The flashing lights reflect off the trees. The EMTs rush a gurney down the driveway toward the open doors of the ambulance. A worried spouse hunts for their car keys. The patient is pale, drenched in sweat, and confused.

Setting aside the danger to the patient and the anxiety of the family, the cost of this episode of hypoglycemia will approach $2,500 if stabilized in the emergency room. If the patient requires inpatient hospitalization, the bill will almost certainly be $10,000 or more.

Or the insurance company could have paid $80.

A game-changing tool in the management of diabetes is the continuous glucose monitoring sensor. A small, wearable monitor with a tiny subcutaneous glucose-sensing filament that sends alerts to the patient’s cellphone if their glucose level rises too high or falls too low.

The sensor costs about $80. It lasts 15 days.

As good as the technology is, the sensors don’t always last the full 15 days. You can pull one out of the skin while removing a sweatshirt. Or drying off with a towel. Or sometimes they just stop working. An alert pops up on the patient’s phone instructing them to replace their sensor.

But imagine it’s May 16th. You just put your second sensor of the month in and it isn’t working. You have over two weeks before your insurance company will authorize another prescription for the sensor. So what do you do?

You go unmonitored for the rest of the month.

My wife Sandy is a meticulously well-controlled diabetic. Unlike me, she eats sensibly, and she is continuously aware of her glucose readings. Her endocrinologist calls her a role model patient. Sandy’s risk is never high glucose, it’s low. She sleeps with orange juice near the bed in case her monitor sends an alarm in the middle of the night.

Periodically throughout the year, one of Sandy’s monitors fails. Each time, she contacts her insurance company to request a replacement, and each time — like clockwork — the insurer refuses.

Why?

Presumably, because they worry that she is trying to scam an extra glucose monitor. Otherwise, why wouldn’t they want her to be wearing one? Someone in a conference room somewhere in the insurance company must have decided that two glucose monitors per month was the absolute limit, no questions asked.

Of all the pharmaceutical things I might try to get more of, a glucose monitor is very low on the list. Who would I sell it to? A non-diabetic who enjoys jabbing themselves with sharp objects?

But if I’m an insurer (and I was in 1985), of all the things I want patients to replace if theirs stops working, a glucose monitor is very high on my list.

An old English proverb goes something like “Don’t spoil the sheep for a ha’p’orth of tar.” It dates back to the 1830s, about 50 years before the widespread adoption of antiseptics, when shepherds used tar medicinally on sheep, particularly on wounds and sores.

A “ha’p’orth” was a halfpennyworth. The idea was that refusing to spend a trivial amount on tar could allow an infection or injury to worsen and ruin an animal worth vastly more.

My brother-in-law was an uncontrolled diabetic who had a leg wound become gangrenous. He lost his lower leg. Then he became septic.

Then he died.

Sandy is a well-controlled diabetic. Our only concern with her are precipitous drops in her glucose, which could trigger the ambulance and the emergency room.

Standing between both patients and potentially catastrophic outcomes is a piece of ingenious technology.

And eighty dollars.

I was startled by a loud banging noise, followed by a shudder, and a splash.

It turned out to be the sounds of summer. A youngster jumping up and down on a diving board before leaping into the pool.

I need to confess something at the outset. I belong to a country club. Before you ask what a frivolous, purely discretionary, self-indulgent (bordering on narcissistic) membership in a country club has to do with health care, all I ask is for your indulgence. I’ll get there, I promise. I wouldn’t even mention it, but it’s central to the point.

My eye was drawn to the diving board by the sheer noise it made. It sounded like two freight cars uncoupling in a rail yard. I watched the next few divers bouncing on the fiberglass plank and noticed that the board shook and banged rather than merely bending. Like it was a bit loose.

Then I noticed something I hadn’t seen before. The metal housing where the diving board originated needed a fresh coat of paint. It was rusty in spots. Something of an eyesore if we’re being honest. I’m thirty years past the age when launching myself into the air made any sense, so I hadn’t given the diving board a passing thought. But looking at it, I was surprised the club had ignored it as much as I had.

This is where I need to make another point solely for the sake of the story. Our club is not financially unable to invest in a diving board. We have two golf courses. One of them hosted the U.S. Open. The governing board is spending many millions of dollars on a major restoration of the golf course, while the diving board goes unpainted.

And that’s the point with relevance to health care.

Health systems make capital allocation decisions between service lines. High-margin clinical programs are like golf courses. They attract investment. Chronic illnesses are like swimming pools. They stand behind the golf course in line for funding. The least profitable clinical services are like the diving board.

Rusty and rattling.

For most of my 47-year career, rheumatology was the diving board of health care’s country club. Minimal investment. Low physician salaries. Long waits for appointments. Not a top priority.

Then came 340B drug pricing. According to HRSA, 340B drug purchases nationally increased from $43.9 billion in 2021 to $100 billion in 2025.

Health systems are now investing heavily in infusion centers. Because infusion of highly profitable drugs is good business.

My wife Sandy wouldn’t object to me sharing that she has for years dealt with the pain and debilitation of severe rheumatoid arthritis. With very little access to specialist care. It was hard to even find a practicing rheumatologist, let alone get an appointment with one.

But then came biologics.

Rheumatology patients need infusions.

Profitable infusions.

It’s almost as if rheumatology jumped from the rickety diving board straight onto the third tee of the golf course.

I’m glad that health systems are investing in outpatient infusion. I’m glad that the pharmaceutical industry is developing better agents to slow the progression of the disease.

But we still have a woeful shortage of rheumatologists. There may be evidence of rheumatology salaries rising faster than other specialties, but if so, I haven’t seen it. And even if we increase compensation, it will take years for training programs to turn out more specialists.

As I say, I’m glad for what attention is being paid to traditionally unprofitable, and hence underfunded chronic conditions.

I just wish it didn’t take profitability to trigger attention in health care.

The need has always been there.

Like a wobbly diving board at the deep end of the pool.

It shouldn’t take profitability to get a handful of bolts and a bucket of paint.

Just short of half a trillion dollars.

That’s what U.S. hospitals spend every year.

Not on medical supplies or direct patient care.

On administration.

Twenty-five cents out of every dollar spent.

It’s easy to blame the Byzantine patchwork of public and private insurance, with its paralyzing billing and collection rules, for America’s world-leading hospital administrative costs. The fragmented payment system unquestionably contributes to excess administrative costs.

