The Healing American Healthcare Podcast
The Healing American Healthcare Podcast

Episode 13 · 8 months ago

The Economics of Healthcare in the US


Ed Eichhorn, co-founder of The Healing American Healthcare Coalition™, sits with neurologist, biophysicist and co-author of Healing American Healthcare Mike Hutchinson to discuss the economics of the healthcare industry. They analyze how America’s bureaucratic systems have held healthcare back and how the market could be geared towards benefitting both patients and practitioners alike.

Want to join our mailing list? Text HEALHEALTHCARE to 22828 to get started. And be sure to go to to learn more about The Healing American Healthcare Coalition™


"The Discovery" 

by The Lemming Shepards 

Exzel Music Publishing ( 

Licensed under Creative Commons: By Attribution 3.0  

Hello and thanks for joining us today,my name is Ad Icorn, I'm the founder of the healing American healthcarecoalition, and our goal is to provide our listeners with timely informationon healthcare, research and developing universal health care plans for America.Our coalition is not a political action committee. We are not affiliated withany political party. Our emission is to be a trusted objective source on thecurrent national discussion on healthcare initiatives that will impactthe health and will being of all Americans in the future. Our guesttoday is Doctor Michael Hutchinson, my Co author for our book healing AmericanHealth Care, a plan to provide care for all while saving one trillion dollars ayear. Doctor Hunchinson is an aurologist and biophysicist. He issenior faculty at the ICON School of Medicine at Mount Sini in Manhattan,New York. He is certified in neurology and neural imaging and is a pastpresident of the American Society of nerrow imaging Dr Hutchinson Holds aPhD and elecular physics and he invected parallel imaging in onthousand nine hundred a d. eighty seven, that is now the standard for clinicalMRI doctor Hunchinson, has a large practice in Manhattan. In addition, heteaches and conducts research, including fundamental M Ri theory andits application to neuro degenerative conditions. He is recently alsopublished a theory of ultrafast MRI and has been awarded two patents in thisarea of research. Thanks for joining us today, Mike I look forward to ourdiscussion. I know you're interested in economics and I'm happy to discusseconomics with you, especially as it relates to the practice of medicine.Well, a lot of people wonder: Why is it that we can have capitalism AP play o everythingexcept healthcare? Why is it breaking down in healthcare and, in my opinion,the answer is because we don't have capitalism at work in health care wehave socialization and and handout to large enterprises like hospitals,pharmaseugical companies and the insurance industry. You know you might ask yourself whycapitalism work so well for the order industry and not for healthcare. So Igive an example suppose you're, the CEO of Mercedes Corporation, you produce aproduct in high demand and the more of that product you ship, the more moneyyou make so the interests of the CEO and the shareholders and the customerare all aligned. They said. Well, that's obvious, but it's not obvious, because here wehave an industry, WHIRH ships of product and high demand, the insuranceindustry, but the more of that product is ships the less money it makes. So ithas a perverse disincentive to provide the demanded product and the rules ofcapialism break down. There's no free enterprise, there's no competitionbetween different pays and so on. The insurance industry is run rather like aoligarchy with local monopolies. Now the insurance indistry applies aburaucracy to prevent the demanded product being shipped and everyone isfamiliar with. You have to get precertification. You have to do this.You have to do that. This isn't covered that in soon and Chrisopher hitchons. Ithink put it really rather well, when he said Modern Madison combines theworst aspects of capitalistic greed with the worst aspects of bureaucraticsocialism. It's not working because...'s not free enerprise, the hospitalsare one thing in armaceutical industries obtained a sweet deal fromthe George W Bush administration, whereby they didn't have negotiate drugprices with the insurance companies, as a result of which I give a concrete example. I'm aeurologist and we use a lot of botarks, not for cosmetics, but for things likeheadaches and muscle spasm, it's a tremendously effective medication, verysafe and it really a great drug. If you will it's a muscle relactiont, which iswhy it works for all wrinkles, believe it or not, but wrinkles is only threepercent of the market and there's a lot of conditions that involved muscleSpesm, for example, spastic gladder. The eurologists are using this to help. People have frequent urination because I bladerstoo small. I use it fror my grain headaches and six other indications. Soit's good stuff now Alagan, who makes bochucks charges twelve hundredllar fora vile of boatups. But if you go to Europe they charge two hundred andfifty dollrs. So what's the difference, the difference is the Europeans go to them. They say welike your product. We think boatracks a great product. He could help a lot ofpeople. How much do you want for it and e Alegan presumably says well how abouttwelve hundred US dollars and they say get out of here- we've done ourhomework. We know it cost you fifty bucks to brow it up in Ireland willgive you two hundred and fifty bucks and that's plenty I'm speculating a bit,but that's basically what I mean is that so now the G it gets worse,because now the insurance comery doesn't want to pay for it. So they putall these rod blocks in the way of giving people