December 5, 2025
Dear Interested Readers,
We Need a New Approach to Healthcare
Looking back on the years 2008-2013, when I had leadership responsibilities at a large and influential medical practice, I have very mixed feelings. I am pleased to have participated in our organization’s effort to achieve the Triple Aim through its orientation to the six domains of quality as defined by the Institute of Medicine: patient-centeredness, safety, effectiveness, timeliness, efficiency, and equity, but I am distressed that in the years since I retired political divisions and the unexpected challenges of the COVID pandemic, coupled with growing professional shortages and increasing resistance to change have left us with significant doubts about the future of healthcare in America.
Back in the 60s, when I was a medical student, Dr. Robert Ebert, then the Dean of Harvard Medical School, postulated that we could not ensure the country’s future health by spending more money and building more healthcare facilities. He felt that we had become too hospital and specialty-centric. He was convinced that the fee-for-service practice was wasteful because it led to over-treatment and was tilted toward expensive interventions in those who were sick, while not fostering efforts to maintain health. He was particularly concerned that a hospital-centric system of care, facilitated by fee-for-service financing, was problematic for underserved communities in both urban and rural areas. Sixty years later, there is no doubt that Dr. Ebert was right on all his points. Despite the earnest efforts by many, many dedicated healthcare professionals to reengineer both how care is delivered and financed, which peaked with the passage of the Affordable Care Act in the decade after the IOM published Crossing the Quality Chasm: A New Health System for the 21st Century in 2001, it appears that progress has been halted. Indeed, I believe that most of the progress during the period between the late eighties and the end of the Obama administration has been lost, and further disintegration of our system of care may occur over the next decade.
We never established that access to adequate healthcare should be an entitlement or a reasonable expectation of every American. The passage of the “One Big Beautiful Bill” and the withdrawal of financial support for the ACA marketplace did not create our problem, but they will accelerate our further decline and diminish the hope of beginning our recovery any time before 2029. I fear that it will be many years before we can start the repair of our current reality, a system of care that often poorly serves even those who can pay the high cost for attention and access. Worse than “slow care” for those with access, which will be delivered in crowded and understaffed environments for problems that could have been avoided with adequate access to preventive care, will be those who end up getting no care until any care will be futile.
I have been encouraged that the Social Determinants of Health, the problems of our very challenged system of primary care, and the failures and future potential harm of the “corporatization” of healthcare have received increasing attention in the New England Journal of Medicine over the last year. I have wondered if the destructive actions and policies of the Trump administration have finally stimulated the Journal to become more vocal.
The articles primarily describe the growing concerns and raise questions that must precede the articulation of policies that may offer potential solutions. I don’t believe in throwing a lot of ideas against the wall to see what sticks. I do believe in developing thoughtful responses to complex problems. Those thoughtful hypotheses should be developed from data-heavy observations blended with the realities and concerns of populations of both patients and healthcare professionals, which will lead to possible solutions that can be carefully implemented and studied. The road to where we want to go will be quite long, even if we have a bipartisan resolve to stem our losses and solve the problems that undermine the health of many Americans.
In a highly polarized political environment, the task of “fixing” healthcare will be much more complicated, if not impossible. Our problems did not begin with the pandemic or the passage of the ACA. I would trace the origin of where we are now back to at least Ronald Reagan’s rants against “welfare queens” and advocacy for small government. Perhaps we could trace it back to the narrow defeat in the Truman administration of a national healthcare system that would have provided care to every American. Maybe the culprit is the AMA, which has persistently protected the practice of medicine as a profitable business venture for its members by opposing most progressive efforts to establish universal coverage going back to Roosevelt’s New Deal. There are many causes over a long time. Trump, in his ignorance, is just driving another nail into the coffin. If we have a problem that has evolved over decades, we can reasonably expect that the recovery will be a long and challenging journey once it begins again.
Perhaps the recent articles in the New England Journal of Medicine signal that we are beginning to do the prework of our recovery. The most recent noteworthy article appeared on November 29th and was in print in the “Perspectives” section of the December 4th edition of the journal. The title—Has Corporatization Met Its Match? The Challenge of Making Money by Keeping People Healthy— immediately captured my attention, and I got very excited when I realized the first author was someone I knew, David M. Cutler, Ph.D. During my management days in Massachusetts, I had many interactions with Professor Cutler as we both served on conference panels, working groups, and policy committees in those heady days when we were in the “vanguard” of healthcare reform in Massachusetts. Robert S. Huckman, Ph.D., coauthored the paper with Dr. Cutler. I do not have any personal experience with him, but if you click on his name, you will follow a link to his impressive credentials.
The paper begins provocatively by declaring that our healthcare system operates with “perverse incentives.” As I frequently do, I have bolded the words that I want you to notice.
