Health Care in the U.S.: 5 Big Questions on Its Pricey Present and Uncertain Future

Dr. Paul Matherne headshot
November 1, 2019

Health care spending represents nearly a fifth of the United States’ gross domestic product.

The U.S. spends more per capita on health care than any other country — about 25% more than the second-biggest spender, Switzerland, according to recent data from the Johns Hopkins University Bloomberg School of Public Health. Yet the country’s health outcomes compare unfavorably to most other industrialized nations. Americans pay more for their health care, driven by a sprawling, opaque web of providers, insurers and little-understood middlemen.

Health care is also an industry seemingly in a state of flux, with new technologies, shifting regulatory frameworks and consumer demand pushing the industry into new, often controversial, territory.

Dr. Paul Matherne, a pediatric cardiologist and acting chief medical officer of the University of Virginia Health System, has led UVA Darden School of Business MBA students through the industry for years, teaching “Challenges in Health Care” and “Solutions and Innovations in Health Care.” He is also a 2010 graduate of Darden’s Executive MBA program.

Matherne recently offered his thoughts on the challenges and opportunities in the field.

Q. Why do Americans spend so much more than other countries while our outcomes tend to be somewhere in the middle of the pack?

A. Because we are paying for what we can think of as sick care, and we are expecting health care. We have a great sick care system. If you are sick in this country, we can generally, without a lot of waiting, get you in to be seen and diagnosed and treated, but it will be expensive.

One problem is that how hospitals get paid and how doctors get paid is not aligned. There are times when a hospital gets paid more if a doctor moves somebody through the hospital faster, but the doctor gets paid less because they’re paid on a per-day basis. That’s just one of the many examples.

In health care, we also have a very complicated relationship between all the stakeholders. You have the person getting the service, the patient, who’s paying part of it, but not all of it. Then you have someone else, the insurance company, telling patients where they can get the service. Actually, the insurance company telling you where you can get the service usually isn’t paying for it either, because most companies are self-insured; they’ve just hired an insurance company to administer the plan – a very confusing system.

Also, as a society, we’re not really into preventative medicine and healthy lifestyles. We don’t design neighborhoods for easy walkability. We can’t access healthy foods everywhere. There are whole parts of the country, particularly in some cities and in rural areas, where you really can’t find any healthy food, and fast food or processed foods are cheaper, so that’s what people eat.

Equally as detrimental to our health is that we don’t spend much time teaching people how to be healthy. If you look at other countries that have economies like ours, they spend far more on non-sick care – health-related initiatives in prevention and education. As a result, they have better outcomes when measured by obesity and diabetes rates, infant mortality and lifespan, among others.

Q. You have a course on innovation in the health care system at Darden. What does innovation look like and where does it come from?

A. Innovation in health care can be anything from an amazing new idea or technology to adopting a tried-and-true method from the non-health care sector.

In the course, we try and look at what health systems are doing to try and improve care and bring down costs. How are they using big data, for instance? How is technology helping?

How are home health and telemedicine technologies going to help us bridge some of the gaps? What is the impact of a company like 23 and Me on health care?

We also try to get students to think about solutions in non-health care businesses that might be applied to health care. How can we improve health care by focusing on the patient experience? What’s the line between what is a hotel and what is a hospital? They seem to bump up against each other at times.

Q. The Affordable Care Act brought significant change to U.S. health care. What has been one of its major impacts?

A. One of the single most important things the Affordable Care Act did was to get rid of preexisting conditions as a reason to deny insurance. I’m a pediatric cardiologist, so I take care of children with very serious heart disease. In the past, it could be difficult to find coverage, especially if you changed insurance carriers.

I once had a family who made the mistake of changing insurance carriers and not reading the fine print. So their 10-year-old daughter couldn’t get insurance, and they were above the poverty line and she wasn’t disabled, so she couldn’t get Medicaid. This was a child who had significant medical needs, and the dad was told, “Here are the choices: Let your business run into the ground and go bankrupt, or divorce your wife and leave your family destitute – then your child can get Medicaid.” In addition, when this child and those like her were to become adults, they could not get insurance because of the preexisting heart disease.

That doesn’t happen anymore. That’s a big, big deal.

Q. How is technology going to affect health care in the near future?

A. Technology, including telemedicine, is amazing. The same thing is true for artificial intelligence. These things have changed the face of medicine and will continue to make advances in care, but fundamentally that’s not why we have poor outcomes.

If I could get people to quit smoking and lose 50 pounds, that would do far more for their health than some fancy new algorithm or machine predicting that they’re going to have diabetes or heart attacks. I already know they’re going to have diabetes and heart attacks when they’re smoking, overweight and have a poor family history.

If we truly want to change the health of the nation, it’s got to go beyond technology.

Q. What does a path forward for sustainable health care and health spending in the United States look like?

A. The solution is going to be to begin to tie all the incentives together. Incentives for a company, incentives for hospital, for the government, for the patient and for providers.

Currently, they are not aligned. The better we can align all the stakeholders and focus on health rather than sick care, the better the health of our nation will be.

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Sophie Zunz

Darden School of Business