Why We Pay More And Get Less From U.S. Healthcare The United States spends trillions of dollars on healthcare every year, but our outcomes are worse than those of other countries that spend less money. Why? Physician and healthcare executive Vivian Lee explains the psychological and economic incentives embedded in the American model of medicine, and makes the case for a different way forward.

The Fee-for-Service Monster

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From NPR, this is HIDDEN BRAIN. I'm Shankar Vedantam.

Let's say you're invited out to eat at a gourmet restaurant. Your host has promised to cover the bill. What do you decide to order? This scenario unfolds in an episode of the TV show "The Office." One of the characters, Jim, needs a favor from his colleagues Phyllis and Stanley, so he takes them out to lunch on his dime.


NOAH BLAKE: (As Waiter) Morning, folks.

LESLIE DAVID BAKER: (As Stanley) I'll have the surf and turf with a side order of lobster.

BLAKE: (As Waiter) Actually, the surf and turf does come with lobster.

BAKER: (As Stanley) Not enough lobster - side order.

VEDANTAM: Call it the surf and turf conundrum. If you're paying for your own meal, you might choose a soup and salad. But if someone else is paying...


PHYLLIS SMITH: (As Phyllis) How much wine do you have?

VEDANTAM: ...It's tempting to ask for a lot more.


VEDANTAM: There's a hidden problem with choosing the surf and turf and the side of lobster. If everyone at the table does this, your host can end up broke and resentful. It might be the last time you get asked out to eat.

Now consider the surf and turf conundrum in a different context. What happens when we look not at a restaurant...


VEDANTAM: ...But in a hospital?

VIVIAN LEE: Many people, I think, are under the mistaken impression that they're not really paying for health care because the insurance company is paying for health care. And as a result, I think one of the culprits in our health care crisis right now is the behavior of us individually as patients, that we do tend to expect that more action is better. We're getting our money's worth.


VEDANTAM: There's no free lunch in health care. The individual choices we make as patients, doctors and insurers might seem rational, but they are producing outcomes that are worse for everyone.


VEDANTAM: How to fix the problem using economics and psychology, this week on HIDDEN BRAIN.


VEDANTAM: Vivian Lee is the author of "The Long Fix: Solving America's Health Care Crisis With Strategies That Work For Everyone." She's also president of health platforms at Verily Life Sciences and is a senior lecturer at Harvard Medical School. Vivian Lee, welcome to HIDDEN BRAIN.

LEE: Wonderful to be with you. Thank you.

VEDANTAM: Some years ago, you were heading up the University of Utah Health system and you had a patient on Medicaid. In the past year, she had come into the emergency room 52 times. What were the medical complaints that were bringing her in?

LEE: They varied all over the place. She had some chronic conditions. Sometimes she had some new issues that would come up. I think sometimes the staff just felt that she was lonely and had nowhere to go and wanted to drop by. They varied quite a lot.

VEDANTAM: And presumably, some of the visits that the ER was seeing this woman for were repeat visits. Did someone stop to say, hang on a second; why isn't this woman seeing a primary care doctor? Did Medicaid say, why isn't this woman seeing a primary care doctor instead of coming into the ER?

LEE: I'm sure many people thought about it. But, you know, emergency rooms are very busy places, and they're just hectic. And while people may have had the idea, wasn't really probably that easy to work out. And so, you know, the key thing was to make sure that she was OK and to be able to discharge her out of the emergency room.

VEDANTAM: So something happened at the end of that year that fundamentally changed how you treated this patient. What happened, and what changed?

LEE: Well, at the end of that year, the state of Utah announced that its Medicaid program would change radically. So leading up to that point, we were paid fee-for-service in our Medicaid program, which meant that every Medicaid patient, such as that woman, who came into our emergency room, we would charge for each visit, for every study that was performed, every medication that was prescribed or administered, for example.

But at the end of that year, as of January 1 of the following year, we would get paid a fixed amount for caring for each of those Medicaid patients, such as this woman. And then what that would mean is that if we ended up spending more than that allocated amount - let's say maybe $10,000 a year, for example - if we ended up spending more, then that would be on our dime. That would be a hit to our profit and loss statement. And so it completely changed the way in which we started thinking about patients like her. Before, she was a profit center. Afterwards, she was a cost center for us.

