Why does American health care feel so broken?
In January 2024, I spoke with Lloyd Sederer, MD, a psychiatrist and public health expert, the day after his newest book came out. The book is Caught in the Crosshairs of American Healthcare, and it argues that for-profit corporations have taken control of medical care in the United States, to the great detriment of the people who depend on it.
Dr. Sederer has seen the system from the inside, at McLean Hospital, a Harvard teaching hospital, and in New York’s public mental health system. In my introduction, I mentioned his policy requiring mental health clinics in New York to offer Suboxone treatment.
We talked about what insurers take off the top, why prices make so little sense, why doctors are leaving medicine, and what patients, doctors, and the courts can do now without waiting on the federal government.
Why did he tell this story through stories?
At 1:42, Dr. Sederer explained that this is not a technical book. He believes stories are the way to understand things, which he called an ancient way of communicating. So, the book follows clinical cases and patients he worked with alongside the larger argument.
His central example is personal. He was at McLean when managed care hit, when referrals to the hospital fell sharply and it began to lose money. It took several years to right the ship, and he described the hospital as having prospered ever since. Still, the point was that he lived it.
How much of the health care dollar goes to insurers?
From 4:02, Dr. Sederer described money siphoned off to corporations, insurance companies, and managed care companies.
He pointed to a regulation called the medical loss ratio. In his account, it sets how much of the patient care dollar an insurer, or the company managing care for it, can keep before any care is delivered.
Why can the same test cost so much less in cash?
At 4:59, I described something from Florida during the pill mill era. Imaging centers offered magnetic resonance imaging (MRI) scans of the spine to cash-paying patients for a small fraction of what the same study was billed to insurance in the same building.
Dr. Sederer compared it to a marketplace where the price in the window is not the real price, and talking to the owner, in this case an insurer, lets you bargain it down. At 6:45, I passed along a tip I had heard. If a hospital bill is far above what Medicare would pay, you may be able to negotiate it down to the Medicare rate if you act quickly. He agreed.
What did he say about Medicare Advantage plans?
From 7:11, Dr. Sederer separated traditional Medicare from Medicare Advantage, the managed care companies that now insure a large share of Medicare beneficiaries. In his view, many of them defraud the federal government through upcoding, which means billing a higher rate or a higher risk adjustment than the care justifies.
He said they also promise subscribers lower costs, better access, and better quality, and that none of it is true. He said some have been taken to court by the Department of Justice and lost. Unfortunately, in his account, the fines are so small next to their revenue that the companies simply pay and keep going.
Why are doctors leaving medicine?
At 9:06, I recalled hearing other doctors in training say that we had all missed the golden age of medicine. By the time I went to medical school, health maintenance organizations (HMOs) were well entrenched, and managed care was part of our training.
Dr. Sederer called it a huge workforce problem. He said it began with COVID and has been sustained, so hospitals are short of doctors, nurses, and technicians. In his description, appointments are hard to get and brief, with doctors mostly typing into the electronic medical record.
Are nonprofit hospitals any different?
At 12:38, Dr. Sederer said the primary purpose of a for-profit corporation is profit, while medical services used to exist to serve the patient and the family. In his view, that has been wiped out.
Interestingly, he said nonprofit hospitals, including the university hospitals people know best, now behave like profiteers too. He traced this to executive pay tied to revenue and profit. So, in his words, they are running an organization meant to deliver a profitable commodity rather than one meant to take care of people.
What can patients and families do?
From 14:29, Dr. Sederer described three solutions he believes are within our control, none of which requires a miracle from the federal government. The first is patients and families. In his experience, the best patients are the ones once called difficult. He prefers the word demanding: they ask what is wrong with them, why the doctor chose this plan, what the alternatives are, and what it will cost.
At 23:34, I suggested bringing a knowledgeable family member to appointments. I also said that with insurance companies, a letter sent to the right place at the right time can sometimes get results that an angry phone call almost never does. Dr. Sederer called that being a demanding subscriber, someone who will not let themselves be exploited.
