Three Areas Where the American Healthcare System Actually Works

9 min readJun 30, 2020

Part VI: Yes, Now is the Perfect Time to Talk Healthcare in America

Note: This post is one part of my series, Yes, Now is the Perfect Time to Talk Healthcare in America, which provides an in-depth look at the current healthcare system so that it can be reformed. Click the link or scroll to the bottom to check out the other posts in the series.

The American healthcare system surely needs reform. You’d be hard pressed to find someone who loves their coverage, the price they pay, or their provider. So often we hear that the system is broken and, in many ways, this is true. However, we can still take note of some redeemable qualities.

Below, I will detail three aspects of the American healthcare system that work well, at least in part, and should be considered.

Research and Development

America leads the world in health and medical innovation. According to its 2017 publication, the Organization for Economic Co-operation and Development (OECD) found that the United States greatly outspent Europe, Japan, and other OECD member nations. In both pharmaceuticals and the health space, the United States’ investments have led to innovations and breakthroughs.

The world benefits from these gains. According to the Cleveland Clinic, the United States has produced incredible medical breakthroughs in the last few years including advances in immunotherapy for cancer treatment, patient-specific 3D printed implants and stents, and new gene therapies. These innovations require sizable investment to achieve.

The United States possesses a strong commitment to research and development because of its public-private partnership; and, the private sector plays an essential role in this duo. In the pharmaceutical industry for example, the National Institute of Health (NIH) performed a study and found that the private sector accounts for about 58% of discovery milestones and 77% of major milestones related to production and drug development. NIH concludes that “without private investment in the applied sciences there would be no return on public investment in basic science.” As seen below, Research!America, an advocacy group urging for more government-based health spending, finds that private industry contributes a similar share.

I would also argue that the United States’ position as the preeminent health innovator has geopolitical importance. With concerns related to data privacy, drug efficacy, and human rights violations, the world’s other leading investor, China, challenges the U.S. for a leading role. The United States is certainly not perfect. After all, it’s innovated and profiteered to fuel the opioid crisis. However, even with these flaws, America promotes a level of transparency and accountability that China does not, and these values matter.

In a scenario where the federal government assumes the entire responsibility for health insurance, it’s difficult to imagine that it can afford both additional costs in coverage and maintain the private sector’s current research and development (R&D) investments. It’s equally difficult to foresee a scenario where the private sector has a significantly reduced or silo-ed role and can maintain its current R&D investment levels. Therefore, industry, startups, venture capital firms, and other private investors add an essential element.

Counterargument: What good are innovations, like drugs, if I can’t afford what already exists?

Innovations actually drive down price. Companies seek to develop new technologies and medicine because if they can be first-to-market, they will receive a higher profit margin per unit. If demand outpaces supply, the price will be higher. As product ages on the market, industry typically catches up and profit no longer relates to price but rather volume. Companies then have an incentive to lower price, especially if product differentiation appears minimal.

In the context of pharmaceuticals, the government can also promote an influx of generics. This forces companies to drop their price as they no longer can dominate volume. The government publicizes the technology and patent protections which ultimately leads to more options for consumers.

In cases of breakthrough innovation and essential treatments, a problem undoubtedly exists. Price gouging should not be tolerated; it should be treated like any other antitrust situation. However, widespread price fixing is arguably worse because it limits supply and then becomes unavailable rather than overly expensive. It’s imperative to more naturally drive down price and only use price fixing in essential instances.

Mid-Level Talent

The United States experiences a significant shortage of doctors. This exists primarily for three reasons. First, a disproportionate number of physicians come from the baby boomer generation which is aging and therefore reducing hours and retiring from the labor force. Second, barriers to entry remain high, like student debt, and deter would-be physicians. Third, as health improves and mortality rate declines, the U.S. actually requires more doctors because the population lives longer. At the top, this is certainly a problem, but let’s consider the labor structure.

As in any pyramid structure, the “most talented” should be the fewest in number and subsequently the rest should flare out. With a shortage of physicians at the top, mid-level talent like Advanced Practice Registered Nurses (APRNs) and Physician Assistants (PAs) fill the void, and increasingly punch above their weights. In multiple studies produced by the American Journal of Medicine, the Kaiser Family Foundation, and the Institute of Medicine, “NPs and PAs provide the same quality of primary care as primary care physicians.”

According to the Association of American Medical Colleges in conjunction with IHS Markit, the number of APRNs and PAs grows exponentially. Some work in emergency medicine and internal medicine specialties too. While it may be partially out of necessity, the mid-level talent has more experience and aptitude.

I want to be clear. I’m not minimizing a very real need for physicians and the problem with shortages, but I also believe that there can be inadvertent benefits. We should highlight the clear trend of a growing APRN and PA supply and acknowledge the fact that they’re working more hours and gaining more experience. In a scenario where we work to increase the number of physicians, it should not be at the expense of expertise gains made at the mid-level of the pyramid.

