By Dr. Patrick Neustatter, ADVANCE CONTRIBUTOR
In the summer months, when the minister of the Unitarian Universalist Fellowship of Fredericksburg is off, and the UUs are desperate for people to fill the pulpit, I usually lead a service in which I carp about some interface of religion/spirituality/ethics and medicine.
This year I’ll be talking bout greed—how the cost of healthcare is out of sight, but all the venders in the industry still seem to be focused on making as much money as possible, undaunted by the hardship this causes.
The Unitarians, whose second principal is “Justice, equity, and compassion in human relations,” get fired up about this kind of thing, so I’m hoping this year’s sermon goes over well.
I’ll start by explaining how I’m a British doctor, trained at the very respectable, if somewhat conservative, venerable London medical school Guy’s Hospital, and how I practiced for 13 years in the UK, which of course meant the National Health Service, one of those quasi-communistic socialized healthcare systems.
I’ll mention how at 37 I met an American and we decided we should get married, but she didn’t want to live in England so I moved to the U.S. where I did two years in residency in New York, then moved to Virginia to join The Pratt Medical Center.
I’ll talk about working as a grunt in the trenches of primary care medicine with Pratt for 24 years, then, after trying to retire, working 15 years more as part-time volunteer medical director of the Moss Free Clinic—until it was forced to close.
I’ll confess that as an overly-busy primary care doctor who then got divorced and became a part-time single parent, I didn’t have the bandwidth to pay much attention to the structure and politics of U.S. healthcare.
It was after leaving Pratt, when the kids had grown up, and while writing my first book Managing Your Doctor, and now Wealthcare—a sort of memoir of a naïve English doctor coming to work in a dysfunctional, overpriced, for-profit, healthcare system—that I got a clearer view of how pernicious the industry really is.
But what really got me focused on greed—especially in the pharmaceutical industry—was being diagnosed with Small Intestinal Bacterial Overgrowth, most often referred to as SIBO.
No, I didn’t know what it was either, but soon learned that it’s when bacteria that aren’t meant to be there, invade the small intestine and cause chronic GI upset.
A gastroenterologist wanted to treat me with a new wonder-drug antibiotic called Xifaxan—generic name rifaximin.
All well and good, until Wal-Mart texted “Your prescription is ready” and I discovered the cost was $1,400. I may be a retired doctor, but like tens of millions of others in America, I don’t have prescription drug coverage.
After some investigation, I discovered that the manufacturer, Bausch Health, had bought the rights to Xifaxan from some little Italian company that discovered it years ago, and almost immediately jacked up the price—prompting drug discount site University Drug Store to comment, “By almost any standard metric . . . Xifaxan is considered massively overpriced in the United States.”
That massive overprice is a striking 80 to 90 percent more than in Canada and the UK, even worse than most medicines in the U.S. where drugs on average cost “only” 2-3 times as much as in other countries.
A WORLD OF FANDANGLES
I’ll go on to explain to my UU audience about the multiple fandangles that drug companies use to maintain their market holds and be so outrageously profitable.
· How they employ “thought leaders,” and pay them stipends to give lectures promoting their products—at drug dinners, continuing-medical-education conferences, even medical schools.
· How members of panels creating treatment protocols often have a financial interest in drug companies.
· How drug companies employ a practice known as “Evergreening”—extending their patents on medicines for years by making minor changes to chemical structure, or even just the packaging,
· How Big Pharma corporations sue or pay off generic drug companies to not market much cheaper generic versions of name-brand medicines.
· How, by sponsoring patient advocacy groups, drug companies promote diseases for which they make medicines.
· How they make the benefits of their drugs look better than they are by the way they report the results. And by influencing the way trials are set up.
· How Big Pharma has persuaded the powers-that-be to allow direct-to-consumer advertising on TV, while only one other country in the world—New Zealand—allows it, though in their case with serious restrictions.
Not to mention those cheerleader drug reps who come and simper over doctors in their offices. With samples, tchotchkes, and invitations to drug dinners.
Then I’ll tell those bleeding-heart Unitarians about how hospitals are no better.
Mary Washington Healthcare, for one, here in Fredericksburg, is practicing what I call “Empire Building” by buying up independent medical practices, giving MWHC a monopoly, so more clout negotiating with insurance companies—but fewer and fewer alternatives for patients, however poor the quality at Mary Wash, and however many extras like “facility fees” they tack on your bill.
I will challenge the UUs to find a practice in Fredericksburg not owned by Mary Washington Healthcare, and I’ll explain how this is common practice among hospitals. I’ll also talk about how many avaricious organizations like private equity firms, hedge funds, and insurance companies are seeing healthcare as a good investment, so are also now buying up and running medical operations as if they’re widget factories—“volume based care” to use the popular term—with focus on the bottom line rather than what’s best for the patient.
