The American Healthcare Industry

We, as employers, are part of a sprawling, enormously complex healthcare system. In theory, all the major players within our system - the payers, providers, administrators, insurance companies and pharmaceutical firms to name a few - should be working together towards a common goal: proactively supporting individual health, and at the onset of illness, providing the tools needed to maintain a quality life. Instead, we often work as a disjointed unit, albeit one that does take small steps to improve the quality and affordability of care so that individuals may experience improved health outcomes. The downside of this fragmentation is that it convolutes the path towards optimal health. This complexity puts the delivery of care itself at risk across its continuum. 

As a result, what we have in America is as Walter Cronkite suggested years ago: Healthcare that isn’t always focused on health. Upon closer examination, it’s also not a stretch to suggest that what we have isn’t entirely caring either. But the thing that rings truest from this statement is that we don't have a system. We may continue to call it a system, but that’s only because we’ve never questioned the legitimacy of the word’s use, at least not in this context. To anybody involved, what we have is simply The American Health Care System.

By definition, a system is a set of things working together as parts of a mechanism or an interconnecting network. I’d like to ask all of you, from your experience in employee benefits, do you believe that all of these players, from our employee patient to the care team; from the billing department to the claims manager; from the pharmaceutical manufacturer to the formulary writer; from the Department of Health and Human Services to the CEO of an insurance company; from the CFO of a multi-state health system to the CHRO of a 5,000 employee organization… are ‘working together’ as an ‘interconnected network’ to improve anything, let alone to collectively improve quality and care that implicitly benefits the health of patients?

Of course not. And there is a reason why they aren’t working together. It’s because we don’t have an American health care system. We have an American health care industry. And over the past six months, we have learned that this industry is hyper-competitive. As of October, at least 47 hospitals have closed or entered bankruptcy in the US this year alone. There are also many provider practices, large and small across the US that have closed their doors. It begs the question; how could this happen in the midst of a pandemic?  

Although there are many reasons a hospital may fall onto hard times, this year’s unique set of circumstances created an environment with fewer patients, higher expenses and countless canceled elective procedures. By one measure, it is estimated that the US lost between 30 and 55 percent of its elective patient volume during the onset of the coronavirus. Although there was a slight uptick in these services come May, the spikes of June and July sent the number of procedures tumbling again. 

This costs hospitals because elective procedures generate revenue. It costs smaller facilities and those in rural areas even more proportionally. Even pre-COVID, many rural hospitals with a predominant Medicare/Medicaid population were struggling to maintain their facilities let alone to offer new elective services. When COVID hit, costs for some of these hospitals immediately exceeded revenues, forcing several to close. Across the country, there were furloughs, layoffs, and closures of entire wings in the first few months of COVID-19 due to restricted services and prohibitive costs. 

American healthcare is billed as the best in the world but that doesn’t matter if we can’t keep the doors to our hospitals and private practices open. If at the onset of a pandemic raging across the U.S. we can’t continue to provide the tools and services needed, then it is time to reevaluate this so-called ‘system.’ It’s time to make certain that when patients need it most, the delivery of care is available. It’s time that healthcare becomes less industrialized and more healthy, caring and organized.