Congratulations to the BC Advantage team for 19 years of successfully making a positive difference in the healthcare industry and for supporting those of us who earn our living in this industry.

In BC Advantage Magazine's issue 18.6 (November/December 2023), Dave Jakielo authored an insightful article titled "The American Healthcare System: A Problem in Need of Solutions." Jakielo does an excellent job discussing numerous current issues that need to be addressed within the U.S. healthcare system. As Jakielo states at the end of his article, "The future of the American healthcare system is uncertain. However, if we are able to address the problems that the system faces, we can create a system that is affordable, accessible, and equitable for all Americans" (emphasis added). I consider these the writer's "objectives" in creating policies for the U.S. healthcare system.

A key roadblock to solving any problem that affects the entire U.S. population or any large group of people living together in any society and sharing resources is getting everyone to agree on the same goals and objectives-and agree on who will pay to accomplish those goals and objectives. As I have repeatedly stated in my previous articles, it is not just semantics; we must first get everyone to agree on the terms, definitions, and meanings of the words we use in our efforts to solve problems.

Take the terms healthcare (one word) and health care (two words) as an example. The Oxford English Dictionary gives definition to the one word. You can search "health care" (two words) on Oxford and it directs to "healthcare" (one word). On Merriam-Webster, "health care" is defined as two words, and lists "healthcare" as a variant—to be used interchangeably. Some sources, such as DocNotes, now prefer to view the terms healthcare and health care separately, noting that one form has "taken on more meaning" regarding the healthcare industry vs. the care of health. Most sources do not view the different spellings with different meanings but rather prefer one spelling o

Note: Until there is a clear distinction regarding the definition(s) or a preferred usage across both medical and reference sources, healthcare as one word will continue to be used for consistency in BC Advantage Magazine.

This word problem is quite evident in our society today with the current growing "woke" debate as to the use and meaning of pronouns, which is changing and expanding daily. These changing gender words, identities, and definitions will obviously create challenges for healthcare providers when providing medical care to patients. Even the AMA is getting involved in this gender identification debate. In June 2021, the AMA added the following AMA policy position: "Aimed at protecting individual privacy and preventing discrimination, the AMA will advocate for the removal of sex as a legal designation on the public portion of the birth certificate." The AMA did not offer an alternative pronoun or designation to be used but simply recommended leaving it blank. This will create many legal, regulatory, and medical challenges for everyone due to our current laws, regulations, and healthcare delivery system.

To move toward reaching Jakielo's stated goals of affordable, accessible, and equitable healthcare, which the entire U.S. population likely desires, it is necessary that the entire U.S. population agree on the definition of those words—as well as many, many other words.

Background

I have been working in healthcare for many, many decades, and am blessed to be able to continue. I have been lecturing and writing about the business of medical practices and the healthcare industry in general since the beginning of my career. I have also worked directly with and advised, and still do, physicians and hospitals on the applications for and operations of the business of medicine. I save all my materials for future resources, which also lets me see where I have been on my journey in the business and how many of my past thoughts about the future of healthcare were correct.

I have had the opportunity to live and participate in the major changes in healthcare over these past decades. While most of us do not provide direct medical care to patients, our participation in the business of medicine has a direct impact on the affordable, accessible, and equitable objectives that Jakielo addressed in his article. This means our participation in the healthcare industry will ultimately impact actual patient care. Besides, we are patients, too. Like any business, healthcare needs to be run cost-efficiently with high standards and quality control to produce the optimum product, which is good medical care. It is not only our job but our obligation to the healthcare industry and the patients to try to improve the healthcare delivery system to benefit all stakeholders. At least that is my mission statement.