How can doctors and the courts push back?
The second solution, in his view, belongs to the professions. Doctors can unionize and strike, because a hospital with empty beds makes no money. They can also refuse to renew contracts with insurers. He described a large practice in California that did not renew its contract with a private Medicare company. Asked why, practices like that one point to the administrative burden and the poor pay, he said.
The third is judicial. Dr. Sederer explained that a court can appoint a special master to oversee a company, so that everything runs through that person. In his view, this is how a culture of greed can change, especially in companies that keep committing fraud because fines do nothing to stop them.
At 19:58, I said the real problem may be politicians, since doctors can no longer accept even a pen from a drug company while lobbyists face no such limits. Yet Dr. Sederer saw little hope there, since in his view the federal government is paralyzed by divisiveness.
Where does private equity fit in?
At 21:58, I noted that many private hospitals in South Florida have been bought by a single large private equity company. Some people now say the public county hospitals, the ones we were once told to avoid, are the safer choice.
Dr. Sederer said private equity is sometimes hidden. A hospital or doctor group that needs money to build new services takes an investment and then owes a high return on it. In fact, in his view, that is one more way money is siphoned off from patient care to investors.
Who is Lloyd Sederer?
Lloyd Sederer, MD, is a psychiatrist, public health expert, and nonfiction author. He is an adjunct professor at the Columbia University School of Public Health. He served as chief medical officer of McLean Hospital, as mental health commissioner for New York City, and as chief medical officer of the New York State Office of Mental Health. His work is at askdrlloyd.com.
What can listeners take away from this conversation?
Dr. Sederer does not expect rescue from the federal government. Of course, that is not a reason to give up. His case is that patients, doctors, and the courts already have tools, and that a patient who asks questions, compares costs, and insists on understanding the plan is part of the answer.
How do I approach this today?
Today my practice focuses on helping people come off benzodiazepines and other medications gradually, and on medication for alcohol and opioid dependence. Physical dependence is not addiction, and the safest way off is usually slow.
This page is educational. It is not medical advice, and listening to the episode or reading this page does not create a doctor-patient relationship. Decisions about starting, continuing, or tapering any medication should be made with your own physician.
Full transcript
A note from Dr. Leeds: my guests speak from their own experience and expertise, and the terminology they use is their own. Whatever the topic, this show holds to one distinction: physical dependence on a prescribed medication is not addiction. This transcript is educational content, not medical advice, and nothing here creates a doctor-patient relationship.
Read the full transcript (25 minutes)
Dr. Mark Leeds [00:00] Dr. Lloyd Sederer, Lloyd Sederer, MD, I’m just going to introduce you a little bit. You’re a distinguished psychiatrist and public health expert and a prolific nonfiction author about to release your, has it released yet, the 14th book?
Lloyd Sederer, MD [00:17] Yes, yesterday.
