The Impending Collapse of American Healthcare

November 28, 2023
Omar L. Hamada

Innovations in Healthcare and Medical Economics

In "The Impending Collapse of American Healthcare," Omar L. Hamada presents a stark analysis of the severe inefficiencies and rising costs plaguing the U.S. healthcare system. Despite spending more per capita on healthcare than any other nation, the U.S. struggles with poor outcomes, physician shortages, and systemic flaws that threaten the sustainability of its healthcare delivery.

Hamada begins by highlighting the immense financial burden of healthcare in the United States, which consumes 19% of GDP. Despite this, critical health indicators such as life expectancy and maternal mortality are alarmingly low compared to other developed nations. The country also faces a looming shortage of nearly 140,000 physicians by 2033, exacerbated by Congress limiting residency training slots funded by Medicare.

The article identifies three primary drivers of the healthcare crisis: access, cost, and quality. Access to healthcare is increasingly difficult, with insurance plans complicating patient appointments and Congress restricting residency slots. Quality of care is deteriorating due to over-reliance on mid-level providers, excessive documentation requirements, and a fragmented training approach that undermines physician autonomy.

Hamada also critiques the administrative bloat within the healthcare system, where excessive regulation and unnecessary administration inflate costs without improving patient outcomes. This inefficiency is further compounded by a training mindset that diminishes the importance of rigorous medical education and reduces healthcare delivery to a time-clock mentality.

To address these issues, Hamada proposes several solutions:

Healthcare Advocacy and Education: Promoting awareness and education through organizations like the Financial Policy Council (FPC), which advocates for free market healthcare solutions and policy reforms.

Direct Patient Care Models: Encouraging models such as concierge medicine and private physician practices that prioritize patient care over administrative demands.

Technological Innovation: Leveraging AI and machine learning to enhance diagnostic accuracy, streamline administrative tasks, and improve patient engagement.

The article concludes by emphasizing the need for a fundamental shift in the U.S. healthcare system. Hamada calls for entrepreneurial ventures that reconnect patients with healthcare providers focused on primary care rather than electronic records and billing metrics. He also highlights the potential of AI to revolutionize healthcare delivery, reducing costs and improving quality.

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and- Reports/NationalHealthExpendData/NHE-Fact-Sheet

Introduction

According to the World Bank, at $13,000 per person, the United States spends more per capita on healthcare than any other nation in the world. At 19% of our GDP (up from 5% in the 1960s), we also spend a higher proportion than any other nation in the world.¹ For comparison, it is important to note that no other nation spends over 12% of their GDP on healthcare – most spend much less – around 50% less – and for much better outcomes. This is particularly remarkable as at $25 trillion annually, our GDP significantly outpaces every other nation on the face of the earth.^2;3;4

Background – Current Healthcare Spending Crisis

Let’s translate this to a per capita basis. In the past 50 years, healthcare spending in the United States has increased from $353 per person in 1970, to $12,914 in 2021⁵. Accounting for inflation and using 2021 dollars, this increase then went from $1,951 to $12,951 annually⁶. These factors so severely impact the average American family that according to a recent CNBC study, an estimated 530,000 families turn to bankruptcy each year as a consequence of the overwhelming pressure of their medical bills.⁷

Despite this exorbitant and increasing expenditure, we only manage to have 2.7 physicians per 1,000 people⁸. This is one of the lowest rates among OECD nations that average almost double this number. In fact, this is so dire for us here in the US, that we are projected to have a shortage of close to 140,000 physicians by 2033 despite an increasing number of medical schools coming online and medical school admissions becoming more and more competitive⁹. Though there are many reasons for this, perhaps the largest is the limitation by Congress of residency training slots that are all funded by Medicare dollars¹⁰.

It is important to also note that despite these high expenditures, our primary health indicators are failing. We have an extraordinarily high rate of maternal and infant mortality as compared to other developed nations¹¹, and a lifespan that continues to plummet – from 79 years in 2019 to 76 today according to recent Harvard Medical School figures. These figures also show that though this decrease of 3 years is standardized across the US population, it is much more pronounced in minority groups such as American Indian, Native Alaskan, and Black populations with drops as large as 7 years. It is interesting to note the remarkable gender gap of 79 years for women and 73 for men. Unfortunately, much of this decrease in life span is due to the recent pandemic, drug overdoses, suicide, accidental injury, and heart disease.¹²

We continue to have one of the highest rates of inpatient medical errors in history accounting for over 400,000 patient deaths per year despite multiple wide-ranging regulatory mandates to apply process improvements and protocols in order to attempt to avoid and minimize these ever-increasing threats¹³.