relief from the chronicmigrane headaches and- and that introduces tremendous bureaucracy thatmy office has to deal with you're very often talking with people in thePhilippines who know nothing about the product, the left hand, doesn' knowwhat the right is doing. It's a bloody mess. Oh my in Europe. As you know, allof the countries in Europe negotiate drug prices on a national basis,whereas in the United States we don't do that and, as you mentioned, whenGeorgew Bush brought part D Medicare into being that paid forpharmaceuticals, pharmaceuticals are paid for by Partd at list price.There's no negotiation on those prices. So, like you know, in the United States, severalstudies have pointed out that we pay two and a half two four times more forspecific patented drugs than people do in other nations that actuallynegotiate on a national basis for the medications for their citizens and evenwhen the drugs go off patent very often ha generic is bought up by the drugmanufacture, which had the patent, which is expired, but they'll buy up.The other covers and they're allowed to do that and they keep the prices up.Yes, that occurs especially when other generic manufacturers do not choose tomake the drug and very similarly to the alegapalistic aspect of the companiesthat you mentioned earlier. If two generics make the same drug, the priceremains a little higher if pinegeneerics make the same drug theprices droppd dramatically because of the price competition and that's whybeing farmat does on what you just describe to have divisions thatgenerics of their patent covere drugs whem the pentns expire, so that theycan maintain price pressure on the market now consider this in theinsurance. Industri is already an oligoply. They have local control inmost markets, so Oli gopothes are bad because there's no free enterprises, nocompetition between them driving down costs, but the insurance ynistry ismade even worse because they have to n. They have to accept these high drugprices, which cuts into their profets,... they make the life of the physicianmiserable. It doesn't do any good except to create all kinds of headachesabout the the patient and the physician. So this is all bad we're talking aboutOli Garples, not free, enderprice, price fixing and so on. This is not theAmerican way. This is not what made America a great economy. Now, if youturn the clock back about forty years, you realize we actually had a prettygood system. Everybody was in short, who had a job and if you insured,youere insured to a high standard, so the doctors were happy. The patientswere happy a cost. Ten percent of GDP what's happened. Well, we have allthese oligapoles. We have hosprals putting up expensive wings. We haveCEOS of hospitals, making six eight ten million dollars a year and for everyCEO, hs Al Cao many deans and mini CEOS. This boxall has to be paid for it's notclear to me how this bureaucracy enhances a provision of medical care,quite the opposite. So how dod we end up with this system. It's been a longroad and, I think, began with the insuranceindustry and then the PHARMACEUTIGOES got involved. ND. Then the hospiralsgot involved. The hospitals are themselves and oligopily. They settheir own prices. You'd find a hospital in one city, doing a spine surgery fora hundred and twentythousand dollars an another city. You might find it doingfor twenty fivehsand and if you go to Amstwerdam, you can get the samesurgery for tensand, so we don't have free markets. Michael, listened to avery important issue. Hospitals have been combining into Omega HospitalSystem when they do that they have the leverage the negotiatingpower with insurance companies. While you know we are critical of insurancecompanies because of their attempt to minimize the medical loss ratio, whichis the amount of money they pay for care on the hospital side when theyform these mega non PROPI corporations. Over the last several years, they'veincreased their prises between twelve and seventeen percent a year becausethey could, if you are a hospital that is a standallone hospital in the statelike New Jersey, where I live. You're negotiting capability with Horizon BlueCross or other paiers is quite limited, so when they choose to try to lowertheir rates, you are in a position to excempt e or be out of Netord. However,if you were a large conglomerate, non profit, people already evhen, you candictate pricing because you have a lot of leverage over the Paier and that'sthe problem you're talking about, but but the hospital industry in ourcountry is one with very different problems in different places. There'sabout five tousand hospitals in the United States. Three thousand of thembreak even or lose money and are not mega hospital that you're. Referring tothat you a deal with from time to time, and in top of that there are sixhundred of those three tousand hospitals that are in rural marketsknow their primary payers are Medicaid in Menicare or cash. Two of them gobankrupt to a close every month and and that's another issue that is to beaddressed and of those hospitals that you know are profitable and most ofwhich are non profits. Two years ago, Their Act, actual nonprofit profit wasseventy eight billion dollars. So there are different sections of this marketthat works very differently, and I think we need to figure out how to bothlower than cost of the expensive hospitals and fine ways to maintainhospitals in rural America and in the inner city thatrnt well financed as theones you describe well. I think we can make a stab in the right direction forcorrecting this by focusing on the doctors and you make doctors, theagents of free enterprise, so they'e competing with each other for Patiente,so in principle, the more patients you...