VEDANTAM: What did you actually do that was different compared to what you were doing before?

LEE: Well, what was interesting about that change in the payment model was, actually, it enabled us to do what most of us felt was the right thing to do. So this was the challenge I think that we had been facing up to that point, which was that our financial incentives really were in complete conflict with what our professional standards were.


LEE: First, we collected a lot of data about all the patients on Medicaid who were coming through our system and identifying patients such as this woman. And so she was a big flag in the system because she'd seen us 52 times in the previous year. And then we all sat down and said, well, what should we be doing to care for a woman like this? Well, she should be assigned to a primary care physician. We should make sure that she has access to transportation to come to and from clinic in case that might be a barrier. We should make sure she's able to refill her prescriptions as necessary. We really started to take care of her and focus on her health.

VEDANTAM: So embedded in the story is the central idea of your book. The United States has built a massive health care system where billing, payments and the focus are on services provided rather than on outcomes. You call it the fee-for-service monster. Can you give me a sense of the scope and scale of the system that we have built?

LEE: The U.S. health care system now is a $3.5 trillion industry. It's consuming about 18% of the U.S. economy. And that's around 2 1/2 to three times as much as our colleagues, say, in much of Europe and Japan, Australia, New Zealand, Canada and so on. And yet, same time, our outcomes are significantly worse than most of those countries in terms of, for example, how long our babies are likely to live who are born today. So even though we are spending so much money, we are not getting the results that we really deserve with that. And that is a consequence of, in my view, the fee-for-service system or what I also call paying for action. We're paying for action, but we're not really paying for results.


VEDANTAM: How did the system come about in the first place, Vivian?

LEE: I think everyone's intentions were good in the beginning. So at the start, I'd say it really took off with Medicare, so with the government-run program of health care for seniors.


UNIDENTIFIED PERSON: ...Security program to provide hospital care, nursing home care, home nursing service and outpatient treatment for those over 65. Medicare will become law on July 1, 1966.

LEE: The Medicare program - the government basically paid hospitals for services that were rendered and eventually also paid physicians for services that were rendered. So every time we saw a patient in the hospital or in a clinic, we would send a bill over, and then we'd get paid.

And in the beginning, that was really a pretty small part of the national economy. It was what you might expect at the start. But if you set up an economic incentive like that, it's - you'll naturally tend to want to increase - it's sort of, I guess, human nature - or at least it is in our society - to try to generate more revenue. And so people began to focus on revenue-generating behaviors or revenue-generating services, which were, for example, operating rooms, cancer centers, basically high-end care in hospitals.

And so that's why over the, let's say, late '70s, mostly '80s and early '90s, every major urban area was littered with giant cranes building huge medical facilities. We called it, actually, a supply-generated demand. So the more operating rooms you had, the more MRI machines you had, the more patients were referred to those systems, and so you could just continue to generate more and more fees and more and more business and more and more profit, frankly.


VEDANTAM: So let's look at some of the attributes of this fee-for-service monster in a little more detail. One of the fundamental principles that you identify is that more care is always better because more care means more services and more services means more remuneration.

LEE: Well, in a fee-for-service system, that's really what you're rewarding. You are rewarding the more services. You're rewarding people doing things to other people. And actually, in many cases, you're rewarding that regardless of whether it actually improves a person's health. So as long as you do a lot of procedures, as long as you poke and prod patients and do more colonoscopies or operations or administer expensive chemotherapeutic agents - the more you do to them, the more money you make.

VEDANTAM: And so the assumptions are more care is better, more visits are better, more treatment is better. And ironically, it actually might suggest that less prevention is also better because if you don't prevent problems from happening, you're going to have problems that arise, and more people are going to come into health care facilities seeking services. I'm not necessarily saying that doctors want people to be sick, but the financial incentives of the system seem to be almost against prevention in favor of actually treating problems once they arise.

LEE: The fee-for-service system really does create all kinds of unintended consequences and incentives, including what you've just described, which is to favor procedures against prevention, favors specialty care in - at the expense of, say, primary care or generalists. This is one of the reasons why orthopedic surgeons or neurosurgeons or cardiac surgeons are among the most highly compensated physicians compared to, say, family medicine or pediatrics or, say, general internal medicine, these primary care physicians, who spend most of their time counseling patients in and helping to prevent disease - you know, encouraging them to stop smoking, lose weight, focus on vaccinations, focus on healthy diets. None of those are really very profitable right now in a fee-for-service system.

