Healthcare, Meet Capitalism

If transparent competition can drive the reinvention of U.S. healthcare, some creative thinkers stand to become unabashedly wealthy—and improve the quality of care in the process.
Athena (Aris Messinis/AFP/Getty)

Self-described "lunatic-fringe disruptors" depict U.S. healthcare like one of Ayn Rand's dystopias. The $2.7 trillion industry lacks accountability for exorbitant costs. The system incentivizes doctors (and hospitals) to do tests and procedures, instead of paying them to do their jobs—keeping people healthy. It's like paying carpenters to use nails.

"I believe we are on the cusp of an oil rush—a fabulous revolution of profit-making and cost-saving in health care," disruptor Jonathan Bush told a rapt audience at the Aspen Ideas Festival last week. In the Rand comparison, Bush might be John Galt—were he not exuding as much benevolence as relentless capitalism. And he's not giving up on the system; he's trying to upend it.

Last week I moderated a discussion that became heated—by moderated-panel standards, and by no part of mine—between Bush, Toby Cosgrove (CEO of the Cleveland Clinic), Rushika Fernandopulle (CEO of Iora Health), and Dena Bravata (CMO of Castlight Health). It ended in an emphatic plea by Bush to never donate money to a hospital. 

That was met with equal parts laughter and applause. From Cosgrove, seated three inches to his right, neither.

Logos of healthcare disruptors

To Bush, CEO and co-founder of the $4.2 billion health-technology company athenahealth healthcare is a business, driven by markets like any other. Altruism and profit-driven business need not be at odds. It's incomprehensible and unsustainable that people have no idea what their care costs and have no incentive to consider cheaper options.

"Profit is a dirty word among the corduroy-elbow crowd in the research hospitals and foundations," Bush wrote in his recently-released book, Where Does It Hurt? "But just like any business, from Samsung to Dogfish Head Brewery, this industry will grow and innovate by figuring out what we need and want, and selling it to us at prices we're willing and able to pay."

In Aspen, Bush mentioned Invisalign braces and LASIK surgery as procedures that have been driven by the free market. These things started off exorbitantly expensive, but prices fell and fell. For LASIK, the procedure was "$2,800 per eye [in the 1990s]; now it's $200 per eye, including a ride to and from the procedure."

The oft-cited, disquieting numbers—the U.S. spends the largest percentage of its GDP on healthcare of any country (by far) but ranks 42nd in global life expectancy and similarly underwhelms in many other health metrics—are projected to worsen. Massive hospitals systems are buying out their competition across the country, charging exorbitant premiums without incentive to cut costs or optimize the care they provide. Bush's gushing proposition is that when patients can "shop" for healthcare based on quality and price, it will drive innovation and better care. Innovation will inevitably disrupt the bloated status quo. But the current system has to be allowed to fail. That might sound bleak, but to innovators like Bush, Fernandopulle, and Bravata, it's an opportunity for reinvention.

Forecasting of this sort is the currency of the Aspen conference (hosted by the Aspen Institute and The Atlantic), but Bush has the infectious passion that makes it feel like he's one of those people who, while giving a keynote on the need for change, is already halfway out the door to make something happen.

Here's the second half of the discussion, which neatly explains some fundamental problems with healthcare delivery: 

From left, the author James Hamblin, Rushika Fernandopulle, Dena Bravata, Toby Cosgrove, and Jonathan Bush at Aspen Ideas Festival, June 25, 2014

Dena Bravata is the chief medical officer of Castlight, whose platform helps patients compare cost and quality to make informed healthcare decisions—shifting incentives for doctors toward lower-cost, higher-quality care.

Rushika Fernandopulle is a primary care physician and co-founder of a small company called Iora Health that is trying to fix healthcare from the bottom up.

"We start by changing the payment system," Fernandopulle said, "which I think is part of the problem. Instead of getting paid fee-for-service, we blow that up and say we should get a fixed fee for what we do. That allows us to care for a population, and our job is to keep them healthy. If you believe that, you completely change the delivery model."

Presented by

James Hamblin, MD, is a senior editor at The Atlantic. He writes the health column for the monthly magazine and hosts the video series If Our Bodies Could Talk.

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