Ron Spurgeon's health began to unravel when he hurt his shoulder doing yard work. He eventually wound up at Redding Medical Center in northern California, where a cardiologist told him he had a life-threatening heart condition. Four days later, he had triple bypass surgery.
Restrictions on heavy lifting as a consequence of the incision in his breastbone led the robust 56-year-old to give up his job maintaining machinery at lumber mills.
In 2003, two years after his operation, Spurgeon learned that Tenet Healthcare, the hospital's owner, had paid $54 million to settle U.S. government allegations that it billed Medicare for unnecessary heart procedures. The next year, Spurgeon and 344 others sued the hospital and eight cardiologists and surgeons for performing unnecessary procedures. The defendants ultimately paid $442 million to settle the suit, and Tenet says safeguards are now in place. Outside experts who reviewed patient charts determined that Spurgeon was among the many patients who hadn't needed their procedures.
"There was nothing wrong with me," Spurgeon says. "Those guys violated me. They took away my trust in doctors."
Spurgeon's story is an extreme example of a major, if unheralded, reason that medical care is more expensive here than anywhere else in the world: overtreatment and overdiagnosis, driven by the system's dysfunctional profit incentives.
As we reported in September, the ability of insurance companies to slow the growth of medical costs has deteriorated sharply since around 2000. The annual U.S. health-care bill has risen to $2 trillion, its highest point in history.
Topsy-turvy financial incentives are almost everywhere in the system:
Consumers already suspect the system is rigged against them. In a series of focus groups we conducted over the past summer in Connecticut, Iowa, and Texas, participants told us they believed the system was designed to make money for doctors, hospitals, insurers, and drug companies rather than provide high-quality care.
Our investigation can help you become a smarter and healthier consumer of medical treatment by recognizing the ways the system runs up cost and runs down quality.
When it comes to health care, more is not necessarily better. But more is what patients tend to get. While America's health system has achieved important gains against major diseases, it has also encouraged the overuse of costly treatments. The system pays the vast majority of doctors and hospitals on a piecework basis called "fee for service." The more services they provide--a blood test, surgery, an MRI or CT scan--the more money they make.
Experts estimate that the nation's $2 trillion annual health-care tab is one-third to one-half higher than need be, in part because of overuse of costly treatments and unnecessary care.
A glaring case in point is the rise and fall of bone marrow transplants for advanced breast cancer. Early reports of dramatic shrinkage of otherwise fatal tumors, and even some apparent long-term remissions, caused an explosion in popularity of the procedure.
Even as insurers and some experts warned that without proper clinical trials there was no proof the new treatment worked better than the old one, dozens of hospitals started programs to cash in on the demand. An estimated $3.4 billion was spent during the 1990s giving the treatment to more than 42,000 women.
But in April 2000, the New England Journal of Medicine reported the results of the first major clinical trial of the procedure: Bone marrow transplantation did not improve survival at all, but it did make patients' remaining time more miserable because of its debilitating side effects.
Bone marrow transplantation for breast cancer is now discredited, but plenty of other expensive treatments and tests are still being overused and overpromoted for all kinds of diseases.
Research conducted over the past decade by the Dartmouth Medical School Center for the Evaluative Clinical Sciences has concluded that the Medicare bill of a given community is determined in large part by its supply of medical services--hospital beds, physicians, and specialists--rather than the medical needs of its residents.
In Miami, which is well stocked with doctors and hospitals, annual Medicare expenditures in 2003 averaged $11,422 per person, compared with $5,438 in Minneapolis. Yet the Dartmouth researchers found that in regions of the U.S. that spent more on Medicare patients, the quality of care was actually worse and patients enjoyed no better outcome than in regions that spent far less.
"Hospitals are dangerous places" where patients can pick up life-threatening infections, says Elliott S. Fisher, M.D., of the Dartmouth research team. Having many different specialists is also a risk factor, probably because of a lack of communication among the various physicians.
Patients themselves are hardly clamoring for less treatment. "People will say, 'I want that new cancer drug,' even though it may not be effective," said Len Lichtenfeld, M.D., deputy chief medical officer of the American Cancer Society.
Thirty-four percent of a national sample of 300 primary-care physicians surveyed by the Consumer Reports National Research Center in August 2007 said their patients "very frequently" or "quite often" requested unnecessary or duplicative medical tests. And 66 percent said they had acceded to at least one such request within the previous month.