...see, the more revenue you have, and sothe betner doctors are going to be highly motivated to see patients andprovide calde healthcare. That's what Frianna pros about! That's, not what wehave. Now we have doctors on salary, working for Oliarchis, known ashospitals and very oftel. You have to wait months to get an appointment. Soif you said to doctors by the way, if you see more patients, you're going tomake more money would be very motivating and that's what we call freeenterprise. Also, the quality of care would go up because doctors would haveto compete with other doctors. So right now we do not have a system of freeenterprise and that, I think, is a fundamental problem with modern UShealthcare ironic, since this country is, you know, perhaps the mostcapitalist, doing more countries in the world. But it's true and I think, byputting doctors back in the driving seat, you can make big inroads. Youalso have to go to the Farmersigal instry and by executive order, orwhatever say it is no longer the case that you no longer have to negotiate.You have to negotiate that's what Cablon's all about. We can't have ifI'Ma Sudal industry like this, so political decisions can be made at ahigh level to make the farmer Seuitedlenstrey more compliant with therules of capitalism and you- and I have suggested that perhaps we could start this by having money madeavailable by the government rather ther in the same way as Medicare, so thatdoctors can' compete for a pooll of money. So you sae well that socialismisgovernment Rud Messine. No, it's not the way. I look at it is rather likethe way I look at the defense industry that I'm not a big fan of defensespending. However, when the government supplies x, amount of dollars for ourparticular fighter plane or so on, you get tremendous competition from defensecorporations and the result is you get the finest weapons in the world? Nowagain, I'm not terribly excited about having so much weaponry, but here's.The point is that when the government puts money in they're not controllingindustry, they are saying there's the money compete for it and that's the wayI look at it. If you had all cares, we've talked about is something thatanybody with a job would have access to as far as repertoire of insurancecorporations to choose from whether it's Oxford or Ednar or blue cross herehas something called or care or care would have minimal input from thegovernment. It would simply be a you know, a large sum of money for whichdoctors could compete just for our listeners, who have not read our book.Yet what you're talking about is I corn Dnuntonson all here, Plang Gevin andthe all care plan is one that is a little bit modeled onthe German system and basically, all employers would have to provideinsurance for their employees and they can be selfinsured. They could byprivate insurance or they could buy the all care option which is designe basedon Medicare, and we have a fe structure similar to menicares and from outrcalculations would cost about thirty percent less than private church. So wewe create competition in the marketplace, especially because ninetypercent of private insurance, company business or their book of business iswith employers. So we would be expanding the insurance base, whichmeans people would see care in a normal way, and positions like yourself couldcompete based on the quality of their services, for the opportunity toprovide care to people who need the services that they can provide and whenwe talk about Meni care as a source for for planning the all care public option.You know we think of Medicare, many of... in the United States. Think of thatas socialized medicine and what menicare actually does is it sets apeace schedule. It monitors how those thes are paid, but physicians decidehow the money is paid. It's not you know a true socialistic system wouldsay you are a physician. Here's what the government is going to pay youmonthly to be a position running. You see, patents or not. That's the way.True hundred percent socialistic system of work, but menicare doesn't do that.It allows you to compete for patience and I think that's an importantpasitive aspect of Medicare and in surveys around the country whenpatients are asked about their health insurance menitary usually comes out asthe most preferrend system. Yes, I have to say Medicare. The way it was set upand structured is olmost, the opposite of socialism, because it does allowdoctors to compete with each other and it sets ta stage for Free Enterpriseand the doctors become the agents of Fre Enterprise. Now the problem withMedicare is a creeping bureaucracy, they're beginning now to imitate theprived insurance companies and, I think that's a huge mistake. Doctors are themost burned out profession. Fifty percent of doctors destrayed themselvesas burned out. This is not a good situation once you have to stopprecertifying for everything. It changes the landscame in such a waythat you almost don't want to come in to work to see patients, so the oldMedicare actually work pretty well. Now. How do you prevent people exploitingMedicare? Let me give you a concrete example. I know physicians, who have awhole bunch of tests in their office and every patient gets every test. It'stotally fraudulent and it's the sort of thing that could be easily flagged bycomputer. So, for example, let's suppose I'm a Eurologist, I see I read a lot ofemorice cans. Suppose I want to own an EMERI scatner and make it readilyavailable to ma patient populations. They don't have to wait a week, get aprehertifight and so on. How do you prevent me from cheating, very simple?You say for each discipline, you have a menu and the menu ul be feneurologywill be something like for every new patient. You See, you get one point twoMeri Gans after that. You'RE SCANNING FOR FREE FOR EVERY REPEAT: patient,it's Pointowait, scans, P for repeat patient. After that you're scaning forfree, you eliminate fraud. You eliminate all these other silly teststhat doctors and their patience for, because you don't allow them. So wecould automatically regulate doctors without all this topdownfrecertification and manipulation and searching through records and all thethings that makes the modern medical practice very difficult. The thingwould run automatically and the beauty of it is the system would encouragedoctors to be supelative in what they do. Michael. I had a question askedthat you and I hav really never talked about in our efforts to write our bookand other discussions. We've had I understand what you said about the ideaof having a set number of tests. You could provide per patient andcontrolling the fees in that way, and there are a number of know, tests orprocedures ordered by physicians, where the preauthorization approval rate isabove ninety seven percent, which begs the question of: Why do you have to dopresearch? But I was wondering what you thought of replacing precertificationin the current marketplace, with postpayment review, not auditing, but areport that says what you order verses. What the standard average is- and youknow, ask you that- no think about your ordering patterns of tests, like you just suggestedpayment play well, the main the main...