Dr. Mark Leeds [00:19] Okay. Oh, great. And it’s already a bestseller from what I hear. Yes. And you are currently an adjunct professor at Columbia University, the School of Public Health. You’ve served as chief medical officer and executive vice president of McLean Hospital, which is a Harvard teaching hospital. You’ve served as mental health commissioner in New York City in the Bloomberg administration, chief medical officer of the New York State Office of Mental Health, which is the nation’s largest state mental health agency. And in those positions, you’ve done an incredible amount of good. That just summarizes a huge career of decades where you’ve probably saved countless lives. I know there’s a great story you told me about how you instituted a policy that mental health clinics in New York had to offer suboxone treatment, which is life-saving. Yes. Yeah, that’s incredible. And you’ve won a ton of awards. I mean, I don’t want to take up all our time listing them, but people should go to your website and read your profile and definitely read your blog posts and follow you on social media. But let’s talk about the book, Caught in the Crosshairs of American Healthcare. It’s a great book and you talk about your experiences at McLean and issues in American healthcare which I think we all know I think anybody listening who’s an American knows that healthcare is a mess so tell us a little bit about the book and everything
Lloyd Sederer, MD [01:42] First thank you for having me on Mark and I always love speaking with you online or otherwise and thanks so thank you again. I tell stories. This is not a technical book. It has a lot of particular details here and there, but I think that the way to understand things is through stories. It’s an ancient way of communicating. So it’s the story told in different ways about how for-profit corporations have taken control over medical care in the United States to the great detriment of you, me, other people who are dependent on medical care. And I use as an illustration McLean Hospital, where I was chief medical officer, as an example, because it’s a first-person example. I was there. I was there when the impact hit, when managed care hit, when suddenly the referrals to the hospital tanked, when we started to hemorrhage money. And it took five or six years, and we righted the ship, and it has prospered since then for the past 30 years. But I had that firsthand experience. It wasn’t abstract, and I tell that story as well. And I tell it in some ways also by providing clinical cases or talk about some of the patients I’ve worked with.
Dr. Mark Leeds [03:23] Yeah. Yeah. And health care. I don’t think there’s any easy, great solutions. You look around the world and there’s other countries that have health care included as part of the government. And there’s a like a meme on social media that, you know, with all this military action, unfortunately, going on in the world where they show some fancy American bomber flying by and they say, oh, the world’s going to find out why we don’t have free health care. You know, which could be you might say is good or bad. I mean, you know, at least we might feel safe for the world, feel safe in some degree, maybe, maybe not. But there goes our health care flying by as a multibillion dollar bomber.
Lloyd Sederer, MD [04:02] There needs to be another meme that represents not just spending money on bombers, but siphoning money off to corporations, to insurance companies, to managed care companies. And this is so fundamental that their regulations is called medical loss ratio, the percentage of dollars, patient care dollars that can be siphoned off by an insurer, and it often is up to 15%. So we start out in American health care in all these ways, including now entitlement programs, Medicare, Medicaid, where the payer or the payer’s manager, administrative manager, like a managed care company, takes 15% off the top.
Dr. Mark Leeds [04:59] Oh, 15%. Well, that’s, so what we pay for healthcare, I mean, and of course, we pay a huge amount for healthcare. It’s unaffordable to most people. I mean, just the thought of medical bills coming in, it’s like, you know, what did I just pay for? You know, you get like this $1,000 bill for a bill for $1,000 for going to the ER. And it’s like, wow, why am I paying $1,000? And then it’s like, no, you didn’t pay for your whole visit wasn’t $1,000. That was just for you to sit in a room. And now there’s a bill from every doctor and radiology and each different entity sends a bill. And there’s no way that all that… One interesting thing in South Florida, I think, or maybe in the state of Florida, which I think is different from other states, is that there was a period of time where people had to get MRIs for pain management. And this was kind of tied in with the pill mill issue that, you know, for these pill mills to try to be legal, they would require people to get spinal MRIs, you know, low back MRI. And so the MRI businesses jumped in and said, well, we can do MRIs for two or three hundred dollars. A study that normally costs three to five thousand dollars, the same exact study. And in fact, if you went into the same MRI center with insurance, it would be billed for thousands of dollars. And they somehow figured out a way that on the side they can charge a cash-paying patient $200 or $300 for the exact same study. So we’re definitely overpaying. These things are being charged a lot more than the value or what they’re worth.
Lloyd Sederer, MD [06:27] It’s like going into a marketplace with shops everywhere. And, you know, there may be a retail price in the window, but inside, if you talk to the owner, in this case an insurer, you can bargain down the price so you can get it for cheaper.
Dr. Mark Leeds [06:45] Yeah, and I think that hospitals, from what I’ve heard, and this is a good tip probably for people that get a big bill from the hospital, I think you can negotiate, like we have a right to negotiate to get Medicare, what Medicare would pay. So if they charge you $1,000 and you find out Medicare would have only paid $200 for that same visit, you should be able to negotiate with the hospital and do it quickly because if you wait too long, you lose apparently the window of time to be able to do that.