VEDANTAM: And the ironic thing is at the end of this, it's also antithetical to what patients want because ultimately, if I was a patient, what I really want is to be as healthy as possible with minimal contact with the health care system.

LEE: Well, that may be true, but I think that that's an important issue that you raise, which is that, of course, if you ask most people, they want to be as healthy as possible, and they want - they never really want to encounter a physician, at least - unless perhaps when they're delivering a baby, for example, which is a moment of joy for most people. But outside of that, most people don't.

However, I think it is also true that many patients, when they do encounter the health care system, there is a tendency to expect something to be done. There is a tendency to feel like, well, if I've come to see you, I should at least walk out with a prescription or referral to another physician or an imaging study, for example.

And one of the consequences of having an insurance-based health care system is that there is sort of this separation from who's actually paying versus who's actually getting the service. So many people, I think, are under the mistaken impression that they're not really paying for health care because the insurance company is paying for health care. And as a result, I think one of the culprits in our health care crisis right now is the behavior of us individually as patients, that we do tend to expect that more action is better. We're getting our money's worth. And even sometimes, there's some interesting studies that suggest that we actually want more expensive services, that we believe that the more expensive a hospital is or the more expensive a test is, it must be better. And so that is actually exacerbating the problem we have now.


VEDANTAM: So how does this relate to that episode of "The Office" where Stanley orders an extravagant meal because he doesn't have to foot the bill? Vivian says when it comes to health care, many of us don't realize that we're behaving like Stanley. We go for the surf and turf option.

LEE: The surf and turf story was one that Len Saltz told me. He's at Memorial Sloan Kettering in New York City. And he said that many people think about health care like when you go out to dinner with a group of friends and you know at the end of the night you're going to split the bill. And so you look at the menu, and you think, what am I going to have to eat tonight? You think, well, I could have a Caesar salad or maybe a burger and fries. And then you think, well, what the heck? We're splitting the bill. I'll get the steak. I'll get the surf and turf. And then at the end of the night, everybody's got the surf and turf.

And that's basically the situation that we are in health care. We each individually don't recognize how we're contributing. And one of the points that I think is actually - was really kind of a realization that dawned on me as I was writing "The Long Fix" was that we not only pay for health care one way or two ways; we actually pay for it three different ways. We pay for it in terms of our copays, our deductibles. And, actually, those are rising. We now pay about 30%. For those of us who have insurance provided by our employers, we pay about 30% of our health care bills now, whereas our employers maybe pay about 70%. The second way is we pay out of our taxes, of course, to support Medicare, Medicaid and other federal and state programs. But then I think the most insidious component is actually the fact that our wages have been essentially flat for the last 50 to 60 years - our average wages in this country - because of rising health care costs.

So this idea that maybe somebody else is paying for our health care bills is really mistaken. We are all paying for it time and time again. And that's really why - one of the reasons why I wrote "The Long Fix" was so that we could all realize that this is our collective responsibility.

VEDANTAM: I want to stay with this last idea a moment because I think it's a really important idea. You argue that stagnating wages are at least in part because employers actually are paying more for labor, but all of the increases have been swallowed up by ballooning health care costs. Break that down for me.

LEE: Well, we've seen over the last four or five decades this rising cost of care driven by, in my view, the fee-for-service economic incentive model. And as a result of that, we each individually are receiving, on average, around 2 1/2 to three times the cost of care from our peers in other developed nations in the world.

And so where - who is paying for that? Well, either the government is paying for that if you're in Medicare or Medicaid or a part of one of the federal programs or the military health system, for example, or your employer is paying for it - except that, of course, your employer has a limited pool of reserves or a limited pool of funds to tap into. So they either are using their profits to pay you in take-home salary and compensation or they're using it for other benefits, including your health care and including retirement.

So one of the facts that I discovered in the course of doing the research on this book was that not only are they taking money out of your compensation and the pay raises that you should've been getting over the last couple of decades or more, actually, but they're also even taking funds out of or they're reducing their contribution to your retirement money. So employer contributions to retirement have also gone down in the last couple of decades, again because of rising health care costs.