This seems to be an illogical correlation – that we spend extraordinary amounts of money and are a world leader in LEAN¹⁴ and efficient business practices yet have such a poorly efficient system with much less than stellar results that worsen from year to year – especially when we consistently demonstrate the most innovative and cutting-edged medical and technological science in the world with some of the best trained physicians and surgeons in the world.

This then bears the question that if we have some of the best medical science, training, and innovation in the world, and we do, why is our healthcare delivery the most expensive and among the most dangerous in terms of patient outcomes?

First, we must define and differentiate medicine and healthcare. Like my Lebanese physician grandfather told me before he died in 1982, medicine is the science and message of hope and healing and should never be compromised, while healthcare is the often dirty and complex business of the delivery of healthcare services. Never confuse the two.

There are three primary drivers in American healthcare – access, cost, and quality – and unfortunately, there are significant and mounting problems with each.

Problem Statement – Access, Cost and Quality Deficiencies

Access is becoming more and more challenging as anyone who tries to make a new patient or a specialty appointment can attest. Insurance plans complicate this process and make it even more difficult. In addition, Congress limits medical and surgical residency slots in the United States based off Medicare funding, so even if we educate more physicians, we can’t train them in the required residencies.

Another of the key issues that affects both access and quality is the mindset established by the training of our newer healthcare graduates on at least two levels. First, we have shifted from a very demanding training apprentice-style requirement for physicians and surgeons that required high levels of dedication, commitment, and stamina, to one that limits training hours and exposure, and breeds a fragmented time-clock mentality of shift workers focused on computer screens and flattened team dynamics rather than bedside diagnostics and primary patient responsibility. Second, we are now minimizing the importance of education and convincing ourselves that most all healthcare team members are equal in knowledge, skill, and responsibility regardless of depth of education or length and complexity of training. This is not only detrimental in a practical way as it increases real risk for patients, but it is also psychologically and logistically detrimental for those trained to care for our ill in a myriad of ways. At the same time, we continue to prostitute physicians’ medical licenses to drive care and reimbursement, and assign medicolegal blame and fiscal responsibility, while removing physician autonomy.

Implications – Impact on Patients, Providers and Economy

These are the high-level basics of the exorbitant and inefficient costs and access of our national healthcare delivery above.

Key Drivers – Flawed Incentives, Administrative Bloat

These metrics are out of control and ever increasing. Like with government, there seems to be an exponentially expanding demand for more and more regulation and administration that is far outpacing the delivery side of healthcare. Many would say this expansion is needless and is the proximate cause for the inefficiencies and for the breakdown of our entire system. Costs controls should start with cutting redundancy, regulation, and unneeded administration that seem to have been created simply to increase complexity.

Deteriorating Quality

The quality of healthcare delivery in the United States remains high for a specific segment of the population, but overall is falling, and it is falling quickly. As medical educational standards are being lowered, as midlevel providers are taking over increasing responsibilities for which they are neither educated nor trained, as more and more focus is directed towards documentation over patient care – primarily for the sake of charge capture, billing, and risk management, and as staffing models are stretching nurses and other ancillary personal ever thinner, quality of care is falling, and it becomes more and more dangerous to be on the receiving end of American healthcare – particularly in the hospital setting.

The need for healthcare advocacy has never been more acute. Yet few patients have that available to them unless they have healthcare professionals in their own family who have the time and geographic freedom to intervene in a meaningful way. True, many hospitals have patient advocates, but they are hospital employees and ultimately represent the hospitals – not the patients.

Needed Solutions – Healthcare Advocacy and Education

As a leading economic think tank, the Financial Policy Council (FPC) plays a critical role in informing Americans and driving smarter policy around our nation’s pressing healthcare challenges. Through consistent research, events, membership insights, and advocacy, the FPC works to spotlight issues and spur meaningful improvements to our healthcare system¹⁵.