The U.S. health care system has long operated with perverse incentives: although there would be greater moral and economic value in keeping people healthy than in treating them once they get sick, the system focuses its resources primarily on treatment rather than prevention. Physicians and other health care professionals are trained to diagnose and treat illness; neither they, nor the hospitals at which they work, can easily sustain themselves by working to keep people from using the services they offer. The ongoing corporatization of health care has exacerbated this fundamental problem, highlighting and increasing the need to realign the system’s incentives and activities to benefit the health of the population it serves.
I have never believed that our system of care could properly serve patients and provide a survivable environment for healthcare professionals if the enterprise’s primary focus is on producing a positive bottom line. There are many aspects of our community where the objective is a necessary service, not the production of a profit or positive bottom line. Successfully supporting community health is not the same as turning a profit. It is highly unlikely that services like obstetrics in a rural environment, adequate mental health resources in any environment, and even primary care can produce both the services needed and a robust bottom line. Dr. Ebert knew that the focus on generating a profit makes the system unnecessarily expensive and favors overuse and misuse of its capabilities. Cutler and Huckman understand the problem and explain its mechanics:
Like other corporations, hospitals and physician practices aim to ensure that their revenues exceed their costs by some margin. At the simplest level, three variables affect the margin: revenue per patient, cost per patient, and the number of patients served. The first two variables have been challenging for hospitals and physician practices to influence, the former because of the power of large (also corporate) payers and the latter because of increases in the price of labor and materials required to deliver care. These limitations leave hospitals and physicians with one lever for raising profits: increasing the volume of profitable treatment provided.
Notice that the outcome of the “three variables” leads to an inevitable focus on an increase in profitable treatments. In hospitals, “hearts, hips, and knees” provide the profits that subsidize necessary services that would be neglected if there were not a transfer of resources. It is also true that the fee structures of Medicare and Medicaid don’t provide hospitals in inner cities and rural areas with the resources that their competitors in wealthy neighborhoods receive from the payments of much more generous employer-sponsored commercial products. During my time in a leadership position, we received more than twice what Medicare would pay when the patient had a Blue Cross card. The differential between Medicaid and commercial insurance payments was even greater. You can’t make up the losses from Medicaid and Medicare compared to commercial payments by doing more Medicaid and Medicare business. You must become more efficient, but in the current environment, gains of one year lead to a new baseline that requires even greater efficiency the following year. No good deed goes unpunished. Cutler and Huckman know the impossibilities that define how the system functions. What they don’t understand is why change doesn’t occur if the current system is becoming increasingly impossible, when the focus of revenue generation is on treating sickness rather than promoting wellness.
An emphasis on increasing volume, however, creates little incentive for hospitals and physicians to focus on what should be the objective of a well-functioning health system: keeping patients healthy so that they need less, or at least less costly, health care. Indeed, we have a health system in which hospitals and physician practices are often more profitable when their patients are sick. Why has it been so challenging to change that system to make hospitals and physician practices more profitable when their patients are healthy?
The authors do report on efforts to shift care out of the hospital to the office and ambulatory surgical centers, and to replace hospital days with “hospital at home” days with better support. They note many attempts at innovation, but sadly, these efforts have not significantly improved the system’s performance or solved its increasing problems. After going through programs tried and the lack of success generated, they attempt to understand why we can’t solve a problem that we can describe.
Several factors contribute to the challenge of turning efforts to keep people healthy into a healthy business…Given that hospital profits are still driven by procedures and inpatient admissions, and hospitals — along with their affiliated physicians — have substantial influence over health care decisions, it is challenging to reduce hospitalization rates substantially. Indeed, though many health systems publicly express concern about crowded emergency departments and inpatient beds, efforts to decant volume from their highest-revenue sites can result in losing patients to competing systems — a risk they may be reluctant to take.
So hospitals have their own special version of a reversed FOMO (fear of missing out) if they leap to a new approach and fail, while their competitors stick to the status quo. But there is more:
Second, like hospitals, physicians often lack incentives to reduce hospital utilization. Although value-based payment models are gaining traction, most physicians continue to operate under fee-for-service (FFS) arrangements, even when their employing organization is paid under a capitated or quality-based model…This durability of FFS payment reinforces physicians’ financial motivation to admit patients to hospitals and, to a lesser extent, to see them in other clinical facilities.
