The American healthcare system has seen better days. Costs of even routine medical procedures are astronomical and continue to skyrocket, which raises insurance premiums. One in five Americans has an outstanding medical debt. Many of them are hounded by debt collectors and face financial insolvency. Ordinary citizens are caught up in (and weighed down by) a game that forces them to pay out large sums to hospitals, insurance companies, or both. The burden is becoming increasingly unmanageable, and politicians get mired in debates that only scratch the topsoil.

After interviewing CEOs of hospitals, insurance company executives, politicians, doctors, nurses, and lots of patients in 22 US cities, Johns Hopkins University surgeon and professor Marty Makary sheds light on the imbroglio and proposes solutions. He argues that while the medical system has its share of crooks and opportunists, most professionals are good people who wish to do good but struggle against a dysfunctional system. Makary also draws our attention to a burgeoning social movement that aims to return patients to the forefront of care.

In the years leading up to the 2008 financial crash, bankers and financiers offered explanations about the financial system that were more obscurantist than enlightening. “It’s all very complicated. Leave the thinking to us.” They hid behind convoluted graphs and jargon, but the simple unvarnished truth was that banks were buying up subprime assets with money they did not have.

There might be a bubble with the medical industry, and, yet again, those with vested interests in the business of medicine tell us, “It’s all very complex, so let us experts worry about it.” Hopefully we have learned to expect better answers so as to avoid another bust. But we clearly have a problem with the health care system, and those within the medical profession need to make concerted strides toward care that is patient-centered and affordable. Heaps of reliable data and interviews with not just relevant experts but with everyday people reveal that many citizens are groaning under the weight of exorbitant costs and are becoming increasingly skeptical that medical professionals have their patients’ best interests at heart.

There was a time when physicians not only recited the Hippocratic Oath as a vow to care for the patient, but did so. There is something disingenuous about inviting people into hospitals to care for them, only to drop a massive bill in their laps and let creditors harass them until they pay up. The business of medicine has become full of incentives and constraints that prevent even well intentioned medical professionals from keeping care for the patient front and center. The industry has become unnecessarily complicated and is overdue for an overhaul.

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Stenting is a medical procedure in which a doctor inserts expandable mesh wire tubes into the patient's arteries to remove blockages and promote better blood flow. For a long time, cardiologists would insert stents in the vessels around the heart, but the procedure has been shown largely ineffective, with the exception of treating someone experiencing cardiac arrest. To enhance general circulation, there are far more helpful treatments than stents, and the medical literature is becoming increasingly clear about this.

Despite the growing consensus, some doctors have continued to recommend the largely useless procedure. Mark Medei was a cardiologist in Baltimore who came under fire for approving stents in hundreds of patients. It was lucrative for Medei while it lasted because he received a portion of every stent he signed people up for, but the bad press caught up with him and sent a message to his colleagues who were also ordering extraneous stents for their patients.

Unnecessary stenting has never gone away, entirely. Instead of stenting the heart, some doctors began stenting the vessels in patients’ legs, even though stenting or blasting innocuous plaque buildup in the legs is just as useless.

Stenting is declining across the United States, but there are still plenty of doctors taking advantage of patient ignorance. Most people do not come in asking about their legs’ circulation, but some doctors will go to churches holding community health fairs and tell people the bad news—not about their sin but about their circulation. A group at Johns Hopkins did a survey to find out how prevalent screenings for bogus stents are in the United States. They found that more than 1,000 health fairs hosted by mosques, synagogues, and churches across the country were offering vascular screenings that medical professionals know to be ineffective at detecting disease.

This was a problem in the Washington, D.C. area, according to a local cardiologist Dr. Sridhar Chatrathi. It might look like medical specialists are just trying to serve underprivileged minority communities, but many were looking to make a killing. They were selling medical care that was unnecessary at best, and financially crippling and dangerous for patients at worst. Pastors were floored when Makary and his team informed them what was happening.

Maybe some technicians at these fairs are just parroting what they have been taught. In any case, these kinds of unnecessary tests add to the expensive morass of health care. An elderly woman who gets a bogus screening will pay a little for a battery of tests she did not need, but the public will foot the rest of the bill through Medicare.

Every profession has its “nudge words”: those phrases that move a patient in a predictable direction. For the gynecologist, it is a phrase like “It will be safer for the baby.” For cardiologists, the nudge words are, “You’ve got a widow maker” (a blocked vessel that implies a deadly heart attack looms). For orthopedic surgeons, the phrase “bone on bone” makes patients very suggestible. People wince thinking of their bones grinding each other down without any cushion. They hate the thought of leaving their spouse a widow. They would not dream of compromising the baby’s health. Most people respond with a willingness to do whatever it takes for whatever it costs. And doctors know this. Oftentimes the procedures are imperative, and doctors are right to recommend them, but some doctors give in to the temptation to use nudge words to manipulate people into shelling out more money than is necessary.

We often think of the American health care issues as a problem of limited resources, but in some cases, the problem is wasted resources: Based on anonymous responses from more than 2,000 doctors across the US, a research team at Johns Hopkins concluded that more than a fifth (21 percent) of what happens in medical care (including tests, operations, and prescriptions) is completely unnecessary. That comes out to billions upon billions of dollars in wasted care.

