Elisabeth Rosenthal
Dr. Elisabeth Rosenthal, author of “An American Sickness: How Healthcare Became Big Business and How You Can Take It Back.” Photo credit: Penguin Press and Nina Subin / Penguin Press

It may turn out that the solution to the health care crisis will not run through Washington.

Another attempt at health care reform, this time the GOP’s effort to dismantle Obamacare, seems to be failing in Congress. Our guest this week, Dr. Elisabeth Rosenthal, the editor-in-chief of Kaiser Health News and a Harvard-trained physician, says that maybe it’s time to look beyond Washington for a solution.

In order to do that, Rosenthal tells WhoWhatWhy’s Jeff Schechtman, patients and the public need to look at how we got here. Why do prices keep rising? Why does 20 to 30% of some household incomes go toward health care? And how come the modern US healthcare system was designed by the same people who made chicken packing plants more efficient?

Rosenthal explains how many of the values of business, which healthcare has become, are incompatible with the values of medicine. She shows how the four-legged stool that is doctors, hospitals, insurance companies and Big Pharma works, and why patients are not a part of the framework — and why they must be. Rosenthal, the author of An American Sickness: How Healthcare Became Big Business and How You Can Take It Back (Penguin Press, April 2017), says that both personal empowerment and an appreciation of humanity is a far more practical way to address healthcare today.

download rss-35468_640

Click HERE to Download Mp3

Full Text Transcript:

As a service to our readers, we provide transcripts with our podcasts. We try to ensure that these transcripts do not include errors. However, due to a constraint of resources, we are not always able to proofread them as closely as we would like and hope that you will excuse any errors that slipped through.

Jeff Schechtman: Welcome to Radio WhoWhatWhy. I’m Jeff Schechtman.

We’ve all heard the old adage that “what can be done, can be undone.” Maybe we need to try that with our healthcare system. In just 50 years we’ve gone from an affordable and human-based system, to one that people hate at every level. They may like their individual doctor, but they generally hate the system. Of course, there have been changes and disruption everywhere in our society, but most of it has been to make our lives easier, better and more efficient, and in many cases, to lower the barriers to entry. In healthcare, it’s become less efficient, costlier, less human centric, higher barriers to entry, and the net result has not been to increase the care or life expectancy of individuals. Instead it’s enriched those at the top of the system, while at the same time being out of step with every system in every other Western nation. This is hardly American exceptionalism. So how did we get here, and how will that knowledge be helpful in trying to sort it out and may be improving the system? We’re going to talk about that today with my guest, Dr. Elisabeth Rosenthal. She spent 22 years as a reporter, correspondent and senior writer at The New York Times. She is currently the editor-in-chief of Kaiser Health News and has received degrees from Stanford, from Cambridge, and from Harvard. It is my pleasure to welcome Dr. Elisabeth Rosenthal here. Dr. Rosenthal, thanks so much for joining us.

Elisabeth Rosenthal: Thanks for having me.

Jeff: Is there is singular point of time, a rough period we can identify in which our system changed so dramatically to the kind of business-based profit system that we have today?

Elisabeth: Well, I think there’s no one point, it was gradually and it was growing when I was a resident in the late 80s, where you would see like the leading edge of this. You know, when I started in medical school there was a head nurse on all wards and he or she would lie down in front of a train to protect the patients on the wards. No one would say, “Oh, you know, insurance won’t reimburse one more day,” or, “You can’t use that medicine because it’s not covered by the policy or it’s too expensive.” But by the time I finished my training, I saw people coming in with clipboards and when I was practicing in emergency room, there were more people with MBAs around the hospital, and that was the leading edge. And at that point it still may have made sense because hospitals were terribly inefficient places, and a lot of them were hemorrhaging money around that time. But I think for me, one of the most pressing moments was around the year 2000, where hospitals started calling in consultants from Deloitte and McKinsey to tell them how to operate better as businesses. And at that point, you see the metrics and the value of business being applied to healthcare. So they’re coming to assist them and not say like, “How do you improve infection rates?” Because, right, McKinsey and Deloitte don’t know that. They come in and say, “This is how you can make more money by billing for more.” “Guys, you know you could bill for OR [?] time. You could bill for recovery room time. You could bill $17 for that Tylenol pill. Why are you leaving all this money on the table?” So suddenly you have the kind of lens that business is looking at healthcare. As if they were looking at a chicken packing plant, a jet engine plant, and that’s where the problem really begins taking off. And of course, once hospitals start billing that way, then the doctors start feeling like, “Wow, we’re the labor here. We’re providing the medical goods, and there are these 20 administrators at my hospital and MBAs, when I’m doing the work. I want more too.” So they start upping the charges. And we see in the pharmaceutical world, you know, when the AIDS drugs were introduced in the 1990s. They came into the market around $10,000 a year and everyone thought, “Wow, that’s a crazy price. That’s insane.” There was all this pushback. Now that sounds kind of reasonable. So the pharmaceutical manufacturers got in and started upping prices, and we always thought that generic drugs were inherently cheap. Well, not really. What we see now is the generic drug manufacturers say, “You know, gee, why should we only charge pennies for this 50-year-old antibiotic. Let’s do a Martin Shkreli and increase the price to five dollars a pill.” And they’re getting away with it, it’s kind of this inflationary cycle where each part of the system sees the others managing to charge extortionate prices. And because the values of business have taken hold, the poor patients and the poor doctors who are just trying to do the right thing, are pretty powerless and feel very stuck.