But it’s not the main culprit. It’s not even the biggest part of the difference between us and the rest of the world. Blaming the payment system is like not seeing the forest for the trees.

So let’s look at the forest.

The most rigorous cross-national study of hospital administration we have — published in Health Affairs — puts total U.S. hospital administrative costs at just over 25% of expenditures.

How much of that belongs to the payment system — the eligibility checks, the prior authorization, the claims fights, the billing and collection machinery? The best studies available put it around a third of total administrative costs.

That leaves two-thirds.

Not insurers. Not claims.

Management. Administration. The org chart.

Cut revenue cycle costs to zero tomorrow — not in half, to zero — and American hospitals would still be spending roughly 17% of their revenue on administration that has nothing to do with a payer.

Compare that to the 9% or so that non-billing administration costs a Canadian hospital. Nearly double, even after giving the payment system full credit for its share of the mess.

And because American hospitals collect nearly twice the per capita revenue of their Canadian counterparts, that percentage gap completely understates the magnitude of the difference.

Canadian hospitals spend about $179 per capita on non-billing hospital administration. American hospitals spend about $772. Four times as much.

Not for the paperwork. For everything else.

Why?

Because we turned health care into big business.

Competing with each other for market share in an industry that should never have been a market. Illness and its treatment should never have become something that businesses fight over.

American health systems have layers of administration developing strategies to attract incremental volume. Marketing and sales. Entire departments responsible for revenue maximization. Every body system becomes a subsidiary business. We call them service lines. Each with its own administrative infrastructure.

It’s the cost of competition.

Rival systems don’t rationalize supply, they engage in an arms race. One health system spending tens of millions of dollars to attract more cases of illness. And another health system spending tens of millions of dollars trying to stop its competitor from taking its volume.

And then there is the uncomfortable topic of salaries.

Everyone in American health care — doctors, nurses, and administrators — earns much more than their international counterparts.

A review of IRS Form 990 filings found 105 individuals earning $1 million or more in just five American nonprofit health systems—an average of 21 per system.

I’d hazard a bet that the senior management conference room of any large American health system has more seven-figure salaries than the entire province of Ontario.

We deflect criticism of high administrative salaries by comparing the compensation to corporate executives in other industries running companies with similar revenue streams. Executives in other industries make much more through stock options and profit-sharing, the story goes.

But in other industries, we accept the idea that prices will be as high as the market will bear.

If executive compensation makes a wristwatch or an airline ticket more expensive, we can buy a cheaper watch or take the bus.

But this is health care. The price should be as low as we can make it, not as high as we can get away with.

What about the argument that we need sophisticated management because health care is so complex?

Health care is complicated because we complicated it.

Now follow the arithmetic all the way to the middle class dinner table.

American hospitals spend about $772 per person on administration that isn’t billing. Canadian hospitals spend about $179. The gap — $593 per person — has nothing to do with insurance companies. We already gave the payment system its due. This is the rest.

Multiply that gap by 335 million Americans, and it comes to just under $200 billion a year. Divide it across the roughly 67 million working households who ultimately fund the system — through premiums, through payroll taxes, through the wages they never see because their employer sent the money to a health plan instead — and it comes to about $3,000 per household.

Every year. Roughly $250 a month.

If our non-billing administrative costs were more like those of Canadian hospitals, and we put that $250 a month into a college fund instead, earning a conservative 5% annual return, after eighteen years the family would have about $87,000.

Think about that.

If we ran hospitals with the same administrative overhead as Canada, the average working family could send a kid to college on the savings.

If we say we spend more because we run better hospitals — would the Canadians agree?

Would an American, treated in Toronto, come home and say the care was worse?

If “better” means faster access, nicer rooms, or more personalized service — would all Americans agree that’s what they’re getting for their $3,000?

Faster access and better amenities for whom?

If it isn’t the insurance system that explains the extra $200 billion, and it isn’t — remember, we’ve already given that its due — then what, exactly, are we paying for?

The arms race. The org chart. The salaries.

The cost of doing business.

Let’s play a game.

I both studied and taught at the University of Chicago.

A professor friend there has a research colleague at Harvard.

They know an economist who has advised the World Bank.

Who regularly has dinner with a senior Bhutanese government official.

Who plays tennis with the King’s chief of staff.

That’s the peculiar mathematics behind six degrees of separation, a concept that entered popular culture through the idea that any two people can be connected by roughly six personal relationships.

It’s also an interesting way to think about value-based care. In particular, stand alone value-based care (VBC) companies, as distinct from internal continuity of care initiatives undertaken by health systems themselves.

Stand alone (and most often, for-profit) VBC firms struggle because of an extra degree of separation. They can only monetize better care by sharing in someone else’s savings. Commonly an insurer.

Let’s think about that.

The patient’s health and wellbeing is at the core of any genuine definition of “value”. The patient’s health system is the first degree of separation. An insurer, either the government or a private sector insurance company, is another step removed from the patient’s wellbeing. The VBC company, contracting with the insurer, is three steps removed.

Now, about the monetizing.

Economically, avoidable patient decompensation hits the health system first, in the form of resource consumption. Direct costs are incurred. Scarce capacity is used. Opportunity costs arise.

The health system has at least three compelling reasons to manage chronic illness better:

• First, they lose money on every unit of service when government payments (or no payments) fail to cover costs.

• Second, they incur opportunity costs if they are operating at or near capacity — with 50 gurneys lining ER hallways and transfer cases diverted for lack of beds, those opportunity costs are real.

• Third, mission.

Contrast that to the insurer.

A private sector insurer does not benefit when a provider reduces avoidable utilization by Medicaid beneficiaries or the uninsured, where revenue is less than costs. A Medicare Advantage insurer does not see incremental earnings if a provider reduces unprofitable volume in traditional Medicare. In a contorted twist, the Medicare Advantage plan is devalued when the performance benchmarks against which it is judged improve. A major category of “value” (fewer underpayments) is only available to the health system, not to the insurer.

Reducing opportunity costs? Insurers have no strained capacity. No value accrues to the insurer if scarce provider capacity can be used elsewhere. In fact, insurers would prefer that provider capacity be exhausted…there is no possibility of additional claims.

Mission? Hardly.