Central to the FPC’s effort is educating the wider public through seminars, forums and events that convene expert voices to discuss the most salient healthcare topics – from the implications of Medicare-for-All proposals to innovations in digital health. These seminars highlight critical data, case studies and perspectives to elucidate often complex policy issues and trade-offs for citizens and investors alike. The FPC also advocates for key principles such as promoting free market healthcare solutions, ensuring price and quality transparency across the system, removing barriers that prevent physicians from providing timely care to patients, and streamlining inefficient government regulations and administrative waste.

Further, the organization leverages its membership base to surface valuable insights from financial experts and investors interacting daily with the healthcare sector. Through member blogs and collaborative digital knowledge sharing, the FPC amplifies diverse viewpoints on how investors and entrepreneurs can drive positive disruption amidst challenging status quo systems. Members discuss how technological adoption; new competitive care delivery models and empowered consumer purchasing can reform the industry. These blogs and member perspectives showcase innovative solutions and highlight health, biotech, and health-tech investment opportunities.

Overall, the FPC serves a crucial function – bringing together investors, economists, policy experts and industry leaders to debate and spread awareness of healthcare challenges while identifying fiscally responsible solutions that ensure quality, affordable, timely care for every American. The FPC provides an independent platform to discuss this complex challenge and spotlight opportunities for the private sector to deliver much needed innovation and value to patients across America.

The opportunities for improvement and innovation are plentiful. However, given the complexity of our current system, the many involved parties who profit from it in its current form, and how slowly real changes are made and implemented, most of these opportunities for improvement will necessarily be outside of the current system. In this author’s opinion, much of the solution lies in entrepreneurial ventures that address the pain points of the consumers by reconnecting them with physicians and mid-level providers who have their patients as their primary focus. Not an electronic medical record system, not Medicare regulations, not billing and documentation metrics, but the patient. The only

way for this to happen in our current state is for this to occur outside of the insurance realm. Direct patient care in whatever form is the answer.

We already see many pivoting to direct patient care models, concierge models, private physician models, and even patient directed models as many take near full responsibility for their own health. As this grows, it will need to be modified to eventually be able to address the needs of society at large and then replace what we currently have – the huge, fragmented, inefficient, third and fourth party run, governmentally-regulated behemoth.

Artificial intelligence (AI) and machine learning technologies continue to progress rapidly. AI-powered solutions are making it easier for healthcare organizations to analyze data, improve diagnostic accuracy, streamline administrative tasks, and enhance both patient engagement and health outcomes.

Specifically, AI tools can screen patient records to identify risk factors, diagnose conditions, and ensure appropriate interventions. Intelligent chatbots provide 24/7 patient support to increase access to care. Backend AI systems can drastically reduce billing errors and processing time.

As AI capabilities grow more powerful each year, its integration across the healthcare ecosystem will bring tremendous efficiency gains. Experts predict AI could help cut healthcare costs by billions while improving quality of care for millions. Accenture estimates that AI applications could result in reducing treatment costs by as much as 50% over the next decade¹⁶.

The accelerated pace of healthcare-focused AI innovation increases the speed at which impactful digital transformation can happen across the industry. Revolutionary changes in care delivery models, virtual medicine adoption, personalized care, and real-time health monitoring/intervention are now possible thanks to these exponential advances in AI and complementary technologies.

Calls to Action – Steps Readers Can Take to Drive Change

A few additional solutions that will help stem the tide of the continued collapse of our healthcare system are to:

Contact Your Representatives: Write, call, or visit your local and national representatives to voice your concerns about some of the specific healthcare issues or reforms you believe are necessary.
Support Healthcare Advocacy Groups: Support organizations and advocacy groups like the Financial Policy Council that make a difference by working towards healthcare reform in addressing specific health-related issues. This could involve membership, donations, or even volunteer work.
Stay Informed: Continue to educate yourself and others as you stay informed about healthcare policies, reforms, and upcoming policy changes.
Advocate for Preventive Care: Remember the importance of preventive care. Take charge of your own health by scheduling regular check-ups, screenings, and vaccinations. If you don’t become your own advocate, no one else will.
Promote Healthy Lifestyles: Similar to the point above, establish healthier lifestyles by improving your sleep, improving nutrition, staying physically active, managing stress, and avoiding harmful habits like smoking or excessive alcohol consumption.
Healthcare Literacy: Educate yourself about your healthcare and insurance options.
Community Engagement: Remember how important it is to get involved in local healthcare initiatives and community health programs. This could include volunteering at clinics or participating in health education events.
Explore Telehealth Options: In the digital age, tele-health has become an established access point for healthcare engagement with your physician or healthcare provider for routine medical consultations and mental health services – especially for those who have limited access to in-person care.

As we make these tectonic shifts in our healthcare landscape, it would be wise to consider investments in companies that are leading the charge in specific areas. A few suggestions would be things like the telehealth space with companies like Teladoc (TDOC: NYSE-Provides virtual healthcare services, including video consultations, chronic disease management, and mental health care.) TeamHealth (TMH:NYSE-Provides physician staffing and management services to hospitals and other healthcare providers.), AmWell (AMWL:NYSE-Offers a wide range of telehealth services, including video consultations, urgent care, and mental health care.), Amazon Care (AMZN:NASDAQ-Provides virtual primary care, urgent care, and mental health services to Amazon employees and their families.), OneMedical (ONEM-NYSE-Operates a network of primary care clinics that offer in-person and virtual care services.) Sesame Care (SESM:NASDAQ-Provides a platform that connects patients with healthcare providers based on their specific needs and preferences.), and others in the same space. There are also companies that are focused on the AI and IT like Cerner (CERN:NASDAQ-Provides software and IT solutions to hospitals and other healthcare providers.), GE Healthcare (GE:NYSE-Develops medical imaging equipment and other healthcare technologies.), Praxis (PRAX-NASDAQ -Provides clinical trial data management solutions to pharmaceutical and biotechnology companies.), Epic (EPICS:Private Company-Develops electronic health record (EHR) software for hospitals.) and other healthcare providers.

(Note: *Investing in any company carries risks, and it is important to conduct thorough research and consult with a financial advisor before making any investment decisions. *Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investing in stocks or other securities carries risks, and past performance does not guarantee future results. Always do your own research and consider your investment goals and risk tolerance before making any investment decisions.)

America’s Extreme Healthcare Waste and Inefficiencies

It is shocking that despite spending nearly 18% of its GDP on healthcare – more than $13,000 per person annually – the U.S. fails to outperform peer countries on critical health indicators like life expectancy and disease burden which spend significantly less. No other nation even spends over 12% of GDP on healthcare. This stark comparison reveals deep systemic inefficiencies.

Consider these eye-opening facts:

U.S. has 30+ MRI machines per million people – more than double other developed nations. Yet access to care ranks last. This shows how the system rewards costly, unnecessary interventions over prevention and holistic care.¹⁷
Americans pay on average $1,220 per year out-of-pocket on healthcare – 50-100% higher than UK, Australia and Canada. This creates severe financial toxicity and inequities for patients¹⁸.
U.S. healthcare administrative costs are 25-30% of total spend compared to ~15% in Canada and Australia. Nearly $1 Trillion annually is wasted on healthcare bureaucracy – not patient care¹⁹.

The implications are clear. America’s healthcare ‘illness’ is rooted in misplaced incentives that have created bloated bureaucracy and over-medicalization. The system merely treats immediate symptoms of chronic underlying policy issues. True healthcare reform requires antidotes that re-align system motivators. Innovation in physician-patient partnership models, transparency on price/quality and lean non-profit care management offer glimmers of hope.

CONCLUSION: Healthcare Innovation is an American Strength

For decades America’s healthcare apparatus has spiraled towards imminent collapse. Flaws have compounded leaving patients struggling under toxic costs, dangerously uneven access and outcomes.

Still, America holds unique strengths – entrepreneurship, research pedigree and risk capital – that can catalyze healthcare transformation. Already trailblazing medical science is being augmented by patient-centric delivery innovations, precision analytics and disruptive new care access platforms.