"We have a real cultural infatuation with the latest treatments and the latest technologies," said David Blumenthal, M.D., director of the Institute for Health Policy at Massachusetts General Hospital. "This is a fact of life in the U.S."
Paul DeLeeuw, M.D., 62, of Fort Myers, Fla., decided to have a whole-body CT scan, a screening test being promoted nationwide to spot early warnings of cancer, heart disease, and other ills. He paid for it out of pocket. Bad news: The images, he says, showed evidence of problems or abnormalities in his coronary arteries, lungs, and liver.
"I thought I was doomed," he recalls. Follow-up tests and referrals to specialists cost several thousand dollars, which insurance did cover, he says, though none led to a diagnosis of serious disease.
Sixty percent of doctors in our survey said they quite often ordered unneeded tests to protect themselves against malpractice suits.
What you can do. Designate one doctor, typically your primary-care physician, to coordinate your care.
Ask which treatments have been shown by research to be best for your condition. "When you undergo any test, inquire what the consequences are if the test is positive," DeLeeuw says.
To secure the approval of the Food and Drug Administration for a new drug, its manufacturer need prove only that it works better than a sugar pill, not that it's better than other remedies. So most of the "new" drugs that the FDA approves--75 percent in 2005--are me-too versions of existing remedies rather than genuine breakthroughs. Drugmakers must convince consumers and physicians that their new pink pill is better than the older green one.
For example, clinical studies conclude that an older type 2 diabetes drug, metformin (Glucophage, generic), controls blood sugar just as well as the latest brand-name drugs, rosiglitizone (Avandia) and pioglitizone (Actos), which cost about four times as much per month. But by promoting Actos and Avandia to doctors and consumers, their manufacturers have succeeded in capturing 21 percent of the market and, because the two drugs are so costly, 82 percent of revenues, according to data from Wolters Kluwer Health, Pharmaceutical Audit Suite, a medical information company.
Results like that explain why the pharmaceutical industry finds it cost-effective to spend an estimated $29.9 billion a year promoting its latest brand-name prescription drugs, according to 2005 figures published in the Aug. 16, 2007, issue of the New England Journal of Medicine.
More familiar to laypeople are the direct-to-consumer ads they see in magazines and on TV. We have tracked alleged violations of ad standards by analyzing letters of complaint to drugmakers that the FDA posted on its Web site from January 1997 through July 2007. (None involved the Requip ad we dissect below.) Among the common problems: minimizing drug risks and side effects, omitting critical safety information, exaggerating the drug's effectiveness, and falsely implying that the drug is superior to a competitor's brand.
But drugmakers lavish most of their marketing efforts on prescription-pad-wielding doctors. They start by handing out free samples, with a retail value of $18.4 billion in 2005, to help get patients on the brand-name drug, when generic equivalents might be available.
Giving patients a few days of free medicine might seem like a benefit, but in the long run it might cost them more, as illustrated in a study reported in the September-October 2006 issue of the Journal of the American Board of Family Medicine. The study compared prescription costs of three medical clinics belonging to the same health-care system. Two had a policy of never giving away free samples, while the third did so. Doctors at the clinic that gave away free samples prescribed significantly fewer drugs from the system's preferred list of medications, and the average monthly cost of a prescription at that clinic was $48, compared with $40 and $41 at the other two clinics.
Drugmakers also shower physicians and their office staffs with money, gifts, meals, and junkets. Vermont and Minnesota collect information about this largesse from drug companies and make it publicly available. In the small state of Vermont alone, those payments totaled $2.2 million in 2006.
One practice the public might not notice is the subtle promotion of expensive drugs for "off-label" uses. The FDAapproves drugs for specific diseases, but once a drug is approved, doctors can legally prescribe it for any purpose they see fit. It's in drugmakers' interest to encourage off-label prescribing because it can add millions to sales without requiring the costly clinical trials needed to secure FDA approval for a new use. The FDA doesn't allow direct promotion of off-label uses.
