Profits Over Patients: The Healthcare System's Design Flaw

Dallas O’Connor


Healthcare in the United States is a headache. Actually, it might be classified as a debilitating migraine. But if you want to get that checked out, you will probably have to go to your general practitioner, who will refer you to a neurologist, who will recommend blood tests, or an MRI, or a CT scan (just to rule out other possible conditions), and then prescribe you medication. I really hope you have insurance.

But seriously, Healthcare in this country is about as complicated and frustrating of an issue as any. And it’s frustrating because it seems impossible to fix without some sort of cinematic revolution. There are probably countless reasons why healthcare has gotten so rotten, but at its core, I don’t believe profit and health should be intertwined. Does that not seem like common sense?

The two hands stitching these ideas together are Private Insurance Companies and Healthcare Organizations. Private health insurance companies are profit-driven meaning their primary obligation is to their shareholders, not the patients they serve. They operate by collecting monthly premiums, and in exchange, they promise to cover certain healthcare costs as outlined in their misleading and intricate insurance policies. According to the United States Census Bureau, in 2022 about 65.6 percent of Americans had private health insurance coverage. Healthcare Organizations, who deliver direct healthcare to patients, generate revenue from payments for medical services rendered. And even though 65.6 percent of Americans succumb to this system, I would guess that the majority do not understand how these two juggernauts interact.

If you think about it, doctors and healthcare professionals mostly work for insurance companies. At the end of the day, they are the ones paying for the majority of their services and decide how much those services are worth through contracts. Hospital-Insurer Contracting is an extremely confusing topic yet it is one of the foundational pieces that dictate how much the patient will eventually pay. In “Facts About Hospital-Insurer Contracting” a study published by The American Journal of Managed Care, they compared the negotiated price of a common service that occurred across 524 contracts and 10 hospitals: MS-DRG 768 (vaginal delivery with operating room procedures). As seen in Table 1, the median negotiated price for this service varied from $5,116 to $14,458. The even crazier part about this study is that they found the same health insurance company pays drastically different prices for the same service at different hospitals. To specify, “the price of MS-DRG 768 for Cigna at North Suburban Medical Center (Colorado) is $3111, whereas the price for Cigna at TriStar Greenview Regional Hospital is $10,796.”


Table 1

The point of providing you with that study is to demonstrate how the cost of something as crucial and universal as childbirth can be so drastically different and rely largely on where the service is provided. And that’s just one problem. As I said, the number of reasons behind the failure of this ridiculous system is probably countless, but I think this for-profit nature is especially wrong. Healthcare Organizations’ goal should not be to garner profit and health insurance companies should focus on making coverage more accessible rather than push more costs onto patients. 

By now I hope it is obvious that the healthcare system is inherently flawed. How could the system possibly function smoothly when the outcomes that benefit patients are directly inverse to the outcomes that benefit private companies and organizations. This is particularly apparent with regard to quality of care. If you think about the ideal circumstances for both parties this relationship becomes clearer. If we use a hospital visit as an example, the ideal outcome for a patient would be that they receive adequate time with a doctor, are given all necessary care, and are not subject to unnecessary tests, surgeries, or treatments. However, the ideal outcome for the hospital, from an economic lens, would be that you spend very little time with a doctor and are given unnecessary, expensive care that insurance covers a large percentage of.

This makes it nearly impossible for quality care to be at the forefront of healthcare. In fact, the book Improving Diagnosis in Health Care comes to a similar conclusion. The committee responsible for this research found that there is “no disincentive for ordering unnecessary diagnostic testing that could lead to false positive results and diagnostic errors.” This committee also found that a conservative estimate of “5 percent of U.S. adults who seek outpatient care each year experience a diagnostic error.” They attribute these diagnostic errors to a health care system “that is not well designed to support the diagnostic process; limited feedback to clinicians about diagnostic performance; and a culture that discourages transparency and disclosure of diagnostic errors.”

In other words, the healthcare system is programmed to fail for the majority of Americans who pay for private coverage. And while many believers of this system believe that private healthcare improves research and development and increases access to services, I would argue that it comes at the expense of the patient. If you are exploiting patients to discover new technologies that will be used to exploit patients even more, can that really be considered a system designed with the patient's best interests in mind?


References


Henderson, Morgan A., and Morgane C. Mouslim. “Facts About Hospital-Insurer Contracting.” The American Journal of Managed Care, vol. 30, no. 2, 12 Feb. 2024, https://doi.org/10.37765/ajmc.2024.89502. 


Keisler-Starkey, Katherine. “Health Insurance Coverage in the United States: 2022.” Census.Gov, 12 Sept. 2023, www.census.gov/library/publications/2023/demo/p60-281.html. 


The National Academies of Sciences, Engineering, and Medicine, et al. Improving Diagnosis in Health Care. National Academies Press, 2015.

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