By rediscovering and modernizing the sacred patient-physician relationship, optimizing policy levers and rewarding value over volume, American healthcare can leverage its unmatched innovation prowess to create the world’s leading patient responsive and economically sustainable model – bringing reform and relief to millions.

Visit www.financialpolicycouncil.org to access blogs and resources focused on healthcare innovation, connect with policy experts and advisors, and help drive reform conversations aimed at fixing our broken system. Together we can support entrepreneurial ventures that increase access, lower costs, and improve quality – building the next generation of healthcare delivery for all Americans.

The FPC offers an independent hub to discuss America’s complex healthcare challenges while empowering stakeholders across the ecosystem to contribute insights and innovative new models that can transform outcomes for millions of patients.

#healthcarecrisis #systemicfailure #accesscostsquality #healthreform #patientcare

#healthtech

Footnotes

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and- Reports/NationalHealthExpendData/NHE-Fact-Sheet
https://www.oecd.org/health/health-data.htm
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
https://www.commonwealthfund.org/publications/fund-reports/2021/aug/mirror-mirror-2021- reflecting-poorly
https://www.in2013dollars.com/us/inflation/1970?amount=353
https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html
https://www.oecd.org/health/health-data.htm
https://www.aamc.org/data-reports/workforce/data/physician-supply-and-demand-through- 2034
https://www.ama-assn.org/system/files/corp/media-browser/premium/arc/medicare-graduate-medical-education-funding-cap-implications.pdf
https://www.commonwealthfund.org/publications/issue-briefs/2020/nov/maternal-mortality-maternity-care-us-compared-10-countries
The maternal and infant mortality data were provided by the Centers for Disease Control and Prevention.^[1] Life expectancy statistics and trends were derived from analyses by the National Center for Health Statistics, Harvard Medical School, the CDC, and other research.^[2] These sources validate declining US life expectancy in recent years, with more pronounced drops for racial/ethnic minority groups.^[3] Research from the CDC, National Center for Health Statistics, and World Health Organization highlight leading causes of death including heart disease, cancer, unintentional injuries, respiratory disease, stroke, and others.^[4]
- [1] Centers for Disease Control and Prevention – www.cdc.gov
- [2] National Center for Health Statistics – www.cdc.gov/nchs | Harvard Medical School – www.hcp.med.harvard.edu
- [3] National Center for Health Statistics Health Disparities Data – www.cdc.gov/nchs/health_policy/hea
- [4] CDC Leading Causes of Death Data – www.cdc.gov/nchs/fastats/leading-causes-of-death.htm
https://www.bmj.com/content/353/bmj.i2139
LEAN is a way of thinking about creating needed value with fewer resources and less waste. And lean is a practice consisting of continuous experimentation to achieve perfect value with zero waste. Lean thinking and practice occur together.
https://www.financialpolicy.org/about-fpc/
https://www.nationalacademies.org/; https://www.forbes.com/sites/cognitiveworld/2022/04/09/the-truth-about-ai-in-healthcare/ and https://www.healthcaredive.com/news/artificial-intelligence-healthcare-savings-harvard-mckinsey-report/641163/
https://www.marketresearchfuture.com/reports/magnetic-resonance-imaging-systems-market-6194
https://www.oecd.org/health/Health-expenditure-differences-USA-OECD-countries-Brief- July-2022.pdf
https://www.commonwealthfund.org/administrative-costs; https://jamanetwork.com/journals/jama/fullarticle/2762302; https://www.kff.org/health-costs/ and https://www.ama-assn.org/delivering-care/patient-support-advocacy/ama-vision-health-care-reform

Disclaimer: This article discusses certain companies and their products or services as potential solutions. These mentions are for illustrative purposes only and should not be interpreted as endorsements or investment recommendations. All investment strategies carry inherent risks, and it is imperative that readers conduct their own independent research and seek advice from qualified investment professionals tailored to their specific financial circumstances before making any investment decisions.

The content provided here does not constitute personalized investment advice. Decisions to invest or engage with any securities or financial products mentioned in this article should only be made after consulting with a qualified financial advisor, considering your investment objectives and risk tolerance. The author assumes no responsibility for any financial losses or other consequences resulting directly or indirectly from the use of the content of this article.

As with any financial decision, thorough investigation and caution are advised before making investment decisions.