A Medicaid fraud lawsuit, filed by Pennsylvania regulators last February, accused AstraZeneca, Eli Lilly, and Janssen Pharmaceutica of engaging in a concerted campaign to persuade doctors to prescribe the antipsychotic drugs Seroquel, Zyprexa, and Risperdal for off-label uses by children and elderly patients. According to the lawsuit, the drugmakers paid doctors to promote the drugs and paid other doctors to attend the programs and lend their names to company-ghostwritten journal articles, paid researchers to create misleading medical literature, and knowingly concealed or misled physicians about the risk of side effects.
This campaign helped boost off-label uses of the three drugs to more than 50 percent of worldwide sales in 2005, alleges the suit, which is ongoing. Asked for comment, Eli Lilly said it plans to vigorously defend itself, AstraZeneca said the claims are without merit, and Janssen Pharmaceutica said it is committed to the highest ethical standards.
What you can do. Consumers are already voting with their dollars for generics, which now make up more than 60 percent of U.S. prescriptions dispensed. Half the doctors we surveyed said their patients frequently ask for them. But research suggests that the U.S. could save more than $8 billion with increased use of generics. If you're offered a newer drug, ask whether it has been proven better or safer than its predecessors. Twenty-five percent of doctors in our survey said they frequently observed adverse effects from newer drugs.
A free Consumers Union Web site, Best Buy Drugs, at www.BestBuyDrugs.org, has comparative treatment and cost information on most major categories of drugs, based on careful analysis of published studies of the drugs' effectiveness and safety.
To secure the approval of the Food and Drug Administration for a new drug, its manufacturer need prove only that it works better than a sugar pill, not that it's better than other remedies. So most of the "new" drugs that the FDA approves--75 percent in 2005--are me-too versions of existing remedies rather than genuine breakthroughs. Drugmakers must convince consumers and physicians that their new pink pill is better than the older green one.To secure the approval of the Food and Drug Administration for a new drug, its manufacturer need prove only that it works better than a sugar pill, not that it's better than other remedies. So most of the "new" drugs that the FDA approves--75 percent in 2005--are me-too versions of existing remedies rather than genuine breakthroughs. Drugmakers must convince consumers and physicians that their new pink pill is better than the older green one.
Health-care costs are ballooning partly because the system is geared toward providing expensive interventions and remedies after health problems develop. "We don't have a system in this country that rewards sitting down with people and educating them as to why it's important for them to change behavior so that they're more healthy," said George Isham, M.D., medical director and chief health officer for HealthPartners, a nonprofit Minnesota HMO whose primary-care doctors were rated better than average in our September 2007 Ratings of HMOs and PPOs.
Isham chaired an Institute of Medicine panel that capped a years-long examination of American health-care quality by recommending 20 "priority areas" for action. Most had nothing to do with new drugs, high-tech care, or costly tests. Instead, the panel looked at basic prevention and care management, such as teaching people with asthma, diabetes, or high blood pressure how to monitor and manage their chronic conditions and making sure all children get timely immunizations.
With all the incentives running the other way, that's a tall order.
Historically, doctors who specialize in the types of care the Institute of Medicine recommended--family doctors, pediatricians, and internists--earn much less for interacting with patients than specialists who do procedures that take the same amount of time. This pay gap has persisted, for economic and political reasons, despite repeated efforts to reduce it.
New medical school graduates, often saddled with six-figure student loans, are increasingly opting to forsake primary care for the bigger paycheck they can earn as specialists. That compromises care quality; the Dartmouth research has shown that care suffers and cost goes up in regions that have a higher proportion of specialists.
"In other countries, people have a 'medical home,' a family physician they've been with for a long time, so the simple things get dealt with quickly and early on," said Karen Davis, Ph.D., president of the Commonwealth Fund, a private foundation that supports health-care system research. "We put a lot more money into the high end, where the payoffs are less."
As a consequence of a payment system that discourages prevention and management of care, Americans spent almost $29 billion on 4.4 million hospital stays for potentially preventable conditions in 2004, according to a study sponsored by the federal Agency for Healthcare Research and Quality.
What you can do. Take lifestyle changes seriously, especially if you are at risk for heart disease, stroke, diabetes, or cancer. If you have a chronic disease, work with your doctor to devise a plan to manage it.
Health-care costs are ballooning partly because the system is geared toward providing expensive interventions and remedies after health problems develop. "We don't have a system in this country that rewards sitting down with people and educating them as to why it's important for them to change behavior so that they're more healthy," said George Isham, M.D., medical director and chief health officer for HealthPartners, a nonprofit Minnesota HMO whose primary-care doctors were rated better than average in our Ratings of HMOs.
