Healthcare Inefficiencies

**IMPORTANT: This article contains mentions of health access insecurity and health insurance. If you feel uncomfortable with these topics, please refrain from reading.

“A health corporation without a healthcare provider in a leadership or board position cannot define itself as a health corporation.” I recently read a similar statement from a leading public health professional and I find it to be resoundingly true. Much of the US health system is run by third party corporations and entities that affect patient care in some capacity but also create inefficiencies in the overall care pathway. While it is necessary to acknowledge that every institution in every health-related or adjacent field is important in the overall delivery of healthcare, the inefficiencies created by collaborating institutions with different interests negatively impact patient care and the ability of healthcare teams to provide high quality patient care. 

A health system is most effective when the number of patients treated and the quality of care provided are maximized. In some systems, the patient volume is very high creating inefficiencies that result in long wait times and lower quality care. In other systems, the patient volume is much lower and although treated patients may experience very high quality care, significant disparities between patients with and without access to care may persist.

A 2022 Biennial Survey highlights the financial complications that accompany medical treatment. (1) In the US, many individuals who deal with medical debt also incur credit card debt, use up all of their savings, delay spending on education or basic necessities, or declare bankruptcy. Given that a health system is designed to maximize the number of patients treated and the quality of care provided, receiving care for a medical illness should not derail an individual’s life such that it diminishes their long-term potential.

In the US, a convergence of publicly and privately-financed health insurance creates inefficiencies between health insurance firms and hospital systems. While insurance firms seek to bear the majority of patient out-of-pocket expenses while earning profit, hospital systems seek to maximize the number of patients treated while ensuring providers are adequately reimbursed. 

A recent dispute between health insurers and hospital systems in New York has revealed the inefficiencies in the US system. (2) While health insurance firms such as United Healthcare and Aetna are seeking to lower insurance reimbursements, hospital networks including New York Presbyterian and Mount Sinai Health are seeking to increase funding to continue treating high volumes of patients. In fact, United Healthcare has stated that Mount Sinai’s increased insurance proposal might increase rates between 43 and 58% over the next few years.

This conflict has had real effects on patients’ access to care; patients ensured with United Healthcare began losing coverage at Mount Sinai Health in January, and coverage has continued to decrease throughout March. The Wall Street Journal predicts that between 80 and 100 thousand patients may lose insurance coverage for their chosen hospital system.

While many would agree that physicians and healthcare providers in general should be well compensated for providing quality care, it is important to acknowledge the other side of the story. While healthcare insurers likely do stand to gain more of a profit in the status quo with lower compensation rates, patient premiums are the primary means of funding hospital reimbursements. Increasing hospital reimbursements would likely increase patient premiums; if patients end up paying more to receive healthcare coverage, the access-inequity in the US may grow resulting in a greater healthcare disparity between those with and those without healthcare access and health insurance.

Regardless, treating healthcare as an economic commodity, a simple supply-and-demand model reflects this situation. With hospital systems supplying healthcare and health insurance firms demanding healthcare and paying via insurance/reimbursement, a status quo equilibrium develops with hospital systems and health insurance firms agreeing upon a set reimbursement price and for a set number of patients.

Hospital systems are demanding greater reimbursements for the same number of patients, effectively proposing that the equilibrium shift up, increasing price but maintaining quantity. On the demand curve (what health insurers are willing to pay), increasing price will result in significantly lower quantity or patient volume, thus resulting in growing access disparities. On the other hand, if the health insurance firm curve shifted up (meaning that insurers were able to provide greater reimbursement costs for the same patient quantity), patient premiums would likely increase resulting in greater patient health expenditures. Regardless, these changes do come at the cost of patients who might be forced to choose between losing in-network coverage and facing higher insurer premiums in the very near term.

I started this article with a pitch to put physicians back in the driver seat of larger healthcare systems. With so many competing private and public institutions that play a role in patient care and outcomes, physicians and healthcare providers need to take the lead and ensure that when making larger systems-level decisions, institutions work to collectively serve the most patients and to provide the best level of care possible. 

While community pharmacies and primary care clinics are important in providing face-to-face patient care, insurance governing firms as well as physician and pharmacist licensing firms are rarely if ever involved in direct patient care. (3) In this complex healthcare marketplace, via effective communication and prioritizing the needs of patients over the benefits of any single firm or industry, institutions may collaborate to expand healthcare access and improve quality, resolving inefficiencies within the status quo system.