The Economics of Medicine: Personal Reflections

Yves here. Readers regularly give updates on the crapification of medicine, mainly from the patient but sometimes the provider side. A big driver is insurance: obstacles like pre-approvals or other gatekeeping delaying or perversely restricting care, or narrow networks excluding certain specialists. But the other is corporatization of medicine, which we’ve been writing about for a decade. That means not just a fixation on cost reduction but also standardization, which proponents insist, without or contrary to evidence, improves care.

The result of all of this, not mentioned often enough, is moral injury. Articles about doctors retiring early may deign to mention burnout, caused by fighting with insurers and particularly post-Covid, thin staffing. But they don’t include often enough moral injury, of feeling they are to violating their ethics by being forced to practice in a substandard or even risky manner.

I ran into a small example yesterday. I always have my blood drawn at a clinical lab because MDs’ nurses usually turn me into a pincushion. I always ask for a butterfly needle.

Today, at a Labcorp, the lab tech said she didn’t have one. She had been ordering them since August and none were being supplied. She said Labcorp was instead giving her similar-gauge needles, which were clearly cheaper than butterflies and not as good for many uses, particularly getting blood from children, the elderly, chemo patients, and patients that needed to be “stuck” many times (she did not elaborate on the latter). This was not a matter of saying “no” to patients. She was clearly upset at being asked as a professional to do her job with improper tools. She seemed to feel demeaned. She said she asked every patient to complain to Labcorp about it.

Multiply stingy indignities like that across the entire medical system in the US.

This wee yet very very typical example illustrates that executives and managers don’t care about the business of the business, even when health and lives are at risk. All that matters is profit.

By Joel Eissenberg. Originally published at Angry Bear

When I was growing up, I viewed being a physician as the zenith of achievement for someone interested in science. That changed when I got to college and became interested in research. I realized I didn’t have the temperament for a physician (OK, maybe a radiologist or a pathologist) and I became a lab rat. I did make a career as a professor in a medical school department and I taught thousands of 1st year medical students, but I really wasn’t interested in medical practice.

When I started my faculty career in 1987, there was a lot of money sloshing around at the medical school. Back then, insurance companies paid a premium for patients seen at academic tertiary care hospitals and clinics. But within a decade, managed care took over and medical schools across the nation were bleeding money. My university sold its hospital to Tenet while the hospital was still profitable. That turned out to be problematic, so eventually they bought it back and sold it to SSM, which was better aligned with the Jesuit Catholic mission of the university.

The basic science curriculum at the medical school has been shortened to make way for more clinical rotations. Meanwhile, for the graduates, the career prospects are evolving. Nurse practitioners and physician assistants are taking over the duties formerly performed by MDs and DOs. AI is more accurate than human radiologists in diagnostic imaging. Private equity is taking over practices and community hospitals and draining resources. Here’s an ophthalmologist in Kansas City:

“Medicine is going to hell. I have been asked to write several editorials but it would be so depressing I would feel bad. My own group, owned by 6 physicians, sold out 2 years ago to private equity (PE). Since then, 5 of us have left. You know the drill: fire local management, install bean counter as head person, golden rule now “MORE REVENUE SO WE CAN SELL OUT AT A PROFIT” down-staffed, told shorter patient contacts/more patients per day, more surgery, more revenue generating tests. Also, by fiat they are shifting all primary eye care to optoms and ophthalmologists do only surgery. This even on patients that have seen an MD and want to see MD not OD for three decades. The partners say no other specialty has had more decline in reimbursement than eye. The younger doctors did not want to buy in as partners and the older doctors had no exit plan. In fact, one of the partners died and they could not raise money to buy her out until sold to PE.

“Scholarship and merit have gone out the windows. The medical students and residents I come in contact with are snowflakes, self-entitled, clueless about intellectual rigor “do it for me” and standards dramatically lowered for some, raised for others in violation of supreme court ruling. You can go on the internet and learn about ‘work arounds” to shape the classes along the lines that are ‘fair’.”