Lloyd Sederer, MD [07:11] Yes, that’s true. Medicare, and that’s traditional Medicare. That’s not what’s called Medicare Advantage, which are the managed care companies that now provide insurance to 50% of Medicare beneficiaries. That’s like 30 million people. And they are for-profit companies, and they are defrauding, many of them, in serious ways, defrauding the federal government by what’s called upcoding, putting a code for a higher rate or a higher risk adjustment so that they get paid more by adding procedures like you were discussing, a spinal tap. And they make a lot of money and they pretend or they offer the client, the subscriber, it’s going to cost less, you’re going to have better access, it’s going to be better quality, and none of that is true. None of that. So they’re fraudulent in their advertising and they’re fraudulent in their billing. So fraudulent that the federal government through health services has brought a lot of them, quite a few of them, to the Department of Justice. And the Department of Justice has taken them to court and won. But the sad part of that story is they get a fine, $10 million, whatever. And that’s such a fraction of their revenue that they just pay the fine and keep doing the same thing. That’s how greedy and that’s how fraudulent some of these companies are, particularly the Medicare Advantage companies.
Dr. Mark Leeds [09:06] Yeah. And another point that you’ve made is that things have gotten to the point where doctors don’t want to even be in this business anymore. […] I think I heard it from other people also, that was the golden age of medicine, that doctors were happy, they had good careers, they could have their own little practice, and things changed dramatically. Like when I went to medical school, HMOs were like well entrenched. In fact, that was part of our education of learning managed care. And it was, in fact, I remember hearing other doctors in training say, you know, you guys all missed the golden age of medicine, you know, like when we were all happy and doing well. And I’ve also heard stories from, you know, I’ve heard people say that the business people in the business of medicine saying that the best way to be successful is to have patients be a captive audience. And I think that ties in with what you’re saying about Medicare Advantage, is that once you’re in one of these plans, you’re stuck. You only have short windows, I guess, to jump from one to another. And maybe there’s nothing really good to jump to. You’re jumping from one bad situation to another.
Lloyd Sederer, MD [10:26] This is a huge problem, a workforce problem, doctors fleeing medicine. And it began with COVID, but it has been sustained so that it’s now affecting our ability to get care because hospitals are not adequately staffed, not with doctors, with nurses, with technicians. It’s very hard to get an appointment. And when you get an appointment, particularly primary care, you get a 10-minute appointment with doctors mostly typing into the electronic medical record. So the whole nature, delivery of medical care has changed in a destructive way […].
Dr. Mark Leeds [11:08] Yeah. And, you know, there’s definitely things that we need in medicine. Like if someone has something life-threatening and, you know, like they need a surgery for a trauma or they need a major surgery and they’re going to come out of it fine. Fine. And without, you know, the medication or the surgery or the procedure, they would die. But, you know, they can live a long life if they get that. Those things are essential. And some of them are very expensive. But then a lot of medical care, you know, kind of to me, it never made sense that insurance would cover every last thing in your health care that, you know, that, you know, like when I get car insurance, I don’t expect it to pay for an oil change or tires, you know, routine wear and tear and routine service should probably be something that people pay for. But because, like you said, because big business is involved and insurance is involved, prices get driven up where, you know, it shouldn’t cost what it costs to get basic service, to go to a doctor’s visit or get a, you know, like we were saying, the MRIs are 10, 20 times more expensive than what they should be. And, you know, you hear about people going to Mexico and other countries and in some areas actually getting decent medical care for a fraction of what they get it for here for various reasons, whether it’s prices driven up by insurance or, I mean, some people say it’s because of fear of litigation, but I think it’s more the insurance and the fact that you can’t charge one price and also deal with insurance. And so they drive prices up.
