18,000/year.) The average premium for a family was $10,880 and only 59% of companies with less than 200 employees offered health benefits - down from 68% five years prior. Even having health insurance is often not enough - in 2005 nearly two-thirds of families struggling to pay medical bills had insurance. Companies are also struggling - in '04 G.M. paid about $1,400/car for health care benefits, vs. profits of $178/car.

Conventional wisdom has it that U.S. costs are so high because we don't ration care - patients in other countries can wait months for elective surgery. However, researchers examined the 15 procedures accounting for most waiting and found they only account for 3% of U.S. spending. Similarly, the U.S. ranks in the bottom quartile of hospital beds/capita and our number of physicians and CT scanners also rank in the lower half. Malpractice litigation is another popular explanation, but payments represent less than 0.5% of spending. (This still leaves the question of it encouraging extra tests, etc.)

In 2002 drug companies paid about $30 billion for promotion - about one-seventh of revenues, and considerably greater than the $19 billion for R&D (often for "me-too" drugs).

Insurance companies spend multiples of the amount government spends for administrative overhead - marketing, enrollment, and profits are the reason. By contrast, pure Medicare and Medicaid avoid marketing costs, and enrollment is usually a one-time cost. (Medicare HMOs have also been found to game the reimbursement system - instituting high co-pays, refusing to cover select situations, etc. to discourage certain high-cost patients - thus, raising administrative costs overall.) In addition, private companies have less incentive for preventive care because those enrolled are likely to migrate to another plan (or no plan at all) before the benefits are realized.

A "Health Affairs" 2004 survey concluded that the most important barrier to addressing medical errors in hospitals is the endemic culture of secrecy and protectionism putting self-interest over patient-interests. Researchers also report strong physician opposition to more research on clinical trials to evaluate various treatments - resulting in congressional pressure to cut such funding. Autopsies reveal major misdianoses in about 40% of cases, and that in about one-third of those the patient would have lived if properly treated; even more surprising is the finding that the error-rate has not changed since 1938, despite greatly improved tests and equipment. A 2003 California Nurses Association commissioned study of the 100 most expensive hospitals in the U.S. found that high profits, not high quality or efficiency was the primary cause. Ninety-five belonged to chains. As hospitals bulk up their negotiating power by merging, so do insurers - in 2005 the ten largest insurers controlled 48% of the insured population, up from 27% in 1995.

John Wennberg has studied variations in health care for decades, and concluded that up to one-third of health care dollars are wasted on ineffective, sometimes unwarranted, and often unproven procedures. Worse yet - excess care can be hazardous to your health, via medical errors, exposure to superbugs, etc. Similarly, a 2004 JAMA report concluded that overall, increased Medicare spending was associated with poorer care - eg. vaccines recommended for certain patients were less likely to be given. Don Berwick, another leading quality-improvement figure, has concluded that 50% of healthcare spending is wasted - "What we lack is not social resources; it is honesty."

In 2000, 90% of physicians in Sweden, 58% in Great Britain, and 48% in Germany were using electronic medical records, vs. 20% in the U.S. in 2005. Benefits include reduced medication errors, ability to provide computerized "best-practice" suggestions for individual patients, improved ability to evaluate new treatments and drugs. The VA hospital system has been a leader in this area, and its costs are estimated to be 20% below Medicare reimbursements. Costs of IT/patient in the VA are estimated at about $76/patient/year, and $40 at Kaiser (also recognized for its electronic medical records).

"Money-Driven Medicine" provides excellent information about the U.S. health system. Where Mahar falls down, however, is her emphatic recommendation for increasing physician autonomy at the end - despite physician resistance to adherence to "best practice" protocols, incentive payments for quality, resistance to research on best practice, involvement with conflict-of-interest recommendations supporting various drugs and devices, etc. The unfortunate reality is that physicians are a major contributor to America's money-driven medicine problem.
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37 of 38 people found the following review helpful:
5.0 out of 5 stars Clear and often gripping, July 7, 2006
This review is from: Money-Driven Medicine: The Real Reason Health Care Costs So Much (Hardcover)
As a family physician who has seen the shortcomings of our health care system from both ends--as a doctor and as a patient--I found Money-Driven Medicine to be a terrific read.

If you've ever tried to decipher a hospital bill, had an insurance claim denied or wrangled with a managed care company over the phone, you know how hard it is to talk about our medical system without becoming overwrought. By keeping a reporter's eye on a very simple question--Why does US health care cost so much?--Maggie Mahar manages to avoid that trap, producing a book that is instructive, well reasoned and engaging.

Ms. Mahar is to be commended for (a) doing her homework (the text is followed by 80 pages of footnotes), (b) focusing on the economics that drive health care delivery, and (c) taking a non-ideological approach that lets the facts speak for themselves. The writing is clear, and often gripping.

Asking where the money goes is a good way of learning why our health system doesn't seem designed for the good of patients--or primary care doctors, for that matter. Having now taken a stroll down the money trail, I now feel more attuned to the lavish excesses we underwrite, why there's no money left for uninsured and underinsured patients, and why so many patients end up overtreated and less healthy.

We all have a stake in our ailing medical system. This book gives insight into the cause of the disease and the extent of the malady; it also points in the direction of a cure.

Highly recommended.
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Inside This Book (learn more)
Key Phrases - Statistically Improbable Phrases (SIPs): (learn more)
outlier payments, unmanaged competition, medical arms race, device makers, interview with the author, health care inflation, corporate medicine, artificial disc, hospital spending, disc replacements, hospital prices, hospital stocks, shareholder committee, health information technology, health care dollars, ration care, health care spending, hospital chain, electronic medical records
Key Phrases - Capitalized Phrases (CAPs): (learn more)
New York, Wall Street, United States, Lew Silverman, Blue Cross, Kaiser Permanente, Blue Shield, Big Pharma, Mayo Clinic, University Hospital, Jerry Avorn, Sheryl Skolnick, Bruce Vladeck, Jack Wennberg, Jeffrey Barbakow, Atul Gawande, Denver Health, Mount Sinai, Pitney Bowes, White House, Jim Moriarty, Merrill Lynch, University of California, Dartmouth Medical School, Elliott Fisher
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