So doctors don’t trust the income from any model other than fee-for-service. There is more:
Third, efforts to move care to what is, in theory, a very low-cost setting — patients’ homes — have faced significant obstacles. Care in the home comes in two forms, both of which aim to reduce the intensity and cost of care while improving patient health. The first is home monitoring of chronic conditions designed to maintain health and prevent avoidable hospital admissions. The second is hospital-at-home programs designed to allow hospitalized patients to recover at home rather than in the hospital or a skilled nursing facility. Despite evidence suggesting their benefits in terms of both cost and quality, hospital-at-home models have grown slowly owing to uncertainty about whether federal waivers to support Medicare reimbursement for the model will be continued. In addition, though most patients do not enjoy being in the hospital, they and their families may not feel confident managing postdischarge needs at home, even with remote support from trusted hospitals or physicians.
There are two more “reasons” the authors offer.
Fourth, the challenge of keeping people healthy is further complicated by the fact that both existing health systems and new entrants focused on value-based care have underestimated the complexity of integrating medical care with broader social supports.
Said differently, improving the Social Determinants of Health is not considered to be part of the job by many doctors and mid-level clinicians. Maybe they are right, but to whom do these tasks fall?
Finally, whereas medical care can be broken into reimbursable procedures and visits that align well with traditional corporate models focused on revenue per unit, health and prevention are generally difficult to quantify and monetize. For businesses to succeed in that realm, they need to be able to get paid for delivering health. Such monetization, however, requires the development of new ways of defining and measuring the health “product” that’s being created.
My take is that until we have new leadership and can find a way to develop a bipartisan search for solutions, as we attempted to do more than twenty years ago, we are stuck with what we have and can only expect things to get worse. If we can’t move to something better than a system of care dominated by a focus on sickness and procedures financed by fee-for-service payment, we will be paying more and more for fewer and fewer people to get adequate care. The authors end with a logical question for which we don’t yet have comprehensive or proven answers.
So what would it take to make delivering health — not just health care — a sustainable business? The path forward begins with agreeing on robust, validated ways to measure health and link it to upstream investments. We need clearer evidence on the impact of healthy food, housing, transportation, and social services on health, which can serve as the foundation for reimbursement models that reward health outcomes, not just medical care activity.
Remembering Dr. Ebert, it is déjà vu “all over again.” Cutler and Huckman can’t quite get to where I am, which is to recognize that we will eventually need to give up healthcare as a business designed to make a profit. I fear we will be frustrated until we recognize healthcare as a right that can’t be delivered until we think of it as a publicly provided service that makes quality care available for everyone, that may not always produce a profit and will require social change and governmental subsidies, but it would be worht it in the same way that an excellent system of education is worht it to the country. A sick and poorly educated population isn’t productive. It is a good investment for the future of our communities to provide everyone with healthcare that is patient-centered, safe, effective, timely, efficient, and equitable. Our authors are realists and not quite ready to give up on figuring out how healthcare can succeed as a business, while I believe that a healthier nation will be good for all our businesses and is worthy of being treated as critical infrastructure. We do agree that any improvement will require sweeping fundamental changes that will be hard to negotiate and implement.
The dearth of successful business models aimed at keeping people healthy highlights one of the central challenges of the growing corporatization of health care: how to make money producing health, not just health care. The path to doing so will require fundamental changes in the incentives for individuals and institutions and, potentially, broader structural change by policymakers to increase access to or financial support for basic preventive care. That said, many of the elements necessary for successfully managing health are both known and reasonable to implement for organizations and policymakers willing to change the status quo.
Success won’t come until we are willing to change the status quo, but that is not a new insight. Dr. Ebert knew that in 1965. We have come full circle over a sixty-year journey. As the song says, “When will they ever learn?” If you prefer T.S. Eliot to Pete Seeger:
We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.
Burr! It is Cold.
The temp at my place bottomed out last night at one degree below zero. I was zero when I arose to finish this letter to you. As you can see from today’s header, we had seven inches of snow earlier this week, and the lake is frozen, although I will wait a little longer before trying to walk on the ice. The long-range forecast says we won’t reach 35 degrees until next Wednesday and Thursday, and then we go down again. I think there’s a good chance of a “White Christmas.” I doubt that there will be “open water” before next April.
I am ready for the cold. My job, or primary purpose these days, is to keep hauling in wood for the fire in my living room and to keep the bird feeders that you can see in the picture filled. If you are weary from working at a pace that is hard to sustain, I feel for you. I feel a little guilty when I get out of my warm bed around 9 AM or later, knowing that most of my readers are up by 6 AM and some even earlier for rounds or to get an early start on office administrative tasks.
Ironically, I envy you and respect your commitment to your difficult jobs in difficult times. From my experience, I would suggest that your retirement will come sooner than you expect. I hope that when it comes, it will be as sweet for you as mine has been for me. Stay warm and find joy in the journey by trying to make things better for some poor soul you may encounter in our dysfunctional, declining healthcare system.
Be well,
Gene
