American Hospitals: Healing a Broken System - New Documentary

This article is a summary of the film and does not represent the position of Public Health Liberation or its members

By Christopher Williams, PHL Founder

American Hospitals: Healing a Broken System premiered on March 29, 2023 at the E Street Cinema in Washington, DC. This documentary provides a provocative look inside the world of profit-driven motives in US healthcare. Unfinished Business Foundation, founded by Richard Master, produced this fourth installment in its documentary series. The major conclusion is that the US healthcare system has fueled an unequal system in which socioeconomic factors, geography, and payer-mix take priority over healthcare access and quality. Rising healthcare costs in the US are unsustainable.

The film examines high healthcare costs in the US that have not produced similar gains in population health. Healthcare in the US is treated as a commodity rather than a public good. Every industrialized nation except the US regards healthcare as a public good, meaning that government takes a central role to ensure regulation for maximum public benefit.

Americans have $140 billion of medical debt due to healthcare costs. US healthcare is a $4 trillion economy in which higher prices do not correlate to better quality. Hundreds of insurance companies and plans produce added expenses that make healthcare in the US more expensive due to administration alone. The film notes that administrative cost per patient has increased over 500% in recent decades. In some cases, a billing and coding administrator is needed for each patient. While the Affordable Care Act set caps on deductibles - albeit a high threshold at $17,000 - it did not address runaway healthcare costs in a systematic fashion. Healthcare is 18% of the US economy.

The film argues that market forces - the theory of supply and demand - do not work with healthcare costs. Hospitals set their prices through their chargemasters - a comprehensive price list of products, procedures, and services. However, identical care and services depend on the type of plan. Commerical insurance can cost 2-3 times more, if not more. Price transparency remains a challenge. The US healthcare system can create different tiers and access points of care due to varying reimbursement rates and out-of-pocket costs. One-third of physicians does not accept Medicaid. Safety net hospitals tend to serve low-income patients at much lower reimbursement rates. These rates, which may not even cover the costs of care, is a major barrier to improved population health because institutions can struggle to establish a financially sustainable model.

Hospital closures have become the norm. Mergers and acquisitions of hospitals can lead to the closure of small, rural, and safety net hospitals that may be less profitable compared to hospitals in more affluent neighborhoods. The film finds that these mergers usually result in more expensive healthcare because hospitals have become “a vehicle to make money”.

Seventy-nine percent of hospitals are non-profit. Their “earned excess” or profit is used to buy bonds, stocks, real estate, and other liquid financial reserves. The film highlights a major system in Pennsylvania with $6 billion in reserves. In 2020, this system earned $23 billion in revenue and $836 million in operating profit. [Source] Although tax exemption is intended to encourage an obligation to community health leadership and partnership, the film argues that investments in community benefits are too few. Lown Institute Hospital Index is the first ranking to define clear, measurable standards for hospital social responsibility. Prominent US healthcare systems can often have glaring disparities in their backyard - literally, just across the street.

While the film critically assesses US hospitals mostly, it recognizes that hospitals are victims of a deeply broken system too, in which they contend with insurance companies and intermediaries.

Maryland is the only state to cap hospital spending by setting the same price for all procedures and services for all patients regardless of insurance plan - the all-payer model. Medicaid, Medicare, and privately insured patients are reimbursed at the same rate. Global budgeting is also used. These practices eliminate the financial incentives for hospitals to engage in medical redlining.