VEDANTAM: Now, insurance companies are incentivized to reduce care and limit cost, but it's worth pointing out here the goal here is not to limit care that is needed. The goal here really is the best outcomes at the best price.

LEE: Yes. That's exactly right. The goal is to have the best outcomes at the right price. And what we need to identify is the way in which the insurance companies, who are primarily concerned with the financial aspect - although, of course, they care about patient outcomes or their member outcomes. But most of the member outcomes are really determined by or controlled by what the doctors and nurses and people who are caring for patients, as well as what the patients themselves, do. And so we need - the solution really has to come at the intersection of both insurers and health systems, as well as individuals.

VEDANTAM: I mean, the illusion, I think, is that with an adversarial system, you know, where health systems are trying to provide more services and insurers are trying to provide less services, we would reach some magical correct answer. But I think your point is that it actually has to be done more deliberately than that. This adversarial system, you know, actually is producing care that is probably not necessary and maybe not even safe, and the insurance companies might be limiting care that actually might be very valuable and important in terms of long-term health outcomes.

LEE: I think of it as like a trillion-dollar tug of war that takes place every year, where you have employers and others putting in funds into, say, the health insurance companies who are managing this. And those are the premiums, for example, that are paid in. And you have the health systems and medical clinics and nursing homes and pharmaceutical companies and so on who are hoping to get a piece of that trillion-some dollars.

And every year, there is this massive tug of war because the more that hospitals and deliverer - and providers of care can get, of course, the better off they are. The less the insurance companies have to pay, the better off they are, the more profit that they make. And so what happens is you have hospitals' fee-for-service system billing, coding, sort of racking up their charges, insurance companies trying to deny those charges or putting in barriers like prior authorization, which means a mound of paperwork that you have to go through in order to get, for example, approval to get an MRI done or a new drug prescribed. And that back-and-forth actually has - really comes at a tremendous cost.

It's a huge amount of administrative paperwork and burden. We know that in the U.S., we spend about 8% of our health care dollar just on administration and this paperwork, compared to 3% for our peers. So right there, that's already a 5% reduction in costs overall in this country if we could actually just reduce that administrative burden. It's a huge - takes a huge toll on physicians and other health care professionals. It's a contributor to significant levels of burnout among our workforce.

And then, really, the people who pay the biggest price are the patients and their families because at the end of the day, when you can't resolve these disputes between these massive behemoths of the insurance companies and these massive hospitals and provider systems, you end up with balance billing or what we call surprise billing. Those bills land in the laps of patients and their families and are a significant source, for example, right now of bankruptcy and hardship.


VEDANTAM: Though the cost of health care in the U.S. is high, high enough to lead Americans into bankruptcy and create stagnating wages, we don't have the health outcomes to match. It's like we're paying for a new Ferrari and getting a used sedan.


VEDANTAM: When we come back, why our need to rein in costs and our desire to improve health outcomes do not have to be at odds with one another.


VEDANTAM: Let's say podcast and radio hosts got paid by the length of the sentences they use. What you would expect to see, not surprisingly, is that when a host has the opportunity to say something in 100 words rather than 10 or 1,000 words instead of 100 or 10,000 words instead of 1,000, he would prefer, all things being equal, to consider the possibility that it's better to go with a longer sentence and then make the case that this longer sentence is actually the best way to communicate his ideas because, after all - you get the picture.


VEDANTAM: Throughout the health care system in the United States, patients, doctors and insurers are incentivized to think not about outcomes but about expanding or limiting services.

Vivian, the consequences of the fee-for-service system we've built is not just unnecessary treatment and greater cost. One of the most disturbing parts of your book has to do with medical mistakes. Give me a sense of the scale of these mistakes today.

LEE: A report from the Institute of Medicine, which is now the National Academy of Medicine, estimated that there were somewhere - there was around 100,000 medical mistakes each year in this country. And since then, the estimates have actually only increased, only because I think it's very difficult to know exactly when a medical mistake is taking place. And with more research, the estimates actually increased two, three, even fourfold.

VEDANTAM: How many people do we think die from medical mistakes every year?

LEE: Well, it's difficult to know for sure, but it may be around 200,000 to 300,000, maybe even 400,000 people per year by some reports. And these are definitely disputed. It's not clear. Again, nobody writes medical mistake on the death certificate, for example. But some people have estimated that it is the third leading cause of death in this country.