Once you move from provider to payer, the vast majority of economic benefit — the avoided payment shortfalls and the incremental capacity — disappear. Insurers have only a small fraction of the providers’ motivation to manage care better. A VBC company accepting “full risk” has only the insurer’s sliver of the overall “value”…and none of the provider’s.

It gets even worse when a VBC firm subcontracts with an insurer under a “shared savings” agreement, as the already questionable insurer slice of the “value” gets cut in half. While adding another layer of administrative expenses (the second corporation) and another chunk of investor appetite for profits. Not surprisingly, by the time the “value” gets diced up, the morsels left often don’t satisfy the appetite of investors who have absolutely no mission involvement whatsoever.

Does this mean that the fundamental tenets of value-based care (more vigilance, proactive intervention, better coordination, improved communication, multi-disciplinary teams, etc.) are wrong? Not at all. In fact, they’re absolutely right.

It’s the business model that needs adjusting.

More effective treatment of chronic conditions, and more efficient longitudinal episodes of care, improve patient wellbeing. The economics are more complicated. Health systems have the most to gain economically, but not through incremental revenue. Not via “shared savings”.

Health systems benefit by losing less money.

How?

The typical $2 billion health system with at least one tertiary medical center is presently losing $200 to $300 million a year on underpaid and avoidable utilization of the emergency department and low acuity inpatient admissions. That in turn creates opportunity costs in the form of diverted high acuity admissions and inter-hospital transfer cases, which come with much higher average revenue.

Health systems should be aggressively engaged in “value-based” care completely on their own. The large majority of savings potential is theirs alone to keep. Fewer underpaid ER visits. Fewer avoidable and underpaid low acuity inpatient admissions. More capacity to accept higher acuity cases, that arrive with more revenue attached and satisfy the mission of the organization.

Shared savings agreements with insurers only make sense after the health system commits to changing on its own. Shared savings are like dessert. They’re meant to follow the meal, not replace it.

Insurers or stand alone VBC companies will never have the financial opportunities that health systems have when it comes to improving patient care. They do not benefit from losing less via fewer underpayments. They have no revenue upside from incremental capacity. Those opportunities are unique to the health system.

It all comes down to degrees of separation.

The health system is one degree removed from the patient.

The insurer — and the VBC firms — are one degree too far.

You’re on a commercial jet headed from Beijing to Paris and you’re descending over the Netherlands through heavy cloud cover with limited visibility.

Your pilot contacts air traffic control in Amsterdam for instructions, speaking Mandarin Chinese.

After a momentary pause a voice responds, speaking Dutch.

Another plane, after taking off from Charles De Gaulle airport, is climbing over Belgium headed in your direction. Its pilot contacts air traffic control in Brussels, speaking Danish.

The response crackles back over the radio. In French.

Meanwhile, the blips on the respective radar screens keep getting closer together.

That couldn’t really happen.

Why not?

Because the International Civil Aviation Organization mandated that all commercial pilots operating internationally must demonstrate proficiency in English or in the language used by the ground station, while English must be available for international aeronautical communication. Because confusion at 550 miles per hour can have disastrous consequences.

When I began my career in 1979, medical records consisted of manila file folders, with brightly colored numeric tabs. Rooms were lined with floor-to-ceiling shelves stuffed with those manila folders. Inside the folders were stapled papers and handwritten notes.

When a patient had an appointment, a medical records librarian pulled their file folder and put it into a metal basket that looked like a shopping cart, including the one wobbly wheel. Medical records were walked to the locations of patient encounters. It wasn’t unusual for the chart not to arrive until after the visit was already completed.

With digital technology came the opportunity to replace paper records with electronic health records or EHRs. Information would travel at the speed of light, improving communication, eliminating gaps in information, increasing quality and lowering costs.

At least that’s what the brochures said.

In 2008, fewer than 10% of U.S. hospitals had fully electronic records. By 2015, 96% had certified EHR technology. An order of magnitude jump in just seven years.

Unfortunately, with billions of dollars invested, many of the anticipated benefits of EHRs have failed to materialize. In industry jargon, the problem is a lack of interoperability, or the capacity for various EHR systems to share information with each other. If EHRs can’t “talk to each other”, the clinical benefits of care coordination and the economic benefits of eliminating avoidable duplication of services are lost.

A 2019 article published in Fortune magazine characterized the EHR situation in America as an “unholy mess.” We have the medical record equivalent of a pilot speaking Mandarin Chinese to an air traffic controller who is fluent in French.

A friend recently described an extremely trying experience involving their elderly parent with dementia and several other chronic conditions who was admitted to a community hospital twice in five months. Three days after the first admission, they took their parent to a major teaching hospital for an evaluation and to develop a care plan.

The workup at the community hospital included imaging of the brain (both MRI and CT), a carotid ultrasound and more than a dozen lab panels. The results from the tests done in the community hospital were not electronically available to the specialists at the tertiary medical center. The two hospitals were on competing EHR platforms.

Tests were repeated.

Communication was non-existent.

A definitive diagnosis was delayed.

The patient was readmitted.

Twice.

The aviation industry solved its Tower of Babel problem with standardization. Health care has been slow to follow suit, in no small part the result of competition over market share. The lack of standardization increases switching costs. So does customization. Idiosyncratic EHRs create customer stickiness. And undermine interoperability.

With more than 10 years to solve the interoperability problem and well in excess of $100 billion already spent, it’s hard to argue that we spent too little time or money.

It’s easy to imagine a future in which electronic health records exchange crucial clinical information with one another effectively and effortlessly.

It’s easy to imagine…but after spending as much as we’ve spent, we shouldn’t have to.

Thanks for visiting uncommon good—and welcome.

This is a place for essays and podcast conversations that explore what works in health care…and what doesn’t.

Together, we’ll use everyday metaphors to challenge conventional thinking, question intuition, and look at familiar problems from a different perspective. Along the way, we’ll explore unmet needs—including the medical consequences of the social determinants of health.

If we do our job well, perhaps we’ll leave things just a little better than we found them.

Want to know what uncommon good is, what it stands for, and why it exists?

Don’t read. Listen.

In just over two minutes, I’ll tell you why uncommon good exists, and what I hope you’ll find here.

Press ▶︎ below to hear the welcome message.

When you’re finished listening, I’d love for you to read The Missed Goodbye. I wrote it for, and about, my dad. I think it captures both the spirit of these essays and the reason I began writing them.