...expense is testing you're, actuallythinking about adding another layer of bureaucracy, I think you'LD be donemuch better automatically, and it would very you know cardiologist would well.One thing I can predict is that the Emera scan is just going to take overjust about all of medical diagnoses. The scans are getting quicker andquicker and quicker, there's a theoreticall reason, which is you knowI've been involved with, for supposing we can do a whole brain or a whole body.EMERI can in a fraction of a second one of high quality, and when that happens,emri is going to take over everything. The cardiologists will get involved theparmenologist- and I think you know if we have these restrictionson the number of skins you can order. You still order in proportion to thenumber of patients you see, so it's not like, bundling which doctors hate, butit's better than that. It's saying that and every year the numbers that you'reallowed to send on an Emeri scan an will change. According to RelativeValley Committees, it can be set up with minimum dureaucracy. So I thinkthat certainly I know my own field very well and I'm aware of a lot of doctorsordering a lot of unnecessary tests for the purposes of income, and you canrestrict that- and you say you know you spend more time talking to the Patienand less time doing tests on them and a lot of these tests are pretty uselessanyway. They don't add anything and I believe that computerized systems canregulate the referral patterns of doctors. So we don't need look back on.You know further layrs of bureaucracy, but you know you have a point. I thinkthat's another possibility that would get rid of this onerous requirement forprecertification. Incidentally, pre certification of boatuck is now socrazy that not only you tolin Someo in Philippines, he may switch intosomething in India. Nobody knows what they're doing the pharmacies are evenworse. They say they ship the stuff when they didn't ship it, the PA, it'sa nightmare and I'm sure it's true in other aspects of medical care as well,but that's something close to my heart. We could easily. By going to thecorporations and the Farmaceudal Coprate SA, you can no longer chargewhatever you want for these drugs. The eight hundred dollar fppen is a classicexample. It's like it's now rageous reversal of capitalism. There's no freeenderprise, there's no competition. You got it's like Amin monopoly. You haveto take what we give and you have to pay for it and that's not capitalism,so I say: restore capitalism and start with the doctors get the doctors out ofthe hospitals rea as we used to be forty years ago and Nono longer onsalary, the good old days can come back and we can do medical practice for farless than it's costing right now. Remember, docters cost only ten percentof the dollars that are spent on health care and make ninety five percent ofthe choices, so we're cheatwe're good value for the money. Just let us runthe thing. No More Hospital administrations, Mbas accountants gethem allot well, Likli. I think you have a very,very strong opinion about where we want to go, and I think you laid out a lot of things in ourconversation that will cause people to think about the future, and you know Ithink it's a debate worth having and as someone who owns an NBA ore,making me nervous well, look NBAS have uses to as just too many ofthem in hospital administration. No, I do say return to capitalism return towhat made this country great and you have a great system, and that meanshanding power back to the doctors. Well...

Mike. I want to thank you for takingthe time to chat with us today. I'm sure our listeners will have a lot ofopinions about the approach you'd like to take to medisine in the future. Theycan contact us. They can send me an email with questions if they like an EDdot icorn at Medelin Groupcom. They can join our mailing list by texting heelhealth care at two two, eight two eight or they can visit our website athealing American health care, dot, orig to learn more about our coalition andto receive our newsletter, the three minute read and lastly, they can getour Buk to learn more about what we think about healthcare and the all careplan. That's healing American health care and it's available at Amazon,Barns and noble and at our website. So thanks a lot everyone and have a greatrest of your day and remember, return us to capitalism and save a trilliondollars a year.

In-Stream Audio Search


Search across all episodes within this podcast

Episodes (23)