The Medical Industrial Complex: A Major Contributor to Out-of-Control Health Care Costs

By Dr. David Lipschitz

March 26, 2015 5 min read

Today the biggest threat to our health care system is the medical industrial complex. Thanks to the promise of great profits, breakthroughs in health have been enormous, making America the leader in the most incredible breakthroughs in diagnosis and cure of disease. Because of American know-how, we have machines that can examine every corner of the human body, the human genome has been characterized in detail, and drugs have been developed that can cure cancer, prevent heart disease and save lives of people of all ages.

However, there is a downside. Health care is our biggest expense, averaging $3.6 trillion, and rising as the baby boomers get older — a price that even a nation with our wealth is having difficulty affording. Costs are out of control, and the lack of regulation and significant competition are serious detriments to containing costs.

Recently Steven Brill published a book entitled "America's Bitter Pill." In it, he describes the overwhelming and burdensome costs of health care.

He describes the experiences of a patient with cancer who elected to leave his own state to go to MD Anderson in Houston to receive care. He was required to pay almost $100,000 in advance before being evaluated and was responsible for thousands more before his treatment finished.

Brill highlights the unbelievable charges submitted by the hospital, including $50 for a Tylenol pill. For reasons I have never been able to understand, health providers, including hospitals, laboratories, physicians, pathology and radiology, always charge much more than the insurance company pays. The only ones who pay in full are those without insurance or whose insurance does not cover the cost of care. There is little evidence that the outcome at MD Anderson would be any better than the local tertiary care hospital in the patient's own state, where his insurance would cover most of the cost.

And yet Brill has a point. It has been estimated that almost half of our $3.6 trillion health care budget is consumed by administrative overhead, unnecessary testing, an overabundance of high-tech equipment that is overused and the willingness of the community to pay overwhelming costs when it comes to their health, as long as they do not actually have to pay for it.

Brill mentions the high profits made by both not-for-profit and for-profit health care systems. Should our insurance premiums pay more than $6.5 million to the CEO of the not-for-profit University of Pittsburgh Medical Center, which also pays between $1 million and $2 million on 20 of its top administrators? The multiple layers of administrative overhead on every aspect of health care are much more than we can afford.

Similarly, the costs of drugs are progressively increasing. Particularly scandalous is the cost of drugs to treat cancer. Treatments can cost as much as $10,000 per dose. And only in America are costs unregulated, making every patient a hostage to the avaricious pharmaceutical industry. Their ruthlessness is particular illustrated by the pharmaceutical companies' strategies to continue massive profits for the drugs used to treat Alzheimer's disease. The patent for Namenda is about to run out. Forest Laboratories stopped the production of Namenda given twice daily and replaced it with a once-a-day dose. They forced patients to switch and hence (unless overturned in court) will continue to make more than $1.5 billion in revenue annually. This is one of many such examples. And as competition lessens, the costs of generic medication are exploding.

We must all do something to reduce health care costs or face dire economic consequences. Physicians must do more to practice appropriate medicine and always do their best for their patients while being more judicious and involved in costs.

Most encouragingly, insurance companies and the federal government through Medicare and Medicaid are beginning to reward physicians and hospitals on the basis of quality outcomes, not on how many tests and how much they have charged for the care provided. Through research on better approaches to the delivery of care and quality outcomes, costs may well be contained. At the same time, we must find ways to curb greed and to ensure that the bottom line of the medical industrial complex be more reasonable.

To find out more about David Lipschitz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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