On a fishing excursion off the Pacific coast about 35 years ago, I became violently ill. You may have felt something similar, if less severe, while riding in the back seat of a car, or on a roller coaster, or even in an elevator.

The underlying cause of motion sickness is sensory conflict, most commonly between visual and vestibular signals to the brain.

When our eyes tell our brains one thing about whether we are or are not moving and our ears tell it something different, the resulting confusion of perceived motion can manifest itself in the form of headaches, dizziness, or nausea.

The idea of sensory conflict – a disconnect between where our brain thinks we should be going and the reality of where we are (or are not) headed – applies to the way we pay for healthcare.

A close friend who was CEO of a large academic health system put it best when she observed that the clinicians in her organization were struggling with what she called “moral distress”. The disparities in access to and affordability of lifesaving or life-changing medical services — consequences of income and social standing — are at odds with the moral compass of the clinician.

The traditional financing system, with its Byzantine cross-subsidies that virtually require competition over privately insured elective surgeries while medical deserts are left largely unattended, deserves a disproportionate share of the responsibility for the clinicians’ uneasiness.

We all nod when we hear the old mantra — “no margin, no mission.” But have we ever asked: at what cost?

In a system entirely dependent upon cross-subsidization, with private sector patients covering the economic shortfalls of the government-sponsored or the uninsured, it’s not only prudent but often downright necessary for providers to prioritize investments in profitable service lines in affluent service areas over arguably more pressing clinical needs in historically underserved geographies.

An economic imperative to chase the margin to achieve as much of the mission as they can afford. Each investment decision becomes a moral compromise disguised as a business plan.

But doing so intensifies what clinicians describe as their moral distress. Hoping to reduce health inequities while entrusting access and price to the market is like having our eyes going one way and our ears going the other.

At the root of the sensory conflict being expressed by medical providers is a fundamental economic conflict. Healthcare has been delivered and paid for as a private good when society – and especially clinicians – aspire for it to be considered a common good.

Markets create disparities, they don’t solve for them.

What if the only path to profitable revenue was not more privately insured business at the expense of government-sponsored patients?

What if the only way to afford care for the underserved was not more elective services for the well-insured?

What if we did something crazy?

What if instead of trying to eliminate health disparities while spending less, we carefully and calculatingly decided to spend more?

What if instead of trying to figure out a way to change both private and public pricing simultaneously, the government decided to unilaterally increase public prices sufficiently to enable providers to invest in medically underserved areas without first earning higher margins in the private sector?

Overall spending would increase in the short term, but we would disrupt an arguably unsustainable reliance on private to public subsidies in the face of an aging population. In the meantime, we would provide new revenue directly tied to treating the traditionally underserved, rather than relying on the redirection of higher private sector margins.

We’d be one step closer to a cure for the motion sickness caused by 50 years of irrational pricing.

The United States has more lighthouses than any other country in the world.

Before automation, each lighthouse came with an adjacent keeper’s cottage.

That wasn’t generosity.

It was infrastructure.

The people responsible for keeping ships off the rocks couldn’t punch a time clock at five o’clock and drive home. Storms didn’t respect business hours. Fog didn’t wait for the morning shift. The keeper lived beside the light because the light depended upon constant watchfulness.

We understood this intuitively at sea.

We’ve somehow forgotten it in health care.

Today, every family caring for someone with advanced dementia, ALS, autism, heart failure, or metastatic cancer has become the modern equivalent of a lighthouse keeper. We count on them to tend the light. We just forgot to build the keeper’s cottage.

Patients undergoing recurring treatments—chemotherapy or radiation for cancer, dialysis for end-stage renal disease, infusions for gastrointestinal or autoimmune disorders, or plasmapheresis for conditions like myasthenia gravis—are often unable to drive themselves.

For their caretakers, it’s rarely practical to drop the patient off and return later. They stay. And for those holding jobs, the regularity of these medical disruptions can become overwhelming.

The financial burden falls hardest on hourly workers, who must be physically present to earn their pay. Many lack both the flexibility and the remote options to manage their dual responsibilities. Attending appointments often means losing income.

Access has become table stakes. Extended hours allow patients and caretakers to schedule around work rather than sacrifice it.

Health systems can offer something standalone competitors can’t: one day, one stop, multiple services.

We’ve made waiting rooms more comfortable, but for recurring, day-long visits, caretaker productivity matters more than comfort. The shift toward hybrid and remote work has caretakers arriving with laptops in hand. For them, we can offer something even more valuable: a place to work.

Imagine infusion centers with what feel less like waiting areas and more like airline lounges—quiet, equipped, connected. The airlines learned long ago that their best customers were the ones who traveled often. Chronically ill patients are health care’s equivalent.

Almost every chronically ill patient comes with a caretaker.

Most of them are doing two jobs at once, racing between the shore and the lighthouse.

It’s time we built the keeper’s cottage.

Hollywood, 1976. The hit television show Charlie’s Angels attracts one in four TV households every Wednesday evening when three private detectives get their next assignment from a faceless voice echoing out of a speakerphone on the desk.

The novelty of the speakerphone was such that an entire television show was anchored around it. We ignored the fact that you sounded, to the person on the other end, like you were shouting from the bottom of a well.

Chicago, 1979. A 23 year-old graduate student sits across the desk from Joe Axelrod, the CEO of the Michael Reese Health Plan, a first generation HMO owned by one of the city’s largest hospitals. Axelrod is on the phone with Bob Mandelbaum, an executive at Walgreens, the Chicago-based pharmaceutical powerhouse.

As he spoke, Joe dipped his pipe into a zippered pouch, then reached for his steel tamper, packing the loose tobacco into the bowl of his pipe. It would be more than ten years before anyone looked sideways at smoking indoors. Smoking a pipe was a two-handed job, so Joe routinely conducted his calls on a 6 by 4 inch silver box, hard-wired to his telephone. The speaker allowed Joe to fidget with his pipe while he talked. It also allowed him to invite his grad student protégé — actually more project than protégé — to listen in on the conversations.

Purposeful mentoring.

It was hard to know it at the time, but history was being made that day. Joe Axelrod and Bob Mandelbaum were finalizing the first fully-capitated prescription drug benefit in Chicago. Walgreens would provide the covered drugs for a fixed monthly fee. Joe cautioned Bob against under-pricing the risk. He was guarding against a large increase on renewal. Once they offered this benefit, there was no turning back if they undershot the costs.