Recently, an MD/PhD who did his PhD in my lab got in touch with me by email. He had initially taken a faculty position at the University of Hawaii medical school. But things changed:

“I am still kind of in academia and made it to associate professor rank but then it was just getting harder as hospitals saw anyone with “MD”s as replaceable billings ($) generating machines and getting rid of all protected time unless you have your own NIH funds (which is hard to do due to very limited support in Hawaii). So I kind of threw in the towel a few years back and started doing private practice (much more flexible schedule), which actually helps to subsidize the limited teach/research I still do pro bono.

Psychiatry is fun in a way that I have been involved in teaching the psych residents on how to translate individual genetic findings into meaningful clinical decision-making. And geriatric psychiatry addressing dementia behavior is still much a learn as you go field so keeps it interesting. The PhD work I had with you made me think more critically and open minded in embracing newer findings (this is like the most important/enlightening thing I picked up as a grad student), as most MDs are trained to think in a cookie cutter manner, so I always have fun putting my MD students on the spot how their textbook knowledge is ever becoming obsolete.

What a tragic waste of a physician-scientist.

I guess the medical profession is no longer quite the meal ticket it once was. The only constant in the world is change, and the economics of medicine is driving change in medical practice.

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22 comments

  1. Paul Greenwood

    It is not solely a US problem as it is propagated by Big Pharma driving Medicine as opposed to Surgery which is treated as a profit centre by health corporations. Yet globally it is said 33% health spending is embezzled or simply siphoned off.

    Insurance-based models from my experience in several countries tend to encourage fraud and over-billing with incentives for profit-maximisers. Coupled with DRGs they lead to whole areas of treatment being ignored and clustering of practitioners in certain specialities where rewards are greatest.

    Radiology is one of the highest paid sectors of German Medicine yet rarely is 4-eyes principle followed. Orthopaedics is characterised by greatest arrogance. Cardio and Anaesthesiology seems more intelligent. Whole areas however are not reimbursable on ICD coding or EBM so no one is interested unless you can be misdiagnosed with a treatable illness.

    Part of German lunacy was to ‚tax‘ health insurers Kassen with lower morbidity clientele and lower premia to aid those Kassen with the sickest and costliest cohorts. Consequently doctors receive hidden bonuses to declare patients in lower morbidity Kassen with serious ailments to reduce outflow to other Kassen

    The patient ends up with mysterious illnesses reported but no treatment for these fictitious ailments. Yet genuine illness cannot be treated because the insurer does not reimburse for that non-coded item

    Western society has followed US down a rabbit hole

    Reply
  2. Tim

    I have come to loathe the medical profession. It’s been my personal experience, thru dealing with an endemic disease and the medical communities indifference to and militant incurious for its causes or effective treatments, that most of the profession has been proletarianized and doesn’t think beyond what the paycheck allows.
    As my wife and I have taken on the responsibilities of taking care of our elderly parents, it’s yet another reminder to us as to how much the industry has optimized disease and infirmaries as units of reimbursements.
    My vocation takes me into the homes of this caste of workers. Anecdotal, but they seem to be doing just fine. Most I’ve interacted with have discretionary income, expensive tastes and often dabble in real estate, though the nature of my business, custom millwork, would act as a filter with the profession.
    I can’t help notice that on one of the previous projects, the bedroom addition including a closet larger than my humble house’s living room and kitchen combined, sharply contrasts with the constant fund raising within my community for families experience a medical crises.
    Don’t even get me started on emergency room visits.
    No, I no longer feel any sympathy for the Doctors. A cast of people who have little solidarity with the rest of the industries work force (have they ever supported a union drive or been in solidarity with a strike?) and their professional associations (agency) have actively worked against socialized health care for decades.
    O.K. End rant

    Reply
    1. Tim

      With the exception of my ire for the posters here at the NC, btw. I admire their desire to generously inform and give insights to this diverse community. I know I’m painting with a broad brush and exceptions exist and are numerous.