VEDANTAM: I mean, that is just astonishing, Vivian, that - the idea that medical mistakes might rival the consequences of cigarette smoking. I mean, that's just - I mean, my jaw fell to the floor when I saw those numbers.

LEE: It's - you know, it is very difficult, and I am always a little bit conflicted when I talk about this because there is inherently in medicine uncertainty. It's not always clear. You know, a cardiologist is not the equivalent of a plumber, for example. You know, it's difficult to understand sometimes and difficult to know what the diagnosis is.

But nevertheless, there's no question that when you start breaking down the different sources of mistakes, like distractions or medication errors or wrong-site surgeries, for example, in the operating room, there's no question that there are a significant number of medical mistakes that do take place in this country, even if we don't know for sure what the total is.


VEDANTAM: How are medical mistakes shaped by the fee-for-service system that we've built?

LEE: Well, one of the issues when you have a fee-for-service system is that you are incentivizing overtreatment, overdiagnosis, even if the physicians themselves or the clinician themselves are really doing their very best.

You are in a system that, for example, if you have any doubt about a person who has, let's say, a headache who comes into the ER, you think 99.9% probability that that headache is just a regular headache and is not a brain tumor. But, you know, there is some risk of a lawsuit, for example, and the family is anxious. Again, they might have the expectation that we will do something. And, oh, by the way, the hospital will make a couple of thousand dollars if we do a brain MRI.

It's pretty easy to lean towards getting extra images and extra studies performed, and those actually don't come without risk. So, you know, on imaging studies, for example, there are many findings that are ambiguous or, you know, you're just not sure. Is that really a lung nodule, or could it be a scar from some old infectious disease? Or - you know, these kinds of situations where you're just not certain, and then you end up perhaps performing a procedure that may not be necessary, for example.

Or we have situations where we are in such a rush to get as many patients through a clinic as possible that we have failures of communication that might lead to mistakes. And so we've kind of created a system that doesn't value health and better outcomes.

I think our industry is really among the slowest to respond. If we look at the history of the aviation industry or, say, safety belts in cars, for example - the automotive industry - all of those other industries are far in advance, and we are the ones who are actually supposed to be the most concerned with health. That really is the ultimate irony.

VEDANTAM: Yeah. Now, you know, we have - we've spent a few minutes, in some ways, criticizing doctors or what doctors are doing, but it's worth pointing out the current system does not serve doctors well. You know, it turns many of them into bean counters and accountants. They spend more time during meetings with patients, you know, staring at their computer screens trying to figure out billing codes, fighting with insurance companies. Lots and lots of doctors are not spending their time practicing medicine anymore.

LEE: Well, that's really one of the ironies of this fee-for-service system is that you would think - I think from the outside, you would think that most physicians must be quite happy because they are generating all these fees, and they're making lucrative salaries, for example, and so you just - you'd expect most physicians to be pretty happy. But when you look at the data on physician burnout, which has been collected now for a number of years, consistently showing that 45%, 50% of all physicians are reporting burnout, and that's across the spectrum.

So I think you're exactly right that they're - the fee-for-service model has created - it's sort of gone too far. It's become a monster that none of us feel like we're actually - or very few of us, I should say, feel like we're really able to practice health care and medicine the way that we expected when we came in.


VEDANTAM: It's just really - it's really sad in some ways because you know that a lot of the doctors actually just want to be practicing medicine. They want to spend time - you know, 20 minutes with a patient, understanding, you know, the patient's life, and there just isn't the room to do it. The system, in some way, has essentially, you know, pushed that out with the incentives that it has.

LEE: You know, I think the COVID crisis is a really great example of exactly that conflict, where you are seeing the heroic behavior of so many doctors and nurses and therapists who are risking their lives to go into these environments, which are incredibly stressful, just to save and help other patients, other people. I think the fundamental commitment to humanity is just so evident in their responses.

And then at the same time, you see that the system is failing them. You know, there's not enough PPE. We run out of ventilators. We're just - we don't have enough public health infrastructure to prevent, and we've run out of testing and so on and so forth. And we sort of see that over and over again in health care. I have a profound admiration for most, if not all, of my colleagues in health care. But I think the system is really failing us.