Imagine that. The payer, Joe, warning the provider, Bob, not to underestimate his costs and set the price too low.

Times were different then.

The price they settled on was $1.10 per member per month. Walgreens would fill every prescription written for health plan enrollees in exchange for $13.20 per member per year. And that was after making sure the price wasn’t too low.

In 1979, gasoline cost 86 cents per gallon. A full tank of gas cost $12.90, almost exactly the annual prescription drug cost for an HMO enrollee. With recent global developments and years of inflation, the national average price of a gallon of regular gasoline now approaches $4.00. That $13 tank of gas in 1979 now costs about $60.

The $13 per member per year cost for prescription drugs that Axelrod and Mandelbaum negotiated in 1979 would be approximately $1,050 today.

The compound annual growth rate in retail prescription drug spending since 1979 has been 9.7% per year. By contrast, prices for non-medical goods and services increased by 3.3% and middle-class wages rose by 3.7% per year over the same period.

As irritating as it is to spend $60 or even $70 to fill your gas tank, imagine seeing $1,050 on the pump.

Prescription drug spending exploded.

I was in the room when we lit the fuse.

It was the third batter of the inning before I noticed. That alone is remarkable, but nowhere near as remarkable as the young girl who I eventually noticed. I was watching my ten year-old granddaughter’s softball game. The catcher on the opposing team has a limb difference, leaving her with only her left hand fully functional. Incredibly, it took me three batters to notice, and I played college baseball.

She wore a baseball glove on her left hand. After catching a pitch, she tucked the glove under her right arm, took the ball in her left, threw it back to the pitcher, and slipped the glove back onto her hand as she returned to her crouch. It dawned on me that I’d simply thought she was left-handed.

That is amazing.

Here was a little girl brave enough to play competitive softball with one functioning arm. She didn’t play a position that hid her from action. She wasn’t interested in just being there.

She chose catcher.

When it was her turn at bat, she stepped up to the plate wielding the bat in one hand.

And she swung the bat.

And she hit the ball. A ground ball to the second baseman. It may as well have been a towering home run from my view. I was inspired watching her.

Everything about her said “ballplayer”. And that’s coming from an old ballplayer.

She chattered like a ballplayer.

She moved like a ballplayer.

She inspired a fellow ballplayer.

I started rooting for her. Not against my granddaughter’s team. I was rooting for her.

The world needs more people like her. We also need more moments like the one I had watching her. Moments when we can see the best of ourselves.

Courage.

Resilience.

Confidence.

Grit.

Last week wasn’t the first time I’d seen a one-handed baseball player. Jim Abbott pitched in the major leagues for ten years. Sixty feet six inches away from the best hitters on the planet. Less than two seconds to get his glove onto his hand in case the batter hit a 100 mph line drive back at his head.

Jim Abbott was not a novelty. He was a ballplayer. On September 4, 1993, he threw a no-hitter against the Cleveland Indians. No one on that Cleveland team saw a disabled pitcher. They only saw pitches they couldn’t hit.

I didn’t see a future major leaguer at the ten year-old softball game, but I saw someone remarkable. Someone who will do great things someday.

Like those Cleveland Indians, I didn’t see a disabled catcher last week.

I saw a ballplayer.

The plane is on final approach, lined up with the strobe light beacons showing the edge of the runway. A gust of wind shoves the passenger jet off line. The pilot instinctively banks slightly to regain their bearing.

But what if the pilot was required to call the control tower and ask permission to adjust course?

“Compliant Air 433 requesting left ten degrees to runway.”

“Compliant 433, this is Tower Control, please advise rationale.”

“We’ve been blown off course and prefer runway to parking lot.”

“Roger, 433, maintain heading pending review.”

“We’re approaching field at 260 knots.”

“We’re checking the protocols, 433, will advise shortly.”

“You’re not sure we should land on the runway?”

“Safety is our top concern, 433.”

“Are you a pilot, Tower Control?”

“Negative, but I’ve seen a lot of planes land, 433.”

“We have data. And AI.”

“Hold current heading.”

“Tower, current heading terminates in a mountain.”

“Compliant 433, we’ve escalated to a second level review.”

“Is the senior reviewer a pilot?”

“Negative, but he flies a lot. Business class.”

“433, can you document the wind gust?”

“Document the wind gust?”

“We’ll need something in writing.”

“Negative. Unable to document air, Tower.”

“433, we’re showing your last course correction was also a left bank.”

“This appears to be a pattern.”

“Your request has been flagged for peer-to-peer review.”

“With who?”

“A general aviation pilot. VFR rated. Single engine props.”

“They’re in a different time zone, stand by.”

“You want me to talk to a Cessna pilot? Have they ever landed a jet?”

“Many times…in simulators.”

“433, pending final review, we’re approving eight degrees.”

“I requested ten.”

“Eight is within guidelines.”

“Our model indicates high probability eight degrees sufficient.”

“A high probability?”

“Bordering on likelihood.”

“Compliant 433 declaring emergency. Pilot in command.”

“Compliant 433, field in sight. Gear down. On the numbers.”

“Tower, 433 is safely down.”

“433, ten degree bank is approved.”

11:40 pm on April 14, 1912. The largest ship in the world just collided with an iceberg in the North Atlantic. In just over two hours, the Titanic will be gone.

The most famous maritime disaster in history holds a lesson for health care providers: there is no such thing as being unsinkable.

Between 2010 and 2025, the ranks of Medicare beneficiaries swelled by almost one-third, from 47 million to 63 million.

When the Medicare program was introduced in 1965, there were 4.5 active workers per retiree. Today that ratio is down to 2.8; it will fall to 2.4 by 2030.

Medicare is paid for by taxing the current workforce. That burden becomes increasingly difficult as the ratio of retirees to workers almost doubles.

In addition to shouldering higher retiree medical costs, today’s workforce has seen its own health care spending triple over the last 15 years. A recent PwC survey of insurance company actuaries projected medical costs to increase by 9% this year.

The typical working family of four spent $9,200 on health insurance premiums and out-of-pocket medical expenses in 2002.

By 2016, that had grown to $25,800.

That number will hit $50,500 per year by 2030.

Think about that. Before spending a single dollar on groceries, housing, or clothing, a working family must generate $50,000 of productivity to pay for their health care and that of their parents.