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      1. 2025 Grad RN

        I am a graduate registered nurse starting March 2025 at a major metro hospital in Australia. I enjoy the writing from KLG and IM Doc.

        My impressions from my short time in a very junior nurse-assisstant role are not great… The workforce is incurious and largely overwhelmed with paperwork. The non-permanent (casual, agency) parts of the workforce are stupid, expensive and uncaring.

        Despite the union prioritising permanency of employment in Enterprise Bargaining Agreements hospitals still refuse to hire adequately and make it difficult for existing permanent (part time) staff to take more hours.

        I look forward to reading and contributing as I work.

        Reply
  3. LAS

    The good medical outcomes that some persons have been fortunate to achieve are used to promote expectations that our non-distributive culture cannot meet in the general population. I wouldn’t even put it on capitalism as the cause, but inequality and politics. Aside from the uncountable, unknown unborn population, we’re really not a particularly pro-life “civilization.” Instead much talk is of enemies within, the sinful and the unworthy. Distribution … it’s mostly political.

    Reply
  4. kriptid

    Years ago, I had aspirations to become a physician scientist. I managed all of the academic rigors fine, and was on track to do so. Then, I spent a couple of hundred hours volunteering at the academic hospital, much of that time spent shadowing physicians in different specialties.

    What struck me was generally how unhappy everyone was and how much time was spent on paperwork. There was no joy for the doctors who spent all of their time in the clinic. The ones who ran a research lab usually only had 2 non-clinical days max per week. You can’t do good research on that schedule. Sure, if your grantsmanship is high level you can get money for your lab, but it’ll be run by your staff and post docs and you’ll become the rubber stamp for their work, never truly understanding the deepest mysteries in the work that, at least professionally, you get the credit for.

    I ended up getting a PhD instead. Along the way, I met many MD/PhD candidates. Not a single one had a strong ambition to stay in medicine: they all wanted to either do research or escape academia completely and work in industry or in finance, where folks with terminal level degrees are becoming more and more valued due to their ability to understand technical topics quickly.

    I ended up taking my PhD to Wall Street despite a solid start to my career in graduate school. I saw all of the same grifting and lying going on in academic science as any other field, so saw little reason to stay in a place where I would be underpaid and struggling my entire career. If you would have told me 15 years ago this is where I’d be, I would have said no way. But medicine and the sciences are becoming such a toxic work environment, there are fewer and fewer reasons to stay unless you’re a true glutton for punishment.

    Reply
    1. jm

      “…and work in industry or in finance, where folks with terminal level degrees are becoming more and more valued due to their ability to understand technical topics quickly”.

      To what end? Isn’t financialization at the root of the problem? I don’t know you or what you do in your work so don’t necessarily take this personally, but how does Wall St. siphoning off those with the intellect and skills required to do medicine and medical science not make the problem worse?

      Reply
      1. kriptid

        It absolutely makes the problem worse.

        But after spending 10+ years burnishing your professional credentials on poverty wages (or, in physicians’ cases, often going into $300-$400k worth or debt), Wall Street asks if you’d like to make double the money to use your technical skills to spot frauds and genuine gems when new technology comes along trying to raise money. You could choose to toil in a lab on some obscure topic that only a dozen people in the world care about and fight over scraps, or you can accept that whatever “good” you could do in that role is marginal compared to the “bad” you’ll do finding honest brokers in pharmaceuticals/med devices for Wall Street. There aren’t a ton of people losing sleep over making that decision, myself included.

        If my skills were valued and I felt like science could lead to a career filled with more joy than suffering, I would have done it in a heartbeat. But that’s not the case, and I’m content with the decision I made after sacrificing so many of my prime years for the ideals of a medical/scientific system that doesn’t care about me (to bring it back to the theme of this post).

        Reply
  5. Bemildred

    Well, they have all been turned into employees. What did they expect?