Consumers are especially vulnerable to promotional persuasion in health care, because they assume that the medical treatments their doctors recommend, such as Ron Spurgeon's triple bypass, are necessary and effective. They are frequently mistaken.
"About 80 percent of what we do in medicine today is not backed up by solid evidence--a clinical trial that proves it's really superior to other therapies," says Lee Newcomer, M.D., senior vice president for oncology at United Healthcare.
Many developed nations have some kind of national agency that objectively evaluates new treatments and technology and determines coverage policy, such as Britain's National Institute for Health and Clinical Excellence. Though insurers and medical specialty societies, among others, do such evaluations in the U.S., payment and coverage decisions here are driven mainly by pressure from manufacturers, doctors, and consumers, according to a study published in the November/December 2004 issue of Health Affairs. No one wants to be "the one on the block who doesn't know the new technique," a physician told the researchers.
Some health-policy experts are advocating the creation of a national center devoted to research directly comparing different medical treatments, an idea that Consumers Union, the nonprofit publisher of Consumer Reports, strongly supports.
"There is clearly value to new medical technology and pharmaceuticals," said Lichtenfeld of the American Cancer Society. "We have to understand the best way to use them, and not overuse them."
Back surgery. Don't rush to surgery for a simple slipped disk. In 90 percent of cases, the pain goes away on its own within six weeks. In stubborn cases, surgery, which can cost $20,000 plus physician's fees, can relieve pain somewhat faster than physical therapy and medication, a recent study showed. But it also found that both groups of patients wound up with similar improvements after two years.
Heartburn surgery. Doctors surgically tighten a sphincter muscle that blocks stomach acid from backing up into the esophagus. But research shows the operation, which costs $14,600 or more, provides no better long-term relief than taking a proton-pump-inhibitor drug such as omeprazole (Prilosec OTC), which costs less than $1 a day.
Prostate treatments. Prostate cancer is often overtreated by surgery that costs $17,000, or by radiation therapy for $20,700 or more, plus physician's fees, without adequate discussion of the alternatives or the high risk of distressing side effects such as incontinence or impotence. Because prostate cancer can grow slowly, sometimes the best approach is "watchful waiting."
Implanted defibrillators. These devices, which automatically shock the heart back to normal rhythm, cost some $90,000 over a lifetime. Yet one-third of people who get them might not really need them, according to research reported in 2007. This year Medicare will pay for an estimated 50,000 of the devices.
Coronary stents. Billions are spent each year inserting tiny mesh tubes to prop open coronary arteries. The procedure plus heart drugs turns out not to work any better to prevent future heart attacks than heart drugs alone for patients with stable coronary artery disease, researchers reported in 2007.
Cesarean sections. They cost almost $7,000, about 55 percent more than a natural delivery, and constituted a record high of 30.2 percent of births in 2005. Most are performed because labor is progressing too slowly. But several less-invasive approaches might be enough to speed up labor.
Whole-body screens. These CT scans, which can cost $1,000 or more, are promoted for spotting early signs of cancer, heart disease, and other abnormalities. There are no proven benefits for healthy people, the Food and Drug Administration has concluded. Plus CT scans expose patients to far more radiation than X-rays. A few CT scans a year can increase your lifetime risk of cancer.
High-tech angiography. Using a CT scan to noninvasively check coronary arteries for narrowing costs an average of $450, according to data from HealthMarkets, which sells health and life insurance through subsidiaries in 44 states. But standard angiography is sometimes still needed to confirm blockages that might require aggressive treatment.
High-tech mammography. Using software to flag suspicious breast X-rays would add $550 million a year to national costs if used for all mammograms. But a 2007 study found that this technique failed to improve the cancer-detection rate significantly, yet resulted in more needless biopsies.
Virtual colonoscopy. These CT scans are being used to detect signs of cancer without inserting a tube into the colon. But a study of virtual colonoscopy reported in 2007 concluded that standard colonoscopy is better at spotting smaller suspicious polyps. Though less costly than a standard colonoscopy, the virtual test isn't cost-effective because any suspicious finding requires retesting with the real thing.