My Look Back

In March 1995, I gave a lecture about "The Social and Economic Trends in Health Care" to a group of physicians at the University of Virginia Medical School. It will soon have been 30 years ago that I did my prophesying and proselytizing on that topic. While I have not yet found my slides or handouts that I used back then, I did find my personal notes that I used to give the lecture-yes, back in my younger healthcare days, I was using slides and not PowerPoint. I wanted to share with you what I told the physicians in 1995, as it helps to see how much of what I predicted then about the future of healthcare was accurate and determine what is still applicable today.

In preparing to write this article, I read my March 1995 lecture notes, as well as my added thoughts during the lecture. Of course, in a room full of physicians, there was significant feedback, both positive and negative. Below is a summary of my lecture as I remember it. In that lecture, I laid the foundation for all my future lectures and writings, including those I have done for BC Advantage Magazine. Over the years, I have continued to include those initial 1995 writings and thoughts in my following writings and lectures because they continue to be as relevant today in 2024, if not more so, as they were in 1995. It is likely that many of you have done the same and have similar valuable reflections you can share.

As I stated to the attendees in my 1995 lecture, the only way to insightfully understand where you are at any point in time is to have a past starting point and the accurate historical facts that occurred on your journey to where you are now. You need to know where you have been and how you got to where you are now to understand and solve current problems. This is my personal approach, similar to the standard gap analysis process, which refers to the current state, the desired state, and the gap between. In plain terms: Where am I now? How did I get here? Where do I want to go? And how do I get there? To use an old Yogi-ism (Yogi Berra, not Yogi Bear): "If you do not know where you are going, you will end up someplace else."

So how did the American healthcare system get to this current state of being a problem needing solved?

Historical Healthcare Facts

In my 1995 lecture, I stated, "It has been estimated that 90% of the medicine being practiced today (1995) did not exist in 1950." That factor alone accounts for a tremendous positive and negative impact on the entire healthcare system and the costs of healthcare today (2024), affecting both the individual and society. Dr. Alexander Fleming developed penicillin in London in 1928-1929. That is less than a century ago. Undisputedly, this is one of the greatest contributions to healthcare and the saving of lives. Healthcare researchers and providers are getting exponentially better at understanding, diagnosing, treating, and curing diseases, which is also extending life expectancy.

The life expectancy in the United States in 1928 was 55.6 years for men and 58.3 years for women. According to the United Nations Population Division, the life expectancy in the U.S. in 2023 was 70.8 years for men and 76.0 years for women. The continued growth, power, and sophistication of computers and medical technology is driving both the success of healthcare and the costs of healthcare. The success and costs are inseparably connected by a Gordian knot.

The extension of life expectancy also increases the costs of providing healthcare because people must be provided healthcare for more years. Also, as the population ages, diseases increase, become more severe, and cost more to treat. It is estimated that 65% of a person's lifetime healthcare costs occur in the last six months of their life.

These facts lead to many questions, including:

• What is the dollar value of a human life?
• What are the dollar costs to preserve a human life?
• Who pays for saving that human life?
• Can we afford it?

Most countries with a socialized medicine system have already assigned a dollar value to a human life that is based on the individual's remaining years' economic value to society relative to the costs to treat the individual's illness. For more information, read about the UK Healthcare system, called NICE (National Institute for Health and Care Excellence). I have been researching and writing about this topic for a long time, attending the U.S. and world healthcare rationing that exists now and is growing. Remember, my 1995 lecture was titled "The Social and Economic Trends in Health Care."

Follow The Dollar

Prior to the late 1920s, the concept of health insurance really did not exist. The financial relationship was between the patient and the healthcare provider. Hospitals first got into the act when the first hospital insurance plan was introduced in Dallas, Texas in 1929. This became the model for the first Blue Cross plan, which was introduced in Sacramento, California in 1932. Prior to that time, health insurance policies that did exist were to cover catastrophic healthcare losses. These "new health insurances" were designed to cover all healthcare costs up to certain policy limits. The reason for this model was because these new healthcare policies were designed by hospitals, not by insurance companies. This concept flowed from the hospital side to the physician side, as well—later to be called Blue Shield. When that direct and personal financial relationship between the patient and the healthcare provider was severed by an intermediary, the "cardinal sin" in the delivery of healthcare was committed. The patient was no longer the "customer" of the physician but the "customer" of the insurance company, and the insurance company became the physician's customer.