VEDANTAM: And it's easy, I think, when we walk into, you know, gleaming health care facilities to imagine that these are places that are flush with money. But it turns out that that's not the case, right? Many hospital systems are actually almost on life support themselves.

LEE: That's another really surprising statistic, I think, for most people that the average profit margin for most hospitals - most nonprofit hospitals - and most hospitals are nonprofit - is around maybe 2%, which is tiny compared to most industries, especially given the fact that they have enormous fixed costs - you know, large hospital buildings that require a lot of maintenance, very expensive equipment in operating rooms, expensive labor, for example. And so those are pretty razor-thin margins, which makes it very difficult. It's a very challenging business to run. It's a very challenging environment to make change or to take risk.


VEDANTAM: The COVID pandemic has made many of the problems with our system transparent. Hospital systems that depend on providing services to stay solvent are on the verge of bankruptcy as elective procedures have dried up. Front-line medical workers have found themselves without basic protective equipment. A system not geared toward prevention quickly became overwhelmed as the virus surged. Even before COVID, U.S. life expectancy was flat or declining. With many people losing health coverage as a result of job losses and other disruptions, those numbers could soon look even worse.

LEE: We have people who have no access to health care. We have populations where we're seeing rising maternal mortality, especially among African American women. We have many segments of the population who don't have access to care. And as a result, when you look at our data overall, it's really not surprising that our overall life expectancy was going down or has flattened, even though science continues to advance - new medical devices, new pharmaceuticals. Remarkable achievements are happening. It's just unevenly distributed. The benefits are unevenly distributed across this country.

VEDANTAM: I mean, it's really quite shocking when you step back and look at the big picture, Vivian. You know, we get lots of medical mistakes as a result of treatment that we don't need. Our doctors are burning out. We have worse outcomes than other countries. We have reduced life expectancy. Everything costs more than it should. And the country as a whole is going bankrupt. I mean, when you think about this in its totality, it's just mind-boggling.

LEE: It is mind-boggling. And one of the reasons why I wrote "The Long Fix" is because I felt like each and every one of us has a deeply, deeply vested interest in the success of our health care system and in advancing health for this country, whether it's ourselves individually, personally or for our families or for our society as a whole.

And yet, part of the problem is that it seems so complicated to most people that I would say that most probably don't feel like they even have an informed opinion about what is wrong with our health care system and how we can possibly fix it. And what I wanted to do was to be able to share at least a few insights, at least provide a basic mental framework for understanding how it is we got to this point in time just so that we could start to layer on that framework some notions about solutions because this is a problem that we all collectively have to work on to solve. There has to be a collective will to move this forward. And if we aren't at the tipping point of that crisis now, I don't know when we will be. Now is the time that we really have to address this, especially with COVID.


VEDANTAM: When we come back, how we can get a system that gets the best outcomes at the lowest cost.


VEDANTAM: This is HIDDEN BRAIN. I'm Shankar Vedantam. Physician and health care administrator Vivian Lee argues that we spend too much time arguing about who should pay for health care and too little time thinking about what we are paying for.

You tell the story of physician Chris Chen in Miami. And you describe him in some ways as being part of a potential solution. What is his story, Vivian?

LEE: Chris Chen and his father and their family started a practice in Miami that was really in the earliest days of Medicare Advantage. It was actually a predecessor to the Medicare Advantage program. And they were charged with caring for some of the most frail patients in Miami and paid a fixed amount of money each year to care for them. And what they decided to do, I think, really offers lessons to all of health care.

Instead of seeing patients every eight to 10 minutes, they said, you know, we really need to understand these patients. We need to understand what their conditions are. We need to take the time to listen to them. They set up their appointments to be 30 minutes to an hour for new patients. They realized that it was very important to see the frailest patients frequently in their clinics, not just to wait until their patients were already deteriorating before they showed up. They actually were very proactive about that.

And in some cases, those patients didn't have transportation, so they offered services. They offered a shuttle service, for example, to bring their patients to and from clinic. Filling prescriptions - also another area where, often, their patients might not be able to do that in a timely fashion and then get sick and have to get admitted, for example, to the hospital. So they put an on-site pharmacy in their clinic. One of the biggest risks in their elderly patient population was falls. So they started yoga classes and tai chi just as a fall-prevention strategy. And, actually, they were really concerned about making sure that their patients didn't get too lonely and feel too isolated and get depressed and so on. So they actually used their clinics in the evenings for some various social hours. And they used shuttle services to help bring them to and from their little events, including birthday parties and that kind of thing.