    I have been avoiding “health care” since the mid-90s, unless I have an acute issue, since it became obvious they did not give a darn about my health and mainly wanted to upsell me drugs of dubious utility.

    Since then, I “manage” my own issues. Modern “health care” requires you to do that anyway.

    It has, frankly, been great.

    Reply
      1. Paul Greenwood

        As you point out „able-bodied“ is a transient state. Driving that car when it it T-boned or rear-ended when stationary changes then outlook rapidly and then medicine is done to you in ER

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  6. IM Doc

    I have said throughout the comments here for years and I will say it again. The system is no longer viable. It is not only moral injury issues for the workers; it is simply not able to be sustained economically. We simply can no longer afford what is happening. I have seen this happening on the inside for some time. I have done all I can do and really put myself “out there” to warn colleagues and patients alike. Let me put it this way, things are now so obvious, they are no longer haranguing me or laughing at me. We can all see the disaster unfolding and it is even worse than I imagined. I have taken on more than one MBA in my life in my immediate world. And yet absolutely nothing changes. It just keeps getting worse. I no longer even try.

    I will repeat once again, most Americans are blissfully unaware of the lateness of the hour – this is medically, and in so many other areas that are regularly discussed on this blog.

    The butterfly IV issue you discuss is likely not from cost-cutting. It is likely there is a supply chain issue. We have not been able to procure these for some months at any cost. It is not just people like Yves, this makes simple IV access and blood draws in kids and babies very difficult. And yet there are literally hundreds of items and all kinds of meds that are on back order all the time.

    I have no answers. Other than I know the brick wall is on the way. I will say it again – please please please – put down the Cheetohs – please start living your life and healing your body in a way that you will not need the medical system – it will not be around much longer in its current form.

    Reply
    1. michael m

      I am sure you are right about the deteriorating state of the medical system. But I wish people like you would stop saying things like “start living your life and healing your body in a way that you will not need the medical system.” At thirty-eight, I had a pituitary tumor which was growing steadily and was going to kill me, which was surgically removed. It is difficult to see how my style of living caused this tumor. I have a condition called “migraine-related vertigo” which got worse and worse and by 2007 meant that after ten seconds of playing the piano very softly, my head swam, like intense nausea in the brain. I finally accepted the drugs suggested by my ENT, who had diagnosed my problem a year before, and I now live a pretty normal life. Without the drugs I probably would basically not move much. This is an inherited condition, my mother and sister have it in a mild form. Mine was mild too, until I caught an ear virus that took six months to recover from, and then the condition got steadily worse over the years. I don’t have the condition because I didn’t eat right or exercise or something. I accept that many of people’s problems may stem from or be exacerbated by non-optimal life practices. But lots of people like me have conditions for which “healing your body in a way that you will not need the medical system” is irrelevant. Writing as though this is some kind of general solution is virtually flippant, which I imagine is not intended.

      Reply
      1. IM Doc

        Sorry about your problem.

        Unfortunately, if I look at my patient panel from the age of 40 and up, I would guess that 95% of the patient’s medical problems are induced by diet, stress, and the American lifestyle. The cost of this is astronomical. It will very soon bankrupt the country.

        There are absolutely patients like yourself who have things that are completely random like pituitary tumors. That is what medical care is supposed to be about – and what it was about when I was younger. I now find myself wading through appointments with morbidly obese patients, diabetics, ADD, depression, anxiety, and followups from hospital stays for the same.

        I have just looked over my schedule – I see about 20-25 people a day. up to 5 of these are infections or trauma ( sometimes more depending on COVID activity) – 1-2 are related to some kind of medical issue that the person has no control over. The other 20 – are all self-induced medical issues or stress/anxiety caused by our current cultural behavior for the most part – there are a few exceptions.

        It is the way it is. It is the failure of our society to face these problems head on – that we will soon be in deep trouble. It is just now starting.

