It's no secret that the American healthcare system is broken. Despite spending more on healthcare than other high-income countries, the US has the worst health outcomes. The decisions made by those in charge of the US healthcare system are resulting in supply and demand imbalances that can negatively affect access to care for millions of individuals.
However, there is no single decision-maker when it comes to the healthcare sector. Everyone, including healthcare consumers, voters, politicians, the Centers for Medicare & Medicaid Services (CMS), local government officials, insurance companies, pharmaceutical companies, private equity firms, and healthcare personnel, such as physicians, nurses, and administrators, all have an impact on the system. Furthermore, decisions made by these groups have a long lag time before their effects are realized. This results in a dissociation between cause and effect, resulting in an imbalance in supply and demand.
According to Dr. Oday Alsheikh, Medical Director of TLC San Antonio and an ophthalmologist with subspecialty training in cornea transplants and refractive surgery, this imbalance can cause multiple geographic locations and medical conditions to become 'healthcare deserts', where there is a substandard delivery of care or even absence of care altogether. To make things worse, the rate of deterioration can become exponential, with devastating effects on the healthcare system and patient welfare.
Dr. Alsheikh entered the practice in 2008, at the height of the Global Financial Crisis, when job prospects were very dim. To make things worse, he joined an academic institution that was devastated by Hurricane Ike, forcing its hospital to close for several months. During this time of uncertainty, Dr. Alsheikh began learning about healthcare economics and its impact on patients, physicians, hospital systems, and local communities. He focused on quality improvement and the successful delivery of rapid change to better meet the demands of patients, local communities, and national and societal needs.
Dr. Alsheikh points out the major dislocation between social expectations and cost, which do not compute with the economic realities.
"Everyone wants doctors who are experienced, well-trained in theory and practice, and are very intelligent. We, as a society, then expect them to give up earning income for an additional four years and incur up to $400,000 in debt. Then, we expect them to finish a residency for three to seven years, where they earn the equivalent of $12 per hour while paying their student loans and trying to build a family. When they are done, we balk at the costs of physician fees and say ' Wow that's really expensive!'"
It's these dislocations that contribute to imbalances in supply and demand. Take, for example, the physician issue. Not enough doctors are being trained to deal with the burgeoning demand caused by aging Baby Boomers and the Silent Generation. This results in the system creating back doors to deal with the imbalance, such as nurse practitioners doing primary care and physician assistants doing primary and specialty care. Dr. Alsheikh argues that safety standards have been tightened to a level that it becomes prohibitively expensive, forcing the healthcare system to create backdoors to skip the same safety standards. These standards were also broken during the COVID pandemic when the health system was so overwhelmed that patients were being treated in hospital corridors and tents.
According to Dr. Alsheikh, Medicare's cutting of physicians' pay has resulted in an exponential decline in income for many doctors, forcing them to sell their profitable practice before they become worthless and, in the case of older doctors from the Baby Boomer generation, deciding to retire. With the Baby Boomer generation entering old age, the number of physicians is dwindling but the number of patients is rising. Furthermore, he points to decisions made by Congress and Medicare 15 years ago that limited funding for residency spots, causing a limited supply of physicians entering the market. Those individuals were also given less financial assistance than their predecessors, resulting in a higher financial burden paying for student loans.
With CMS and insurance companies not recognizing inflation in the healthcare field and refusing to increase reimbursement, labor costs are going up, but the revenue per visit is either flat or decreasing. This is why physicians are under financial stress, but people don't understand it unless the physicians spell it out. Additionally, many of these private equity firms are heavily indebted and face maturing bonds or interest-sensitive loans, much like the floating rates seen during the mortgage crisis in 2007.
"The burden on healthcare delivery has caused the shut down of small hospitals in rural counties," Dr. Alsheikh says. "Even if the hospital might remain open, they might shut down a department. This creates healthcare deserts, or areas where there is no access to care, urgent care is delayed, or being delivered by less qualified healthcare personnel. Sadly, the public does not understand these dynamics, but they are the voters who ultimately determine how the federal government influences the economics of healthcare. Naturally, healthcare delivery will try to cut corners, which ironically will reduce safety. These are the very same safety parameters that increase costs that people balk at paying. This is why there is a need to understand the economics of healthcare and how it impacts the workforce."