Lloyd Sederer, MD [12:38] Yes. And the primary purpose of a for-profit corporation, the primary purpose is to make a profit yeah it used to be that medical services the primary purpose was to say serve the patient to serve the family to serve you and me that has been wiped out and it extends now there was a piece recently in the times because it has been shown over and over again that’s the case with for-profit corporations, huge insurers like United, Aetna, Anthem, that they’ve been squeezing the dollar out for a long time, and in some ways in the Spanish care plans fraudulently. But now not-for-profit hospitals, which about half of the hospitals in the country are not-for-profit, the ones we tend to know the most are university hospitals. University of Florida, whatever. And they’re also behaving like profiteers. And that’s because executive compensation, the CEO of that university hospital, that’s for not-for-profit, his or her compensation is determined, 75% of their compensation is determined by what kind of revenue, what kind of profit they bring in. So they’re not running an organization that’s meant to take care of people. They’re running an organization that’s meant to deliver a profitable commodity.
Dr. Mark Leeds [14:22] Even a nonprofit hospital is playing that same game of profit.
Lloyd Sederer, MD [14:29] Many, many, many are. And that’s become just how ubiquitous the greed and the destruction of quality ethical medical care has become. And that’s why I wrote this book. I’m the only one, but I wanted to pitch in my voice because I’ve lived it. I saw what was needed to save a hospital from going under, from being sold. When threatened by managed care, when threatened by insurers. We did it, but it took a lot, it was a hard time, but we succeeded, and other people can succeed. And people have asked me now, I’ve thought about this even more, are there any solutions to this corporate raping, if you will, of medical care? There are three. And these are three that are in our control. It’s not waiting for a miracle from the federal government or the miracle of universal health. First is patients and families. The second is professions. And the third is judicial, not federal government, but the courts. First patients and families. And what I have urged people and discovered worse is you have to be a demanding patient or family. You can’t just be meek or afraid of the doctor because you’ll just get bypassed. And my experience is that the best patients are what we used to call difficult patients. Now they’re demanding, which is they’re demanding what’s due them. They’re demanding to know what’s the matter with them, why the doctor has posed this plan, what the alternatives are, what the costs are. Those are demanding patients that begin to tip the balance about what’s going on. So that’s really critical in terms of one solution. The second solution is professions. And I’ll just concentrate on the doctors for a moment because the doctors have two tools to win against corporatization that they’re starting to use but not very much the first is to unionize because then they can strike and striking is a very powerful way of fighting back against control bad control because Because if doctors go on strike, a hospital doesn’t make money. Beds are unfilled. So we’re basically then attacking what’s most important to these companies, which is revenue, which is profit. The second is, and there are some examples of this, particularly in California, There are large doctor groups that have very big contracts with insurers, particularly Medicare Advantage. And one practice in California did not renew its contract with this private Medicare company. And it shocked everybody. And 30,000 subscribers, 30,000 patients and their families were suddenly had no place to go, had no doctor, had no care system to go to. That is disruptive in a way that will change things painfully, but will change. So the two things are unionizing, going on strike, and basically not doing business with these companies. And when asked these large practices why they do that, they say two things. Well, it’s just too much of a burden to deal with them. The administrative hassle is it. And they pay poorly. Why should I renew this contract? And the third reason is, or third method of fighting back, is judicial. And what I mean by that is that courts, administrative courts, can appoint a special master to a company, to a state or federal agency. Basically, they are suddenly put in charge. Everything has to run through them. And that’s how culture can be changed, because this is a culture of greed. And a special master is there to see that the company does right, that it serves the people it’s supposed to serve. And so the third is a court appointed special master over some of these companies, particularly the ones I imagine who are repeatedly fraudulent because the fines are not doing anything to change them. Those are three methods of fighting that are within our grasp and don’t need to wait for a miracle.