Jeff: It does seem almost like a four-legged stool – the patients are not really part of that – but it’s the insurance companies, the hospitals, the doctors, and the drug and pharmaceutical companies, and the way they have all worked together over these past 30, 40 years.

Elisabeth: Well, they’re often kind of codependent and very unproductive ways that say much more about the business of healthcare, than about healthcare itself. I mean what we find now is that even many of the patient advocacy groups are funded by PhRMA. So really what’s their message when they’re funded by PhRMA. It’s not, “Gee, why does this drug cost $70,000 a year.” It’s, “Why doesn’t our insurance pay for it?” It’s such a distorted kind of inflationary lens to look at healthcare through. In all of these healthcare debates in Washington, at the state level, at companies, no one really is representing the patients and their needs and their distress as they open these bills and face the $5000 deductible, or the 20% co-pay, on insulin that’s risen by 400% in the last 10 years. So we need to speak up for our own interests here.

Jeff: The other thing that seems to have happened at the same time is almost on purpose, an increasing complexity of all of this, making it more and more difficult for the patient to understand.

Elisabeth: And I don’t think… you know these things don’t happen for business purposes in order to make a profit, but because they make a profit. And because they’re conducive to making money, there’s no there’s no resistance to them. So in our system what you see happening is layers and layers of middlemen introduced. So say for example, a joint implant, a company is charging $22,000 for that because, hey, there only four joint manufacturers in the US – and some orthopedists like to refer to them as a cartel – you know, they’re all charging a lot of money, way more than they charge in other countries, and it’s in no one’s interest to offer a discounted project product. But what happens is the hospital says, “Wow, that’s really expensive.” So the hospital hires a joint negotiator who talks to a joint broker, and the manufacturer has a joint salesman, so someone calculated that there are 13 middlemen between that joint being produced, and it being put into a patient’s body. And those are all for-profit companies in the middle and they’re all taking you know their 10% cut. So why does a joint end up costing $22,000? Well, because there are a lot of people kind of feeding off that list price. You know, we heard it when the CEO of Mylan was taken to the congressional hearing, saying, “Why does the EpiPen cost $600 now?” And she said, “Well, there all these middlemen, so we don’t get that $600.” Now there two layers of questions there. I mean first of all, what value do the middlemen serve for those of us patients? And the answer is: little to none. And the second question is, you know, why does an ancient drug put in a fancy new device deserve the same patent as the ancient drug by itself, which is really the lifesaving entity? You know, epinephrine is cheap. EpiPens are hugely expensive just because epinephrine is in kind of a cool new package. And that may have some value, it’s easier to use in a syringe and a little vial of epinephrine. But $200, $400? Not if we were paying out of pocket. And I think that’s why we’re seeing people squawking now because with high deductibles and co-pays we are seeing these prices now. We are feeling them and we weren’t a few years ago, when our insurance was covering things better. So now we see this widespread outrage at healthcare and healthcare costs. We see at the town hall meetings, people standing up and going, “Don’t take away my insurance, I can’t afford this. I’m being devastated. I haven’t gotten a raise in 10 years.” Why? Because your employer has been increasingly paying more and more to health insurance costs.

Jeff: Is there a tipping point in all of this? Is there a point that you could see where the system just collapses under its own financial weight?

Elisabeth: Well, you know, I would’ve thought over the last few years we’d reach that tipping point. I mean people spending 20 to 30% of their household income on healthcare costs, that to me is pretty near that tipping point. People not getting raises for 10 years because of healthcare costs, that should create a tipping point. But I think we haven’t adequately connected all these hardships to things that are fixable, that we don’t have to put up with. You know, we’ve accepted this narrative of, “Well, healthcare is expensive. We’re doing really important valuable things for you. We have no choice but to pay this much for the drug, otherwise we won’t get drug development.” This is not necessary and we’re not getting results that are better than anywhere else in the world. In fact, for many diseases studies show we’re getting worse results. So don’t just take this narrative, “Oh, we have the best healthcare and it has to cost this much because it’s so very valuable.” Well, no, no, no, you know, we’re paying 2 to 3 times as much as people in the rest of the world. I don’t expect us to overnight get to any of those levels, but certainly we can turn the ship around and not be not taking summer vacations, or going bankrupt, or having our credit ratings dinged because of these really outrageous costs.

Jeff: To some extent, it’s hard to imagine, except for anyone that is in the system and profiting from the system, that there can be any legitimate defenders of this current system.