There is little incentive for the patient to shop for the most cost-effective medical care or limit the use of medical care if someone else other than the patient is paying the bill. You can just ask any healthcare provider who accepts and treats Medicaid patients. There is little incentive for hospitals or physicians to limit the amount or type of care provided to the patient if payment is guaranteed to be paid to them by an insurance company. This means that the hospital or physician does not have to bill the patient. As the U.S. society became more socially conscious at our federal level, we got the "Great Society" in 1965. Following the Civil Rights Act of 1964, the government established Medicare, for the elderly, and Medicaid, for those with limited income, in 1965.

According to the U.S. government, U.S. healthcare as a percentage of the U.S. GDP was 5.6% in 1965. When I gave this lecture in 1995, the healthcare/GDP percentage had increased to 13.5%. That is a 241% increase. In 2021, the reported healthcare/GDP percentage was 18.3% and projected to increase to 20.0% by 2031. Other sources say it is currently higher and will be even higher sooner than 2031. I agree. In U.S. dollars, the 2021 GDP was $23.3 trillion, which makes the healthcare/GDP spending at $4.3 trillion. The "experts" say this is not sustainable, even with a stable population. In the U.S. in 2021, there were a reported 3.66 million births and 3.46 million deaths. That's a net increase in the U.S. population of .2 million (200,000) people. Add to that a reported 1.5 million authorized immigrants and 1.0 million unauthorized immigrants in 2021, and you get approximately an additional 3.0 million "patients" added to the U.S. healthcare system in one year. That 3.0 million increase a year in the U.S. population, which seems to be about the average increase over the last decade, creates an unsustainable pressure on the U.S. economy and the U.S. healthcare system. My 1995 notes show that I had a handout then on the national heath expenditure, which means we knew that we had this problem almost 30 years ago, did nothing, and it has gotten exponentially worse.

Monetizing Healthcare

There were two other major factors, besides the cardinal sin already mentioned, that allowed the now fatally flawed U.S. healthcare system to be guaranteed to financially fail in the future. If the U.S. healthcare system fails financially, then that means that eventually medical care provided to patients will suffer and fail. The first of these other major factors was that the National Labor Relations Board ruled in 1948 that health benefits were subject to collective bargaining. This allowed the employer to substitute "paid health insurance" in lieu of higher wage increases. This shifted the responsibility for the health insurance premium payments from the patient to the employer. The employer could now negotiate with the insurance companies as part of the employer's costs for employees instead of having to negotiate with the labor unions on higher employee wages. The second was that the IRS ruled that the cost of employee healthcare insurance is tax deductible. This meant that the employer could pay for employee healthcare insurance premiums with "pre-tax" dollars just as the employer did with employee wages. The employer was betting that the costs of healthcare insurance premiums for employees would be cheaper than the costs of higher employee wages negotiated by the employer with the labor unions.

Now the stage is set. The patient (not all patients) has a "Health Insurance Credit Card," with no limit, and someone else is going to pay the bill. The healthcare providers providing the patient care are going to deliver to those with the Health Insurance Credit Card an unlimited amount of services because the healthcare providers know they will get paid by the insurance companies and do not have to hassle the patient. The same is true for the hospitals. Therefore, the healthcare providers know that the more services provided means more revenue and hopefully more profit. The hospitals know the same thing. Yes, I know there are differences between physician Fee-for-Service (FFS) payments and hospital DRG payments. That is a discussion for a separate article. The concept of someone else other than the patient paying the patient's bill is the same.

