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

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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.

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.

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.

First, a full disclosure: Maggie Mahar and I started at the same university at the same time on the same career path--far away from the Medical School. Both of us changed careers, we lived on opposite coasts, and lost touch over the years. But that's not why I bought this book. I bought it because I've had some serious chronic illnesses to manage for the past ten years, I've had more contact with the American medical system than most people, and I'm always asking questions. Most are questions about my own care. But I'm interested in the larger questions too, and this book gives some interesting answers.

As patients go, I'm one of the luckier ones--I have comprehensive health insurance, and many great doctors and nurses giving me both excellent care and moral support. But I've also been baffled and frustrated at times by the indifference and inefficiencies of the larger system. And I've seen these at both for-profit and non-profit hospitals, includng top-rated ones.

It's a scandal that the United States has so many uninsured people, and it's good news that a few states like Vermont and Massachusetts (if not the federal government) are at last showing some leadership on the issue. Dedicated groups in other states (certainly in California) are pushing for solutions too. But health coverage is just the most visible part of the problem. The problem is that "money-driven medicine" has too many perverse incentives to work the way medicine (or markets) are supposed to work. This well-researched and readable book tells you exactly why in both economic and personal terms--and many of the best anecdotes and insights come from inside the system, especially from frustrated physicians.

Unless you think that you and your family members will never get sick, but all die peacefully in your sleep at the age of 101, you should read this book just to protect yourself from the downside of the medical markets. It's not even an anti-capitalist thing to do. (Investors are always looking for ne3w ways to protect themselves from the downside of financial markets, after all.)

As this book rightly points out, if you haven't gone to medical school--or even if you have--when you or a family member gets sick, you have to trust your doctor. (There's reliable and unreliable information on the Internet, but it can't replace a doctor's long training and experience.) But make doctors earn your trust.

This is my personal advice, but it's confirmed by the information in this book. Ask questions; ask for some evidence that a drug or treatment will work; find out what the potential side effects are and how to avoid or mitigate them. Medicine is imperfect, and good doctors will admit what they do and don't know. (I think that's the litmus test for a good doctor.) In some situations, there may not be any evidence that one treatment is better than another, but you need to know that too. Try not ask irritating questions; but if the doctor gets irritated too easily, this may not be the doctor for you.

I have absolutely no solutions to the larger puzzle of the whole system--and neither does this book. After reading it, though, I think that doctors, nurses and other health professionals need help from some quarter to do their difficult jobs without so much interference from market forces. Eisenhower warned about the downside of the military-industrial complex fifty years ago; and it's still with us, stronger than ever. Now Americans have a medical-industrial complex to cope with too, and it affects us in an even more intimate way.

Read "Market-Driven Medicine"-it's news you can use.

One can usually tell if a book is good by the passion it generates among its readers. Both good and bad. And this one is no exception!
This book challenges many of the myths about our healthcare system and presents a startling view of how broken the system really is.
Starting right at the beginning, the figures are 'mind numbing'- 2.2 trillion dollars spent each year and the breakdown of where the money comes from and how it is spent is sure to be a revelation to many.
Author Maggie Mahar has clearly done the research and presented a well written and clear, account of the healthcare system. Full of data yet nicely balanced with personal perspectives and stories.
For any serious student of the healthcare system, regardless of role within the system, even political persuasion, this book will help spread some light on where the money goes. With so much money 'slushing' around its easy to see how so many organisations make huge sums of money without delivering much value in return.
As a user of the healthcare system I'm disappointed by the failure of the system to deliver better health outcomes to consumers. This book certainly alerted me to my role in demanding better care and the need for me to take more responsiblity for my own health.
This is a very different book than Porter and Teisberg's 'Redefining Health Care'. Infintely more readable and compelling.
My one regret is the author did not confront the solution!

I recently (April 2008) saw a reference to this book in the Wall Street Journal's HealthBlog, so decided to read it based on the reviews here. I add my own praise for the book. The blurb on the author, Maggie Mahar, states that she was once a professor of literature at Yale University. Her prose is excellent, so I find that little fact interesting and relevant. The prose of many otherwise excellent books is not always up to that standard.

What is particularly noteworthy of this book is the depth and accuracy of its research - something fairly rare among books by journalists. Journalists' role in disseminating information is by and large not scholarly, but rather popularizing of scholarly work. In this case the book comes closer to scholarly work than most even though it is based almost entirely on secondary sources. However the sources Ms. Mahar uses are the best. She cites several times two of the seminal works on healthcare: the always-cited work in scholarly circles by the eminent Nobel-prize-winning Kenneth Arrow and the comprehensive social history of American medicine by Paul Starr, itself a masterful, easily-readable book. She also cites another excellent compendium by health economists that looks at different aspects of the issues raised in Professor Arrow's article.

The book's focus ultimately addresses in detail the reasons what the American healthcare system is so inflated in terms of cost and so dysfunctional at the same time. In essence this is due to the many participants in healthcare who are profit-motivated. In the case of healthcare services profit-motivation does more harm than good as a rule. The participant groups reviewed cover all suppliers, ranging from physicians groups to hospital chains to nursing homes to pharmaceutical manufacturers/distributors to device manufacturers, in sum most of the suppliers into the system.

I highly recommend this book, along with several others that I have reviewed. Each is outstanding in its way and written by individuals with different experiences and perspectives, but all highly accurate in their analysis and assessments.

Essential read for anyone trying to understand the history and mystery of healthcare economic trends and market drivers. Having worked in the industry directly for over 15 years and being around it my entire life, this book is spot on! Absolutely calls it like it is.

This is far and away the best introduction I've seen to the economic side of American health care.

MONEY DRIVEN MEDICINE BY MAGGIE MAHAR IS AN EXCELLENT READ AND PROVIDED ME WITH VALUABLE INFORMATION ABOUT THE STATE OF MEDICINE AND HEALTH CARE TODAY, ESPECIALLY THE FINANCIAL FACTS. IT GAVE ME AN INSIDERS LOOK AT WHAT MEDICAL PROFESSIONALS, INSURANCE COMPANIES, DRUG COMPANIES AND HOSPITALS ARE UP TO. IT IS EXTREMELY WELL CRAFTED AND HAS A WEALTH OF INSIGHTFUL INTERVIEWS WITH KEY PEOPLE IN ALL ASPECTS OF THE MEDICAL ARENA.

I first saw this author on Bill Moyer's Journal and decided to read her book. I finished the book and came here to read a number of the different reviews.

My feeling is that everyone should read this book - whether you agree with it or not. There is a great deal of information about how we got into the mess we are in. However, the author goes to great lengths to give mostly facts. This is both the greatest strength of the book and its greatest weakness. Depending on your biases going in, you will probably have a different view of how the book presents the facts.

This is such a complex subject that I feel the author was correct in concentrating on the facts of how we got here and stories about exactly where 'here' is. Having said that, I am extremely frustrated with the lack of coherent recommendations. Her final points about patients wanting to be able to trust their doctor so that they could let the doctor make the decision about what is best for them is a telling one about the health care system in general. I don't really trust myself to evaluate all the possible solutions and make decisions, but increasingly I don't think I trust anyone else to tell me what is best either.

This book was written in 2005/06 and her interview with Bill Moyer was this summer. Thank goodness there is the interview, where some solutions were discussed - with more recent events in the mix.

Read the book, but don't expect to be less frustrated at the end than you were before you started reading. You will just be much better informed.