I will tell how the New York Times reports investment funds close unprofitable hospitals in underserved areas, then open new ones in profitable suburbs. How others are stripping out and selling off assets and closing hospitals. And how nursing homes owned by investment funds are reported to have a 10 percent higher mortality rate.
Then I will talk about insurance companies some more—pointing out that premiums are rising at about 6 percent a year, and grew from $5,791 in 2000 for family coverage to $25,572 in 2024.
I will explain how this allows those companies to invest surplus funds and boost their profits. And how they have invented Pharmacy Benefit Managers to get drugs at a discount from drug companies, though they don’t pass on those savings to patients.
And I’ll mention insurance companies’ invention of “Preferred Provider” networks to minimize how much they have to pay doctors and hospitals, and how they bogusly “upcode” the complexity of patients on Medicare Advantage plans to squeeze more money out of the Centers for Medicare and Medicaid.
By this time, I hope I will have convinced the UU audience that all vendors in the industry are bums, out to screw as much money out of the system as possible, and I won’t have to continue the depressing litany, and tell about the same kind of thing going on in medical device companies, electronic medical records companies, physicians’ practices, and urgent cares doing unnecessary tests etc.
MORALITY AND GREED
Then I will tell the UUs I was excited to come across “The Existential Threat of Greed in U.S. Health Care” in The Journal of the American Medical Association, written by Donald Berwick, MD, MPP, lecturer of Health Care Policy in the Department of Health Care Policy, at Harvard Medical School, so someone with some serious expertise who affirms my diagnosis.
I’ll quote from the article about how “Profit may have its place in motivating innovation and higher quality in health care, as in any industry” but “kleptocapitalist behaviors that raise prices, salaries, market power, and government payment to extreme levels hurt patients and families, vulnerable institutions, governmental programs, small and large businesses, and workforce morale,” while “pharmaceutical companies have used monopoly ownership of medications to raise prices to stratospheric levels, and not just for new drugs.”
I will point out the obvious—that healthcare in the U.S. is crazily expensive, about $15,000 per head compared with only $6,000 for the average developed country, and that 41percent, or 100 million people in all, are laboring under medical debt in the U.S.—1 in 8 of them owing more than $10,000.
And medical bills are the precipitating cause of 66.5 percent of bankruptcies.
And many of them actually have health insurance, but can’t afford the out-of-pocket expenses for deductibles that have risen to thousands of dollars, rendering those people effectively uninsured.
I’ll also note that in contrast to other developed countries that all have universal healthcare, there are still some 28 million Americans who are totally uninsured—aggravated by the failure to continue the enhanced Affordable Care Act premiums for low income households, and the predicted effect of cuts and restrictions to eligibility for Medicaid.
I will explain that to my mind, the most convincing evidence of greed is profit margins of the pharmaceutical industry significantly greater than those of other S&P 500 companies—net income as a fraction of revenue at 13.8 percent, compared with 7.7 for the average S&P 500 company.
And that insurance companies seem to do well also, though they low-ball public declaration of their profits, claiming profit margins only between 2 and 6 percent, which would put them in 35th place of 53 industries in the Fortune 500. Organizations such as Physicians for a National Health Plan, however, point out that because insurance companies have the benefit of being able to invest all those premiums, their real profit margin is 22.3 percent, which would put them in first place in the Fortune 500.
Closer to home, I will explain how Mary Washington Healthcare, which is a non-profit so doesn’t have to pay federal or state income, property, or sales tax, is meant to provide community benefits equivalent to what they would have paid in taxes—recently announced their revenue tops $1 billion.
And despite the rules forbidding non-profits from the paying “excessive salaries,” the MWHC benefits package of then-CEO Mike McDermott in 2021 totaled $2,181,797, raising a few eye brows—especially mine, when I remember that the annual budget of the Moss Free Clinic, which closed just over a year ago for lack of financial support, was $2.2 million, almost exactly the same amount as McDermott’s salary.
But then I will play devil’s advocate with the UUs, and suggest, as many do, that it is the job of any company to be as profitable as possible, and that these healthcare companies are just good at doing that job. I’ll also pose the question, “Is there something different about healthcare that it should be treated any differently?”
I’ll be tempted to dig deeper and get more philosophical, asking if healthcare is just a microcosm of the wealth disparity of the country as a whole where the rich are getting richer. Or maybe I’ll want to point out that having all that wealth allows the healthcare industry to spend more on lobbying than any other, and what are the implications of that? Or maybe I’ll want to ask why Americans tolerate a system that is overpriced and inefficient—where longevity, and maternal and infant mortality, are all much worse than equivalent industrialized countries.
But by this time my audience will be getting restless, and the Worship Associate will be frantically signaling that it’s time to wind it up, and if I keep going on much longer they might even cut the mike.
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Patrick Neustatter is a retired general practitioner and former medical director of the Moss Free Clinic. He still volunteers at a free clinic in Orange County.
Hi, Pat. Since there is strength in numbers, I wonder if you, me, and Jay B. might join forces?
RK
Excellent, informative piece. Thank you.