Now enters the U.S. government as a major payor, providing Medicare, Medicaid, Tricare, and other government-affiliated healthcare plans. This means that the U.S. federal government will now be directly involved and legally allowed to control all the U.S. healthcare policies through U.S. government healthcare laws and regulations, i.e., HHS and CMS. This will also directly impact the commercial healthcare insurance industry, as well as U.S. companies, individuals, and the entire U.S. economy. Remember, "I'm from the government, and I'm here to help" (President Ronald Reagan's opinion on the nine most frightening words spoken).

The largest monetization of U.S. healthcare was done when President George H. W. Bush signed into law the Omnibus Budget Reconciliation Act of 1989, which switched Medicare to an RBRVS payment schedule. This took effect on January 1, 1992. The commercial insurance companies soon followed. The RBRVS "price-fixing system" has now become the U.S. standard used by everyone to determine what to pay for medical services listed in the CPT code books, plus the government's HCPC codes.

As we know, there is a Relative Value Unit (RVU) for each CPT/HCPC code (some zero values) that has the following components:

• Work = Physician Work
• PE = Practice Expense
• MP = Malpractice Expense

Each of these components is multiplied by an average statewide Geographic Adjustment Factor (GAF). I do not see any RVU component or value for profit in the RBRVS system. Pointing out the RBRVS system emphasizes that U.S. healthcare has been fully monetized, which is the first step by the U.S. to determine the value of a human life.

Fast Forward to 2024

I made a general statement in my 1995 lecture: "There has been much written concerning other things affecting healthcare trends. Things such as reform, access, physician extenders, population mix, drugs, violence, attitude toward health, etc. All of these have some impact on the demand and provision of healthcare. But the current and foreseeable focus is on the costs of delivering healthcare and who pays for it." I think I got it correct in 1995 and it still equally applies in 2024. In 1995, I explained the U.S. healthcare system via two social and economic periods regarding healthcare delivery. They were the "practice of medicine" periods, pre-1990 and post-1990. I wrote an article for BC Advantage Magazine, titled "Follow the Dollar" (2018), which discusses the post-1990 period. In that article, I stated: "It has always been about managed dollars, not managed care." I also said that in 1995 and I am still saying it today.

Different Perspectives

As I stated, Jakielo did an excellent job explaining the problems in the U.S. healthcare system. I would like to comment on his statement, "The United States spends more on healthcare than any other country in the world, yet it has some of the worst health outcomes." There is no disputing the high costs of healthcare in the U.S., nor the fact that the U.S. has some of the worst health outcomes compared to other high-income nations. According to "U.S. Health Care From a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes," from the Commonwealth Fund, "The U.S. has the lowest life expectancy at birth, the highest death rates for avoidable or treatable conditions, the highest maternal and infant mortality, and among the highest suicide rates" (Gunja, Gumas, and Williams, 2023). These outcomes could be explored in another article, but let's discuss another reason the U.S. is considered from a global perspective to have some of the worst health outcomes.

If your statistics only include outcomes from the low-risk patients you treated and not on the sickest of the sick you refused to treat, then your outcomes will be much better, and your healthcare costs will certainly be lower. It does not cost a lot to treat healthy people or people with low-risk health problems. The U.S. treats the sickest of the sick, where other countries will not because of the person's age, multiple morbidities, or other societal economic factors under their socialized medicine systems. Refer to the UK NICE system mentioned above.

I have traveled to other countries, studied the healthcare systems of other countries, have friends who live in other countries, and work with physicians who are from and have practiced medicine in other countries. Most people you ask across the globe will tell you that the U.S. has the most sophisticated and greatest number of high-tech medical equipment and treatments in the world, as well as the best physicians. This is why many wealthy people in other countries come to the U.S. when they have serious health problems. Ask the substantial number of Canadians who come to the U.S. every year for medical care since the medical care they need is not available in Canada or, if available, they cannot get the medical care they need in Canada in a timely manner when they need it.