Dr. Mark Leeds [19:58] Yeah. And would that help as far as with because, you know, I see like probably the real problem is corrupt politicians. You know, they’ve done a lot to make sure that doctors are not corrupt. You know, they you know, we can’t even a drug company can’t even give us a free pen anymore. And, you know, when I first started, they could they could buy us tickets to a baseball or a football game and put us in a fancy box and get served dinner. And, you know, that was probably kind of extreme. But, you know, we can’t even accept a pen with the name of a drug company because we’re being influenced. But every one of these companies, I’m sure, has a lot of lobbyists that are doing all kinds of favors for politicians. And they don’t, you know, I feel like if politicians had to have the same rules that doctors had, you know, that they can’t get paid off and they can’t have special favors and take a lot of money from people. I mean, all this stuff that happens. I mean, it just seems like these companies can get away with anything. But maybe by following those three steps that you outlined just now, that at least, you know, I don’t think we’re going to change politics and get rid of lobbyists and get rid of, you know, change that whole thing. But there are some things that we can do now to make a difference.
Lloyd Sederer, MD [21:08] Yes. Yes. The federal government anyway, which might stand a chance to correct things, is paralyzed at this point. And the divisiveness is appalling and it prevents any action. So particularly a difficult action like holding payers or insurance companies or private equity companies to task, it’s never going to happen because of how funded they are, and it’s pharmaceuticals as well, And because the federal government, the Congress, has decided we’re not going to do anything to help one another, which is not what government is supposed to be about. It’s supposed to be about coming together to help.
Dr. Mark Leeds [21:58] Yeah. The thing about private equity, that I think is a major thing that’s become a much bigger issue lately. I’ve noticed almost every private hospital in South Florida has been bought by one company. And when I look them up, they’re one of the largest private equity companies. And now people are saying only go to public, like the hospitals that we used to be told to stay away from, the public hospitals, the county hospitals. Now people are saying those are the only places you should go because these companies are going to kill people by trying to profit. You know, the things that make them money are things that could be very dangerous to patients.
Lloyd Sederer, MD [22:30] Yes. And sometimes you know the private equity companies, but sometimes it’s silent or it’s hidden because there a hospital needs money to operate, to build new services. A private equity company shows up and says, well, we’ll give you $4 million a year for the next four years so you can do this and that. But you have to pay us on our investment, not 4% like a bond, but 15%. So also another way by which money is siphoned off and basically the hospitals and other doctor groups are required. To fund indirectly, fund these private equity companies, which do very well for their investors because they’re automatically siphoning off money from patient care.
Dr. Mark Leeds [23:34] Yeah, and I think people also need to, like you said, they need to be more informed. You know, if necessary, bring, when you go to the doctor, bring someone to represent you, to be, you know, a family member that’s knowledgeable. And now yeah now with some of these new ai tools like we can all be kind of be a genius and we can take contracts and feed them into the ai and say you know read the fine print for me and you know I mean and there’s things you know things that are like magical like insurance companies you can sometimes if you write a letter at the right time and fax it to the right number you can actually get results and you almost never get results when you call them on the phone and yell at them you know that seems like a tactic to delay things and there’s like little tricks like demand a third-party arbitration or something like that, things like that. And magically, things happen when you say the right words as per the fine print and the contracts.
Lloyd Sederer, MD [24:28] Yes. That is being a demanding patient or a demanding subscriber, which is not taking it lying down. It is not letting yourself be exploited.
Dr. Mark Leeds [24:39] Yeah. Yeah, definitely. So, Dr. Lloyd Sederer, thank you for joining me. And I recommend everyone go to Amazon, go to your nearest bookstore, buy this book, Caught in the Crosshairs of American Healthcare. It’s a very good book, very enjoyable read, and a lot of insight into your experience at McLean. And also a lot of interesting analysis of the healthcare system and solutions, ideas for what we can do today to make a difference. So thank you.
Lloyd Sederer, MD [25:09] Thank you, Mark. Always a pleasure to be with you.