        Reply
      2. ISL

        Everything you write is true, and for patients with such problems, modern medicine is a miracle to be thanked (and trauma).

        Still, if you (or anyone) avoid exercise and a balanced and nutritious diet, choosing to binge on Cheetos and vodka, it is a safe bet that your health problems probably will compound (see Russian lifespan in the 1990s). And when the system hits the wall (See Russian lifespan in the 1990s), we all will need every positive health attribute we can achieve.

        Reply
    2. grateful dude

      RFK Jr, besides whatever flakiness he exhibits (and OMG Gaza), got a lot of this right. Eat well and most of the sickness goes away, absent too many previous decades of junk food.

      I get my care South of the Border. The doctors I’ve seen are excellent. I pay a little more than I used to in Medicare co-pays and deductibles, but that’s with no insurance at all (Medicare doesn’t cover outside the US). I can visit a well-educated, experienced physician, ie provider, in a clean professional situation for an hour or two for $20 – $60 US; pharmaceuticals are more natural. I had a basal cell/squamous carcinoma removed in a total 3 of visits to an oncologist, by laser, for about $250 US. No scar. And there’s a whole smorgasbord of providers of many kinds of medicine. Mexico is a much freer country than the u.s. in important ways.

      Reply
  7. David in Friday Harbor

    I’ve lost 3 excellent physicians over the past 20 years due to the corporate practice of medicine by MBA’s dictating their practice. This is leading to a dumbing-down of care due to the sort of inexperienced people who are willing to fill the jobs.

    A few examples close to home:

    Two years ago I went onto Medicare and my new physician recommended a “free” baseline aortal MRI. The technician was 6 months out of school and diagnosed an aneurism. The MD put me on a massive dose of statins (4x NIH recommended) even though my cholesterol levels were “perfect.” Within 12 weeks I developed severe muscle myopathy which was likely the beginnings of a form of muscular dystrophy known to be caused by statins. Fortunately KLG had posted here about a recent NEJM-IM study calling statins into question. I immediately stopped taking the drugs, the myopathy disappeared, and I convinced my MD to get a second opinion about the aneurism. I was sent to a 20-year veteran who confirmed that my aorta was within “normal” range. “Rookie mistake” caused me weeks of severe pain.

    This past week my daughter’s 30-year old friend experienced severe headaches and blurred vision. He went to the ER but was sent home because blood tests ruled-out a brain tumor. Fortunately, a mutual friend is an RN and marched him back to the ER and demanded an MRI. The MRI disclosed a massive cyst on the brain, likely caused by a sinus infection, requiring immediate surgery. The patient appears to be recovering well, so long as an infection doesn’t invade his pierced dura.

    Some years ago a colleague slipped on stairs (women’s shoes) and had to have her knee scoped. When friends came to pick her up from surgery they noticed that she “wasn’t right” and asked the hospital to examine her further. The hospital people basically said, “You Black people are always complaining,” and sent her home. She walked in the door and promptly dropped dead from a blood clot blocking her aortal artery. She left two daughters motherless.

    We’re just revenue streams. I agree about the Cheetos. Fingers-crossed that I never get sick…

    Reply
  8. Glenda

    I’m a member of a city commission that is tasked with oversight of the Behavioral Health Dept of Berkeley CA. This should involve looking at the contracts the city has with “providers” of services for drug and mental health support services. But the only provider we asked has just not given us any response. I’m thinking this will need a legal approach.
    The other currently notable issue is that the Dept is 30% understaffed and has job openings posted on a website. But the descriptions are full of license requirements. And the the Dept has not to my knowledge contacted the City College to advertise. I will be asking them to to that, but my guess is that the pay is too low to afford living in our city. And of course our city council has sold out to developers of expensive housing for students and yuppies.
    Still I keep hoping that a community commission like I’m on can develop a community alliance that can push for improvements or perhaps be part of a local safety net. Sadly I begin to think we will only be a place to hear sad stories.

    Reply

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