So they invested a lot more upfront in caring for these people holistically. And while they cost more per patient in the primary care setting, from a business perspective, they more than saved in terms of reducing hospital admissions. And so at the end of the day, they created a completely different business model for primary care that improved outcomes and lowered the cost of care significantly. And because this business model was, as Chris Chen calls, the subscription model, it also made them much more robust in the setting of, for example, the COVID-19 pandemic because they had guaranteed payments, guaranteed income from the government month to month. And so they could look after these patients, especially when they need it the most during this pandemic.

VEDANTAM: You know, I remember talking many years ago to someone at the WHO in Geneva, and he was mostly focused on mental health. But what he told me makes sense across so much of medicine and health. He said most problems in medicine are not medical. You know, when I think of a doctor who's figuring out how to transport patients to a clinic, you can see on the one hand that has nothing to do with medicine. And you can see on the other hand, it has everything to do with medicine because it essentially predicts what the outcomes of the patients are going to be.

LEE: That's exactly right. And as a physician, when your mindset is shifted from how many bills can I submit and how many procedures can I click and how many codes can I enter to how do I keep this person healthy, you just take a step back.

I mean, we - one of the individuals that I interviewed for my book was telling me about a patient who was diabetic and was really having difficulty managing her blood sugars. And they went and visited her in her home, which would never happen, you know, in a normal fee-for-service situation. But in this case, they visited her in her home, and they discovered that she didn't have a refrigerator. And insulin needs to be refrigerated. So they went out and they bought her a fridge.


LEE: That's the kind of care that we should be providing for people. That's how we keep them from coming into our emergency rooms, from needing heart surgery or an amputation or kidney failure and dialysis. It's just such a better investment. And it keeps her healthy and productive and employable - so many wins.


VEDANTAM: You say that we also have some public sector versions of this, for example, in the DOD, in the Department of Defense.

LEE: The military health system is really a fantastic case study in thinking about how the government could approach health care in a more holistic way. Because within the military health system, which is operated by the Department of Defense - and I serve on the advisory committee of the DOD, which is called the Defense Health Board - the Department of Defense runs not only the clinical facilities, the hospitals and the clinics and the base - on the bases all across the world, as well as many of the eminent military hospitals that are in this country, they also operate the benefits program, which is sort of the equivalent of the insurance side of health care for our active military and their dependents and some retirees.

And there are many lessons that we can learn from them, including, for example, the ways in which they compensate their physicians, the way in which they invest in education. So their graduates coming out of the military do not come out encumbered with enormous debts. And so they may not make the same size salaries as we do on the civilian side, but they're definitely more focused on primary care, for example.

They also actually have a completely different approach to thinking about how they pay for pharmaceuticals. They rely much more on formularies and they're able to negotiate with pharmaceutical companies around pricing, which is also very powerful.

And they are very much invested in the use of data to create a learning health system and to continuously improve. And that's something that they brought from the battlefield all the way into the entire military health system. So while it's not a perfect system by any means - and I'm not claiming that it is - its outcomes are comparable to the civilian side, and there are many, many useful lessons.

VEDANTAM: Vivian's search for an alternative to the fee-for-service health care model has led her to seek innovations beyond the health care world. One of the places she's looked at is the automotive industry. She told me a story about visiting a car manufacturing plant where workers were installing airbags.

LEE: They had been contracted by Toyota maybe 20 years before to produce the airbags. And the Toyota team had sent out these specialists in industrial engineering to teach these techniques called lean manufacturing, for example, that have now been widely embraced, widely used across most of manufacturing, most of the industrial sector in the U.S. and around the world.