At the same time, we shouldn’t conclude that APRNs and PAs can simply replace physicians — quite the opposite. Instead, the entire medical gradient should be moved up and in many ways it already has. APRNs and PAs should continue to perform more primary care work. Meanwhile, we mitigate barriers to entry to increase the number of physicians. Most will specialize but perhaps we can incentivize more to enter primary care too.

In an increasingly privatized healthcare system, replacement trumps scope re-alignment because it’s cheaper. Private insurance would likely flood the in-network landscape with more APRNs and PAs and squeeze doctors further out. However, replacement will only strain the system because an extreme shortage already exists. Thus, we must maintain the mid-level talent developed without considering it a direct substitute.

Counterargument: If we use more APRNs and PAs instead of doctors, won’t this decrease the price for patients and make coverage more affordable?

In some cases, this would certainly prove true. Private insurers can leverage equal treatment outcomes to create a lower cost of labor and transfer these savings to patients. Insurers may also keep these savings.

Under a more privatized system, physicians will exist at a greater premium. While the volume of visits would increasingly be staffed by APRNs and PAs, specialty and emergency treatment likely won’t be replaced. This could force the price of primary visits to drop but put a greater premium on specialized physicians.

Specialized Treatment

After spotlighting mid-level talent, let’s focus on those at the top. Due to its shortage and lucrative system, America can breed and attract some of the best doctors. America offers fantastic and effective high-end treatment. According to the Center for Disease Control, the U.S. had among the best survival rates across different forms of cancer. Similarly, the National Bureau of Economic Research finds that the U.S. far outpaced Canada last decade in almost every form of preventive care like mammograms, PAP smears, PSA tests, colonoscopies, and psychiatric screening. Lastly, the U.S. houses some of the world’s most renowned hospitals and research centers like the Mayo Clinic, Cleveland Clinic, Mass General, Johns Hopkins, Memorial Sloan, and Boston Children’s Hospital.

In the United States, more physicians learn to be specialists. In 1961, 50% of all physicians focused on primary care. By 2015, it was 33%. All the while, the number of American medical students continues to grow. They choose to specialize for a few primary reasons: pay off mounting student debt, make more money, and gain prestige.

Looking a layer deeper, American physicians aren’t just specializing, they’re sub-specializing. For instance, a physician is more likely to become a cardiologist than more generally specialize in internal medicine.

If someone has good health insurance and needs serious treatment, they’d be hard pressed to find better specialized care than in the United States. America has elite hospitals, doctors, technology, research, and specialties. The U.S. continues to be a leading destination for “medical tourism”, where foreigners who can afford it, come specifically to the U.S. for treatment. Perhaps most sobering however, is that the U.S.’ share of medical tourist exports continues to grow as well. This highlights that America remains a far better option than even many other comparable countries. While a leader in the world, it shuts too many of its own citizens out.

Counterargument: All of the high-end treatment seems to be in major cities. What about rural America?

America has great physicians and hospitals but a wide disparity exists. According to Pew Research, “nearly 80% of rural counties are short on primary care doctors, and 9% have none. Additionally, many people have to travel 100 miles or more for specialty services. Since 2005, at least 163 rural hospitals have closed, more than 60% of them since 2012.”

Instead of closing, many other rural hospitals are also consolidating. According to a study by Carnegie Mellon, there were 1,412 hospital mergers between 1998 and 2015, and 561 in just the five years from 2010 to 2015. As can be imagined, such consolidation has also funneled the top talent away from rural America. With more young doctors choosing to work in specialties and rural hospitals consolidating, big hospitals win out. These hospitals tend to reside in large metro areas. Ironically, they don’t statistically treat minority communities, who often live in close proximity, as well as other communities. Once again, the U.S. doesn’t lack in ability but rather accessibility — and that’s the problem.

Thanks for reading! If you enjoyed this post please clap, share, and feel free to add me on LinkedIn to share any feedback. For links to all of the other blog posts included in this series, see below.

1. Yes, Now is the Perfect Time to Talk Healthcare in America

2. The History of Pre-1970s Healthcare

3. The History of Modern Healthcare

4. What is Medicare?

5. The Debate Around the Affordable Care Act

6. Three Areas Where the American Healthcare System Actually Works

7. Three Areas Where the American Healthcare System Fails

8. The Driving Forces Behind America’s Healthcare Cost Problem

9. Voter Attitudes Surrounding Healthcare

10. How the United States Can Fix Healthcare, According to the Presidential Candidates

11. International Healthcare Systems: Western Democracies

12. International Healthcare Systems: Eastern Democracies