If the 9% annual growth rate from the actuaries persists, health care costs will double again around the end of the next Presidential term .

In a global economy, with international competition using much less expensive labor, it’s hard to imagine how we make that math work for the American middle class.

There is no path to curbing health care spending that leaves prices where they are.

We use fewer days of hospital care than Germany but spend more because our prices are higher. We use about the same number of hospital days as Canada, but spend twice as much because we pay ourselves prices that are twice as high.

Hospitals and health systems have always solved financial problems by increasing revenue. Whenever the topic of price controls comes up, the industry reassures itself that “that will never happen”.

Overconfidence is dangerous.

We’re like an ocean liner barreling through the ice in the North Atlantic at 22 knots.

And the Titanic was unsinkable.

You’re sitting in your seat on the airplane watching a passenger hoist a hopelessly overstuffed suitcase over their head, wedge it into the opening of the overhead compartment, and then try jamming it into the bin. They’d have better luck cramming a watermelon into a soda bottle.

The price-weary airline passengers dragging their belongings down the jet bridge look like the refugees fleeing Anatevka in Fiddler on the Roof. It’s annoying to business travelers who pack light, but it’s easy to understand why it’s happening. It now costs $50 to check a bag on most domestic flights. The second checked bag costs even more. Families have to decide whether to bring their luggage or their kids.

Bag fees now account for virtually all of the airline industry’s profit.

In 2024, all U.S. airlines combined made a total after-tax profit of $6.7 billion.

Their aggregate bag fees that year? Just over $7 billion.

Take away bag fees and the industry struggles to break even. Think about that for a moment. The revenue from the people riding in the airplane’s cabin doesn’t cover the cost of the flight. It’s the revenue from the cargo hold that is propping up the airline.

It’s dangerous when your main business loses money and you make it all up and then some on a service that someone else can actually do cheaper.

What happens when airline passengers FedEx their luggage to themselves at their destination rather than paying the airport bag fees? Sound crazy? Any crazier than buying something for $17 on Amazon that you don’t need to get free shipping on the $8 item you did need? People will go to great lengths to save $15.

What does this have to do with health care?

If you guessed that major surgery was the most profitable component of a hospital’s business, you’d be wrong. If you thought it was all of the inpatient care combined, you’d be…wrong again.

Ask any hospital administrator today what they depend on for their financial survival and you’ll be surprised by the answer.

These days, hospital operating margins don’t come from the operating room or the intensive care unit. They come from the pharmacy.

Hospitals purchase drugs from pharmaceutical companies at a discount. The discount is mandated by the government to help safety-net hospitals with costs that government payment rates don’t cover. Instead of increasing the prices it pays, the government requires drug companies to lower their prices on drugs sold to hospitals caring for government patients.

On the surface, the idea had some merit. Drug companies sell their products at lower prices in other countries, where those governments refuse to pay what the companies charge here. Lowering drug prices here was not a bad idea.

But nothing about American health care finance is simple.

Hospitals don’t just administer those discounted drugs to government patients. The same drugs go to privately insured patients who pay much higher prices. Over time, the mark-up on specialty drugs started generating bigger margins. The pharmacy, which used to be an ancillary cost center located in the basement — like baggage handling at the airlines — became the financial engine of the entire clinical enterprise.

And like the airlines, which became dependent on bag fees for their profitability, hospitals now rely on pharmacy profits for their economic survival.

So why worry?

The profitability of the hospital pharmacy has become so large that it is attracting scrutiny from insurance companies, employers who pay the bills, patients, and policymakers.

What began as a program designed to help safety-net hospitals stretch scarce resources to serve low-income and uninsured patients became a primary profit engine. Not unlike Aesop’s golden egg-laying goose.

What is the “FedEx” analog for competition with hospital pharmacies? Free-standing infusion centers and care in the home. Commercial insurers have already balked at paying for hospital-based infusions for conditions like rheumatoid arthritis — those services now occur in free-standing centers. They have not challenged oncology. Yet.

It’s precarious for multi-billion dollar health systems, with enormous physical footprints and tens of thousands of professional employees, to lose money on operations with the exception of pharmaceutical services. The parallel to the airline industry and its bag fees is alarmingly clear. But if the pharmacy income goes away, unlike the airlines, hospitals won’t be able to raise other prices.

Hospitals seem unsettlingly sanguine about this.

As if the dependence on the drug discounts is now so complete as to make the program untouchable.

But it’s just a goose.

You might want to be sitting down when you read the next sentence.

We don’t need more primary care physicians.

Let’s be clear — we need a lot more of what primary care physicians have been doing for the last five decades. Episodic care of acute conditions. Minor injuries. Preventive care and screenings. Medication monitoring and refills. Patient education. And referrals.

We just don’t need more physicians doing those things.

We need physicians managing a tidal wave of chronic diseases.

According to the CDC, three-fourths of American adults have at least one chronic condition. Over half have two or more. The number of adults over the age of fifty with at least one chronic condition is expected to double over the next 25 years to 142 million people.

We can’t afford to have primary care physicians handling minor short-term episodes.

And we can’t afford not to have them for the longitudinal management of chronic and complex illness.

So how can I say we don’t need more primary care physicians? It’s the lumping of internists, family physicians, and pediatricians under the umbrella of “primary care”. I was there 45 years ago when we did it. We even debated whether to include OB/GYN.

Health insurers — more specifically, managed care plans — wanted gatekeepers. A first line of defense against patients trying to spend the insurers’ money on specialist care.

Health systems saw primary care physicians like gold miners, standing midstream panning for shiny nuggets.

Both views did a disservice to internists, family physicians, and pediatricians. Their economic value was derivative rather than intrinsic. Based on what they prevented, or what they found, not what they did. And for both roles, visit volume was the key. Whether income came from insurers or health system salaries, throughput was rewarded.

With nearly 150 million adults with chronic conditions bearing down on the health care system, we need more internists and family physicians. But we need them in a new role. With different expectations, different scopes of practice, and different compensation.

We need internists, family physicians, and geriatricians to manage the full constellation of chronic and complex conditions. Backed by specialist physicians for complex escalations, but with physician-to-physician consultation replacing many if not most referrals. Smaller patient panels. Fewer and longer encounters.

