As patients increasingly rely on intermediaries and their services, US healthcare has developed what Dr. Robert Pearl calls the “intermediary mentality”.
Between producers and consumers, you will find a group of professionals who facilitate transactions, facilitate them and ship goods and services.
Known as intermediaries, they thrive in almost every industry, from real estate and retail to financial and travel services. Without intermediaries, houses and shirts would not be sold. There will be no banks or online booking sites. Thanks to intermediaries, tomatoes grown in South America are delivered by ship to North America, go through customs, end up in a local supermarket and end up in your basket.
Intermediaries do it all for a price. Consumers and economists disagree about whether intermediaries are pesky parasites essential to modern life, or both.
As long as the controversy continues, one thing is certain: U.S. healthcare intermediaries are many and thriving.
Physicians and patients maintain a personal relationship and pay directly before intermediaries step in.
A 19th-century farmer with shoulder pain requested a visit from his family doctor, who performed a physical examination, diagnosis, and pain medication. All this can be exchanged for chicken or a small amount of cash. An intermediary is not required.
This began to change in the first half of the 20th century, when the cost and complexity of care became an issue for many. In 1929, when the stock market crashed, Blue Cross began as a partnership between Texas hospitals and local educators. Teachers pay a monthly bonus of 50 cents to pay for the hospital care they need.
Insurance brokers are the next intermediary in medicine, advising people on the best health insurance plans and insurance companies. When insurance companies began offering prescription drug benefits in the 1960s, PBMs (Pharmacy Benefit Managers) emerged to help control drug costs.
Intermediaries are everywhere in the digital realm these days. Companies like Teledoc and ZocDoc were created to help people find doctors day and night. Offshoots of PBM, such as GoodRx, are entering the market to negotiate drug prices with manufacturers and pharmacies on behalf of patients. Mental health services like Talkspace and BetterHelp have sprung up to connect people with doctors licensed to prescribe psychiatric drugs.
These point solutions help patients better navigate dysfunctional healthcare systems, making care and treatment more convenient, accessible, and affordable. But as patients increasingly rely on intermediaries and their services, what I call the intermediary mentality has evolved in American healthcare.
Imagine that you have found a long crack in the surface of your driveway. You can raise the asphalt, remove the roots underneath and refill the entire area. Or you can hire someone to pave the way.
Regardless of the industry or issue, intermediaries maintain a “fix” mentality. Their goal is to solve a narrow problem without considering the accompanying (usually structural) problems behind it.
So when a patient can’t find a doctor, Zocdoc or Teledoc can help make an appointment. But these companies are ignoring a bigger question: Why is it so hard for people to find affordable doctors in the first place? Similarly, GoodRx can offer coupons when patients are unable to buy drugs from a pharmacy. But the company doesn’t care why Americans pay twice as much for prescriptions as people in other OECD countries.
American health care is deteriorating because the mediators are not addressing these big, unsolvable systemic problems. To use a medical analogy, a mediator can alleviate life-threatening situations. They don’t try to heal them.
To be clear, the problem with medicine is not the presence of intermediaries. Lack of leaders who are willing and able to restore the damaged foundations of health care.
An example of this lack of leadership is the “fee-for-service” reimbursement model prevalent in US healthcare, in which doctors and hospitals are paid based on the number of services (tests, treatments, and procedures) they provide. This “earn as you use” payment method makes sense in most corporate industries. But in health care, the consequences have been costly and counterproductive.
In pay-per-service, doctors are paid more for treating a medical problem than for preventing it. They are interested in providing more care, whether or not it adds value.
Our country’s dependence on fees helps explain why U.S. health care costs have risen twice as fast as inflation over the past two decades, while life expectancy has barely changed over the same period. Currently, the US lags behind all other industrialized countries in clinical quality, and child and maternal mortality rates are twice those of the other richest countries.
You might think that healthcare professionals would be ashamed of these failures – they would insist on replacing this inefficient payment model with one that focuses on the value of the care provided rather than the amount of care provided. You’re not right.
The pay-for-value model requires physicians and hospitals to take financial risk for clinical outcomes. For them, the transition to prepayment is fraught with financial risk. So instead of seizing the opportunity, they adopted a middleman mentality, opting for small incremental changes to minimize risk.
As doctors and hospitals refuse to pay for the cost, private insurance companies and the federal government resort to pay-for-performance programs that represent an extreme middleman mindset.
These incentive programs reward doctors with a few extra dollars each time they provide a specific preventive service. But because there are hundreds of evidence-based ways to prevent disease (and only a limited amount of incentive money is available), non-incentive preventive measures are often overlooked.
The man-in-the-middle mindset thrives in dysfunctional industries, weakening leaders and hindering change. Therefore, the sooner the US healthcare industry returns to its leadership mindset, the better.
Leaders take a step forward and solve big problems with bold actions. Middlemen use band-aids to hide them. When something goes wrong, leaders take responsibility. The mediator mentality puts the blame on someone else.
It’s the same with American medicine, with drug buyers blaming insurance companies for high costs and poor health. In turn, the insurance company blames the doctor for everything. Doctors blame patients, regulators and fast food companies. Patients blame their employers and the government. It’s an endless vicious circle.
Of course, there are many people in the healthcare industry—CEOs, chairs of boards of directors, presidents of medical groups, and many others—who have the power and ability to lead transformational change. But the mediator mentality fills them with fear, narrows their focus, and pushes them towards small incremental improvements.
Small steps are not enough to overcome worsening and widespread health problems. As long as the health solution remains small, the consequences of inaction will mount.
American healthcare needs strong leaders to break the middleman mentality and inspire others to take bold action.
Success will require leaders to use their heart, brain, and spine—the three (metaphorically) anatomical regions needed to bring about transformational change. Although the anatomy of leadership is not taught in medical or nursing schools, the future of medicine depends on it.
The next three articles in this series will explore these anatomy and describe the steps leaders can take to transform American healthcare. Step 1: Get rid of the middleman mentality.
Post time: Sep-28-2022