Elisabeth: Well, you know, certainly many, many physicians feel extremely uncomfortable with this system. They do not think their patients are getting value and it bothers them. There’s one group of physicians who are a bunch of surgeons in northern Wisconsin, red state, red area for sure. And one of them said to me, “You know, I always felt like I was helping people by taking out their appendix, and then a patient came in to me and said, ‘Doc, I feel better but I just got this bill for $25,000 and I can’t afford it.’” And this doctor, Hans Roy Steiner, said to me, “You know, I’d always felt good about being a physician and then I realized in saving his life, I bankrupted his family.” And so, no, doctors, many of the good doctors in this system, are so stressed by what’s going on. So who are the defenders? You know, you hear them certainly come from PhRMA, you hear them come from some of the hospital executives who say, “You know, what else can we do?” Well, you look around the hospital and you say, “Gee, maybe you didn’t have to buy the new wing? Maybe you could’ve reduced the bills? Or maybe don’t need a curator and all this art? Maybe you should not charge so much for your outpatient surgery center?” You know, the defenders tend to be people who are profiting from the system, not the people who were just – and there are many people who are just trying to deliver good healthcare – and that’s to me the essential problem. That the values of healthcare are patients, helping people, caring. The values of business are efficiency, revenue generation, profit maximization. A lot of the people involved in our healthcare system are profit driven and the values of medicine and the values of business intersect sometimes, but many times they don’t.

Jeff: Are we seeing any difference at all when we look at the world – there is a separate world of non-profit medicine, non-profit hospitals – when we look at those is anything any different?

Elisabeth: Well, that’s a really hard one to answer because certainly there are many non-profits in the healthcare world like community clinics that are doing amazing work and struggling to do so. There are also small rural hospitals that are struggling to do so. But look at two thirds of hospitals or more in this country are technically non-profit. They do not look like any other non-profit on earth, I would say. Their executives are paid millions and millions of dollars, often the highest-paid non-profit executive in a city is the hospital CEO. They tend to be now more MBAs than physicians, which is a big change from 25 years ago. So I think, you know I would like to see more non-profits in the healthcare space, but I’d like them to be real non-profits. I think one thing that I encourage all patients to do is look at their local hospital’s tax form. Because they are non-profits they have to file something called a Schedule H on their 990 tax form, and it will tell you what your hospital is doing for your community to deserve not paying any taxes. And I think most of us will find that very unsatisfying. So yes, non-profits in healthcare are a good idea in many countries, like in Germany. There’s a rule that all insurers have to be not-for-profit. I don’t know that we’re ready to go there but those sectors which are non-profit, we should demand that they give us real value, that they serve the communities. And I would love to see more non-profit insurers. The Affordable Care Act created a bunch of them through the state insurance cooperatives. Many of them failed because frankly Congress never really funded them adequately to function as health insurers.

Jeff: We’re just about out of time. Let me ask you, do you have any reason to think, given the current climate, medical climate, political climate, all the various forces that we’ve touched on here, that anything is going to change in the system anytime soon?

Elisabeth: I do think there’s hope, but I think we’re looking to the wrong place if we’re looking to Washington for a solution right now. There’s a lot that individuals can do to reduce their own healthcare cost. Things to ask your doctor, ways to question the hospital, even templates of letters you can use to assert your patient rights. That will save you money, but also it will send a message to this healthcare system that we are not just going to accept these prices anymore. We want much better. We want more reasonable prices and far greater transparency. But also at the state level, there’s an enormous amount that state insurance regulators can do, for example. They can say those directories which we all know now are horribly inaccurate, have to be accurate up to this week, up to this month. Most insurance, state insurance directors now are taken from the insurance industry, but they really should be patient advocates. And many of those are elected positions, so let’s start electing state insurance commissioners who serve our interests. We see a number of states playing around with different innovations, some are single-payer, some are drug price regulations. I suspect that much progress in healthcare now, as we suffer issues like gay marriage, or legalizing medical marijuana, will come at the state level, and we’ll see if that coalesces into a bigger national movement. But states can do an awful lot. I mean, healthcare is if nothing else, it’s local, it’s local. And the courts can break up these local conglomerates. You can go to your local hospital and ask for better. We do have power at the state and local and individual level, as long as we choose to speak up and exercise it. And I think we all should.

Jeff: Elisabeth Rosenthal. Elisabeth, I thank you so much for spending time with us.

Elisabeth: Sure. I hope people get more for what they pay for their healthcare. We all deserve it.

Jeff Schechtman: Thank you so much. Thank you for listening and joining us here on Radio WhoWhatWhy. I hope you join us next week for another Radio WhoWhatWhy podcast. I’m Jeff Schechtman.

If you liked this podcast, please feel free to share and help others find it by rating and reviewing it on iTunes. You can also support this podcast and all the work we do by going to

Related front page panorama photo credit: Adapted by WhoWhatWhy from man with stool (Fredrik Alpstedt / Flickr – CC BY-NC-SA 2.0).


  • Jeff Schechtman

    Jeff Schechtman’s career spans movies, radio stations and podcasts. After spending twenty-five years in the motion picture industry as a producer and executive, he immersed himself in journalism, radio, and more recently the world of podcasts. To date he has conducted over ten-thousand interviews with authors, journalists, and thought leaders. Since March of 2015, he has conducted over 315 podcasts for

    View all posts

Comments are closed.