And we need to start by retiring the outdated term “primary care physician”. To ask these doctors to focus on the burgeoning chronic population while continuing to use a term that connotes gatekeeper or gold miner is a category error. Making the cognitive break from “primary care” won’t happen passively. The term has become entrenched. We need an alternative or the old thinking will linger.

My suggestion: Chronic Care Physician (CCP).

Why now? In addition to the urgency of chronic demand, we now have the technology to pull it off.

The emergence of AI links generalist physicians to specialist-level knowledge in real time. A Chronic Care Physician will reduce care fragmentation, provide continuity, and in the case of dangerous patient decompensation, avoid the avoidable.

So who provides the lower acuity, episodic care no longer expected from PCPs? The same technology supports the delegation of lower acuity work to AI-enabled APNs and a wider array of professionals who are faster to train and deploy.

The shift from PCP to CCP frees scarce specialist capacity, increases the intrinsic value of internists, family physicians, and geriatricians, and provides a much shorter and less costly path to better access for patients needing low acuity episodic care.

You can let go of the arms of your chair now.

You’re talking to your neighbor over the back fence when he complains that his house didn’t burn down. Sound crazy? Sure it does.

You’re in a Starbucks and you overhear a 30 year-old complaining that she paid way more for her health insurance than she got back in claims. Why doesn’t that sound as crazy?

No one complains that their homeowner’s insurance is a waste of money in a year their house doesn’t burn down. A good year is one in which you paid premiums but had no claims.

Somewhere along the line, Americans got confused. They started to look at health insurance as something you buy only if you plan to take more out than you put in.

The concept of insurance breaks down if the risk of illness is not shared by everyone.

If only sick people enroll, it’s not insurance.

The individual market has always been a source of anxiety for health insurance company underwriters. Instead of enrolling entire companies or other large groups en masse and spreading risk, insurers become susceptible to what actuaries call selection bias —where the healthy are reluctant buyers and the sick can’t sign up fast enough.

To provide value, health insurance must spread the risk of catastrophic financial loss over a large population who all contribute premiums to fund the costs of illnesses should they occur unexpectedly.

Like homeowner’s insurance, which protects against financial ruin in the event that our house catches fire, health insurance was originally designed to protect against unaffordable medical bills should we be unlucky enough to become seriously ill.

The decision to use the private market to sell insurance to previously uninsured individuals was — to frame it charitably — naive.

The right thing to do back in 2010 would have been to enroll everyone not covered by an employer’s insurance plan into a government plan, funded by taxes.

Universal coverage.

No selection bias.

So why didn’t we do that?

Politics.

Private insurers saw an existential threat. They couldn’t compete with Medicare or Medicaid premiums that are based on lower government prices. They knew that what started out as a public option would have become the de facto only option as employers abandoned their outmoded insurance plans and paid taxes instead.

Instead of creating a public option with a stable risk pool, we created a subsidized private sector individual insurance market.

Then we made it voluntary — a sure recipe for selection bias.

And just when it didn’t seem like we could make any more mistakes, we outdid ourselves.

We created multiple benefit tiers, each with progressively richer coverage and associated higher premiums. If the individual market didn’t introduce enough selection bias on its own, we poured kerosene on the fire by giving individuals the option to splinter the risk pool even further…buying less coverage if they felt healthy and more coverage if they knew they were sick.

Splitting healthy people from the sick has inherent political appeal because there are more winners than losers.

In the arithmetic of insurance, however, fragmented risk pools are destabilizing.

If healthy individuals are able to opt out of comprehensive insurance until their own health needs escalate — leaving only those with serious illness to contribute to premiums — the cost of the insurance becomes prohibitive.

We set fire to the concept of insurance, but we didn’t just strike a match — we brought a blow torch.

It’s dark. You lose sight of the edge of the pavement. You trust your intuition and hold what feels like a steady course.

Your car drifts. Or the road curves.

The right front tire hits the gravel shoulder of the road, grabbing your attention. Then your right rear tire slips into the gravel.

Unless you’re an experienced driver, or have practiced for this moment, your instinct is to quickly steer to the left. But that instinct can have deadly consequences.

Lurch too quickly and the car will veer left as the tires regain traction. Across the center line and into oncoming traffic.

Intuition can be a dangerous thing.

Like the belief that competition would lower health care prices. More competitors, transparent prices, and elastic demand would combine to drive lower costs.

Holding a steady course, driving by intuition.

But patients don’t care about prices. Many spend too little for price to matter. A small percentage of the people — who account for the overwhelming majority of health care spending — exceed their insurance out of pocket limits, making price irrelevant. Only 11% of private sector patients spend enough, but not too much, to care about price.

Two tires in the gravel.

Unable or unwilling to abandon faith in the market, policymakers double down on competition. The result? Three high-risk surgical programs where there should be one, grappling for market share. Two or maybe all three operating below minimum proficiency thresholds. With actual-to-expected mortality ratios higher than 1.0, suggesting avoidable deaths.

Veering into oncoming traffic.

The market doesn’t work for health care.

Two wrongs don’t make it right.

They make it worse.

It was 1977, the summer before my senior year of college. I was driving a truck, delivering bundles of newspapers to paperboys. Today, they’d probably be called paperpeople. Among the dozen of us backing the trucks up to the loading dock, one driver stood out from the rest. Harry.

He knocked a mirror off on a tree limb.

Dented a bumper backing into dumpster.

Crushed a tail light on a parking lot lamp post.

And flattened a tire running over a curb.

The distribution manager called him a menace.

Eventually, when the newspaper was almost out of trucks, he was fired. We were sad to see him go. He was a nice guy. None of us would ride with him, but he was a nice guy. About a month later, just as I was getting ready to head back to school, someone asked if Harry had found a new job. Turns out he had.

He was driving a school bus.

I hadn’t thought about Harry for nearly 50 years. Then Robert F. Kennedy Jr. was named Secretary of Health and Human Services. And all I could think about was Harry. Raking mirrors off his truck. Slamming into dumpsters. Backing into lamp posts. Careening over curbs.

Harry’s crashes were confounding. Kennedy’s are calamitous.

Children dying from measles.

Scientists — including Nobel laureates — displaced from the National Institutes of Health.

Hundreds of millions of dollars cut from mRNA vaccines with the potential to prevent fatal cancers.

I look at Kennedy and I see Harry.

Not safe enough to deliver newspapers.

Trusted to get children to school.

Who’s driving this bus?

Just over 3 million people will die in the United States this year.