I, along with many of my family and friends, have been treated over many years by the U.S. healthcare system for extremely serious injuries and diseases, and received care that we would not have found anywhere else. While nobody I know wants to go to another country for healthcare, I agree with Jakielo that the U.S. healthcare system needs many improvements to try to provide more affordable, accessible, and equitable healthcare to everyone.

Conclusion

Because I am a realist, I am not optimistic that the U.S. will be able to reach Jakielo's admirably stated objectives. The reasons include the cardinal sin stated above, the stakeholder conflicts, and the future predictions, as well as the fact that the providing of healthcare has become the business of medicine. For more on this topic, I encourage you to read my two-part article in BC Advantage Magazine, titled "Thoughts Had…Lessons Learned ® The Selling of Marcus Welby, M.D." (2022). Investment firms, both foreign and domestic, are buying up the U.S. healthcare system and have an investment strategy of "churn and burn" instead of "buy and hold." If you don't buy and hold, you cannot maintain a stable, cost-effective healthcare delivery system with good outcomes. I have been and continue to be directly involved in some of these billion-dollar transactions. It is these investment firms that have taken control of the U.S. healthcare industry. In addition, many of our medical products and, more importantly, many of our critical medical treatment drugs are manufactured in other countries, whom are not all friendly to the U.S.

I want to conclude by sharing a story I created while thinking about equitable, a word which seems to be overused on everyone's tongue these days. We used to use the word fair before the word wars started.

Stranded In the Desert Dilemma:

There were ten people stranded in the desert for a considerable length of time. They had made progress toward safety but only had enough water remaining to provide for one person to survive the trip to safety. How do the ten people decide who gets the water? You can choose yourself to be the survivor. A compassionate pragmatist is going to select the person whose survival will benefit the world the most in the future. The ideologue equitist is going to decide that no one person gets the remaining water and that the remaining water be equally divided among the ten people. This means that none of the ten will survive and that all ten will die. To the equitist, all ten people dying is not relevant. What is equitable to the equitist at this moment is that the equitist's decision was equitable. How negatively the equitist's decision affects the rest of the world and what collateral damage it does to others is not relevant to the equitist ideology. It is the ideology of equity that overrides everything else.

This is the type of decision that all of us in America and the rest of the world are faced with now given the state of the American and world healthcare systems and the finite resources for everything. There is now a great deal of focus on the healthcare systems, and yet truly little focus or commitment on how to keep people healthy. Though, as my physician friends tell me, "We make our money treating sick people, not treating healthy people." How can we do better? We want to make the U.S. healthcare system affordable, accessible, and equitable. But a lot of this depends upon the health of the people. Are we all doing our part, caring for our own health to the best of our ability (healthy diet, regular exercise, etc.), thereby lessening the burden and thus improving the healthcare system?

L.E. Shepherd, Jr., MedBizonics

Mr. Shepherd received his Bachelor of Science (BS) degree in Business Management from Virginia Tech. He received his Master of Science in Administration (MSA) degree from George Washington University. Mr. Shepherd served 4 years active duty, and 2 years reserve duty in the U.S. Air Force.

Mr. Shepherd has successfully provided comprehensive business advisory and business services to the healthcare industry and others for over 25 years. He successfully managed his initial companies’ merger that resulted in the merged companies going public and being traded on the NASDAQ. Over the course of his business career, Mr. Shepherd has developed a broad knowledge base of business acumen and expertise, with an extensive focus on the Business of Medicine, the Consumer-Patient, the Healthcare Industry, and Employer Benefits. He has written numerous articles on practice, financial and tax management for various medical and dental publications. He also has lectured to numerous medical societies; and taught practice, financial and tax management courses through university medical and dental schools. With his comprehensive business experiences and extensive speaking engagements; along with his many years of relationship building in the healthcare system; Mr. Shepherd brings a unique perspective and set of skills to solving the complex business problems facing businesses today and tomorrow.

www.medbizonics.com