And we were just - really, we were actually almost embarrassed because at this Autoliv company, they basically were espousing a zero error rate. You know, one in a million was still too high. And at the same time, in our health care industry, we have an error rate of maybe 25% to 30%. Patients who are hospitalized - something will go wrong. Maybe it's nothing serious. Maybe it's just they got their medication 30 minutes after they should've received it, so maybe not significant consequences. Or maybe it would be significant. Maybe they had a misdiagnosis or they received the wrong procedure, for example. Nonetheless, 25% to 30% error rate in a hospital and a airbag manufacturer company aiming for less than one in a million. So it just opened our eyes not only to the culture, but also to how many lessons that we could learn from industrial engineering and from operations that we could apply to our own institution to reduce errors and to really improve outcomes.

VEDANTAM: Vivian, you tell the story of how you decided to become a doctor by hanging out with someone you call Dr. B (ph). Tell me that story from when you were, I think, back in junior high. And tell me that dream of why so many smart people go into medicine and, in some ways, how frustrating it must be to deal with a system that does not allow them to live that dream.

LEE: When I was in junior high school, a very resourceful teacher of mine reached out to the community and found a number of different leaders and assigned us to shadow them. And I happened to be - I just lucked out and I happened to be assigned to Dr. B, who, for several years, allowed me to accompany him on his Saturday morning rounds at our local hospital. And he was - I guess at the time, he was an internal medicine physician and mostly cared for fairly elderly patients.

And, of course, I was in junior high. I didn't really understand much about the medicine, but I could see that he was very thoughtful. He was very observant. At that time, I wasn't aware of many imaging studies, for example, or complicated diagnostic tests. I felt like he mostly could figure out from talking with the patients and doing a physical exam what was wrong with them.

And he also cared a lot about them as individuals. And he would always tell me that, you know, yes, I'm here to care for their medical ailments, but they are definitely more than their medical ailments. It's a lot more about them as people and caring for them as people. And I found that really - it was so inspiring. And he seemed very happy with what he was doing. He seemed very satisfied with his life. And so I decided that I wanted to be a doctor. And we didn't have any physicians in my family, so I was really inspired by Dr. B.

And, you know, medical training takes a long time. So after maybe - I don't know - 15 years later, I - after I graduated high school, went to college, medical school, internship, residency, graduate school and so on, by the time I emerged, I discovered that medicine had changed a lot - or at least I thought - my perception of it. It had changed a lot. It had become much more of a business, much more of a kind of a medical-industrial complex kind of feel to it and a lot more rushed.


LEE: I think that rather than spending a lot of time, I guess, thinking about the past and maybe glorifying the past, it's definitely worth saying that, you know, enormous improvements were made over that period of time. I mean, people that had heart attacks, we really wouldn't have much to do for them back when I was first introduced to medicine, and now people survive those heart attacks, they survive their strokes, they survive cancer. I mean, it's remarkable the advances.

But what I really hope is that in the next 20-, 25-year period, we are similarly able to take advantage of the advances in, let's say, technologies, in data, in our understanding of human behavior and psychology to continue to improve medicine and continue to take advantage of those scientific advances in order to improve health. And I'm worried that in a fee-for-service model of health care in our current construct where physicians are so burnt out they're thinking about how they can exit the field, not thinking about how they can innovate in the field, that we won't be able to take advantage of all the advances that we've been making in society and be able to apply those to better health. So I think there's a lot of urgency for us to fix our health care system so that we can realize that potential. And I'm convinced that now is really the time to do that.


VEDANTAM: Vivian Lee is the author of "The Long Fix: Solving America's Health Care Crisis With Strategies That Work For Everyone." Vivian, thanks for joining me today on HIDDEN BRAIN.

LEE: Thank you so much for having me.


VEDANTAM: This episode of HIDDEN BRAIN was produced by Parth Shah and edited by Tara Boyle and Jenny Schmidt. Our team includes Thomas Lu, Rhaina Cohen, Laura Kwerel and Cat Schuknecht. Engineering support from Gilly Moon.


VEDANTAM: Our unsung hero this week is Justin Lucas. Justin is the director of audience relations and engagement at NPR. He and his team respond to listener comments and requests. They help explain NPR stories to listeners and help staffers understand the perspectives of audience members. Justin used to be my podmate in the early days of HIDDEN BRAIN, and I always appreciated his calm presence and ready smile. Thanks, Justin.


VEDANTAM: For more HIDDEN BRAIN, you can follow us on Facebook and Twitter. If you like this episode, please be sure to share it with a friend.

I'm Shankar Vedantam, and this is NPR.


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