Over 90% of them — about 2.7 million — will die from chronic or degenerative diseases.

Not from lightning strikes. Not from unforeseen accidents.

From chronic or degenerative disease.

2,700,000 deaths that we knew were going to happen.

In a deeply troubling article in this week’s The Atlantic, Dr. Elisabeth Rosenthal, an emergency medicine physician no longer in practice, described the passing of her husband from advanced esophageal cancer. Dr. Rosenthal’s article wasn’t about the passing of a patient with terminal cancer. It was about the unimaginably bad experiences that her husband — and she — had to endure over the course of several emergency department visits before he died.

All of us in health care know what comes next in the story. Thirty-six hours of ER boarding, on a stretcher in a hallway. Three patients sharing one “ER overflow” room, where one woman, partially clothed, paced the floor — singing — while another was having fluid removed from his lungs.

As a country, we do a pretty miserable job of getting end of life care right. Far too few of us have advance directives, and even when we do, way too many of us end up dying in an ICU instead of in a hospice facility or at home, as so many Americans say they would prefer. There is a chasm between the way we say we want to die and the way we actually do.

But that’s not what has me sitting at the keyboard tonight. Dr. Rosenthal’s husband had advance directives. And a family caregiver of the highest capability. What has me typing are the unconscienable patient experiences that have arisen in response to a payment system that is completely out of step with the burden of illness. As bad as it is that we have people dying in intensive care units instead of hospice, it’s utterly unacceptable that we have them dying in hallways on stretchers.

We know that 2.7 million people will die this year of chronic or degenerative disease. How do we know? Because that many people died last year, and that many people will die next year. It’s as predictable as the tides.

We wouldn’t build a sand castle below the tide line.

Until we figure out how to increase hospice uptake, build the capacity to provide it, and reduce in-hospital deaths, we have no choice but to be prepared for the 2.7 million. We can’t just roll the carts down the hall.

I spent over 30 years studying health system strategy. Competitive battles over market share. Investment in geographies with favorable payer mix to subsidize the costs government payments didn’t cover. Expanding surgical capacity because the economic return was so much higher. Success meant more volume and more revenue. If we have 500 beds, strategy dictates filling as many of them as possible with surgical or procedural cases.

But what about the 2.7 million dying patients who we knew were coming? What did our strategy suggest we do for them? Did we make arrangements to accommodate the 2.7 million before we launched our strategy to go get “better” market share?

We need to find a comfortable, dignified, humane place where people who we know are dying can die.

And then we can have a strategy.

You need surgery. The cost of the diagnostic tests, imaging, the procedure itself, and prescriptions afterward total $27,000. Your insurance has a $5,000 deductible. Your maximum annual out-of-pocket liability is $7,500.

Unless another hospital will do that $27,000 procedure for $7,499, do you care about price?

I have cancer. The cost of my diagnostic testing, chemotherapy or radiation therapy, and Rx will be $105,000. My annual out-of-pocket limit is $10,000. Unless there is a $9,999 alternative to the $105,000 regimen, do I care about price?

So who cares about price?

Only someone who expects to spend less than their deductible or annual out-of-pocket limit. Once you meet your annual limit, or if you know you eventually will, price transparency is irrelevant.

How much of total private sector health care spending is by patients who spend enough but not too much to care about prices? Before I retired, we checked. Looked at commercial insurance claims data. How much?

Only 11 percent.

Everyone else spends too little to care or way too much to matter.

It’s a classic Catch-22 — an idiom from Joseph Heller’s book of the same title. A member of a World War II bomber flight crew requests to be removed from combat, citing mental distress induced by the trauma of war. But the fact that he is afraid constitutes evidence that he is mentally fit, making it impossible to request relief.

Employers, insurers, and policymakers — relying on classical economic theory — have made significant bets that price transparency coupled with higher deductibles would cause patients to shop for lower cost services, in turn reducing health care spending. Trapped in the Yossarian belief that the market works.

It’s like sending the bombardier back up.

Summer of 1984. Salt Lake City. I have a chance to see Arnold Palmer play in a nearby golf tournament.

Arnold Palmer.

Arnie.

I’m walking back to my car after the round. Walking ahead of me is a young dad and his little boy. A golf cart approaches from the opposite direction, moving fast. As it zooms past us, the little guy holds up a scorecard and a pencil. The guy driving the golf cart never saw him. Just zipped past.

This past Sunday, I was watching the final round of the Masters golf tournament on television. The cameras were following Scottie Scheffler, currently ranked as the #1 golfer in the world, as he walked a narrow pathway lined on both sides by admiring spectators. Middle-aged fans. Parents with kids. Older folks. All of them clapping, waving, and holding out open palms for that cherished “high five” from their hero.

I was sad to see Scottie (we call all sports heroes by their first names, like old friends) cover what must have been more than 100 yards without acknowledging a single fan. No high fives. No tip of the cap. No wave. Not so much as eye contact.

Scottie Scheffler is 29 years old. He made $27 million in official tournament earnings in 2025. He made that much again in product endorsements. He has made more than $100 million dollars in prize money. Playing golf. Why? Because those people lining the pathway, holding out a hand, watch golf on television. They buy products that he endorses. Without fans, Scottie Scheffler would be giving lessons and parking golf carts somewhere.

So seeing him “tune out” the admiration was disappointing . Some would say he was just focusing on his job. But his job is more than just hitting good golf shots. He makes $6,200 per hour, 24 hours a day, 365 days a year. Part of the job, whether he acknowledges it or not, is the people lining that rope. No one expects him to sign autographs on his way to the first tee. But would it be so hard to merely wave at the people shouting encouragement to you?

Back to Salt Lake City.

The golf cart screeched to a stop after passing us. Then it started backing up. It made its way in reverse past me and on up to the young dad and the little kid. In the passenger seat of the cart was Arnie. He’d seen the little guy holding up his scorecard and pencil.

He could have kept going.

Could have pretended not to see the kid.

He was “off the clock”… he’d given the spectators what he owed them.

He was Arnold Palmer.

Nope. Arnie had the driver back up. He took the kid’s scorecard and signed it. Reached into his golf bag, grabbed a ball, and gave it to the little guy.

Then Arnold Palmer — the greatest golfer of his generation — got back in the cart and waved to a kid who’ll never forget him.

And that is why Arnie was known as “The King”.