Even doctors who dislike the systematic waste of time, procedures, and money feel pressured into silence by colleagues who are benefitting from the waste. The culture of silence makes someone like cardiologist Dr. Chatrathi’s refusal of anonymity remarkable, even if it might harm some colleague’s business-as-usual practices in the D.C. area where he practices. "That’s the problem,” Chatrathi told the author. “We have all been silent about all the waste in medicine, even as everyday people pay higher and higher health care costs. Use my name."

Henri was beginning his Master’s at George Mason University in D.C., when his father had a heart attack while visiting from France. Not knowing anything about the American medical system, the family went to the hospital and learned that he would need a bypass surgery, and that it would cost $150,000. Henri’s father called a surgeon in France and learned that the exact same operation would cost $15,000 back home. It was no contest, and he informed the hospital representative that he would be returning to France for the surgery. To the shock of the patient and his family, the representative made a counteroffer of $50,000. The family declined again, and then a third time on their way out the door when another offer was made of $25,000.

The bargaining made the family feel like they were dealing with a used car salesman or haggling in a bazaar, where vendors base prices on how much they think they can get from you. A clueless tourist in Cairo or Istanbul is a much more promising prospect than a knowledgeable local. But here, at an American hospital of solid reputation, there was the same dynamic, and not over a trivial souvenir, but over someone’s health. A family clueless about the American system was getting price gouged. Although their vulnerability was being taken advantage of, they were gracious enough to conclude that they loved their American doctors, but the business of medicine left a bad taste in their mouths.

The University of Iowa conducted a survey of 101 hospitals across the US, asking what they quoted for bypass surgery like the one intended for Henri’s father. Only half the hospitals were willing to disclose what they quoted, but of those that did, the mean price was $151,000. But the range in prices was astounding: between $44,000 and $448,000. Does this mean the places charging a 10th of the price deliver questionable surgeries or that the most expensive are demonstrably higher quality? No. Surgery results are a matter of public record and those records reveal no correlation between cost and success rates.

A team of Johns Hopkins researchers investigating markup patterns for medical services found that markups for operations across the nation were 23 times higher than what people paid under Medicare for the same procedure. When higher-ups in hospitals were asked about their hospitals’ markups and how they measured up against other hospitals, most did not know. The stock explanation for markups was the hospitals need to compensate for treating uninsured patients, but no leaders interviewed had any evidence of this beyond hearsay or intuition. The data, however, revealed a different story.

A team based out of Johns Hopkins did an in-depth study of factors causing markups for medical bills and they found that exorbitant prices had nothing to do with serving low-income groups or the amount of free medical services. One of the major findings was that emergency room bills were always significantly higher than bills issued by internal medicine—even when the procedure is exactly the same.

But why were these emergency room bills so expensive? What was behind the markup process? One medical student leading research out of Johns Hopkins (and a certifiable genius), could find no discernible pattern to billing markups in emergency rooms. If one of the brightest mathematicians at Johns Hopkins could not discern the pattern, then of course the layman could not be expected to figure it out.

As one insurance leader put it at a closed-door meeting involving powerful leaders looking to reform the health care industry, “It’s a stupid game. We can do better.” The game is one of markups and discounts: Health insurance companies aggressively haggle for bigger discounts with hospitals, and hospitals mark up their prices because insurance companies only pay part of many medical bills. But the game forces the prices up, and people pay for it one way or another. Some of the leaders at the reform meeting offered rationales and defense of their roles in the markup-discount dynamic, but it became clear that it was all still part of the game.

Whatever discounts insurance companies receive, hospitals and insurance companies protect that information jealously, but the discounts can range from 4 percent to 90 percent. Depending on the particular discount that a hospital has with an insurance company, the price that falls to the patient can vary dramatically, making it difficult for patients to know what they can expect to pay. Even if the hospital, the procedure, and equipment involved are all the same, the costs span quite a range. One Vox journalist ran a story about how the cost of a hospital bed for a night during a standard childbirth can vary from $1,000 to $12,000—at the same hospital.

Shopping around for quotes can be a complicated task, even for standard medical procedures. It should be straight forward, but a cash cow is hiding behind the obfuscating cloud of “I’m not sure, but please hold while I transfer you to another representative who will be equally evasive.”

A common defense that hospital CEOs and other medical professionals offer to justify their rates is that patients never pay the sticker price in full, however exorbitant it is. But unfortunately that is not always the case. The Amish community in Pennsylvania, for example, always pays their bills in toto. They forgo health insurance, but the Amish community becomes the safety net. When one member needs treatment, the community pools money and walks into ICUs with bags containing thousands in cash. But sometimes the bills are bewilderingly high. One child from the Amish community had unexpected health issues at birth, and the Amish community was scrambling to pay a $1 million bill. Thankfully, they had connections to Johns Hopkins faculty who helped the community whittle the bottom-line down to a mere $200,000.

To avoid these markups, many Amish have begun sending their sick on a six-day journey to Mexico, where the care is comparable, the costs are reasonable, and the pricing is transparent. At one Amtrak station in Pennsylvania, the Amish account for up to half of the passengers. Mexican hospitals have noticed the trend and begun advertising in Amtrak’s magazines.

But lest we come down too hard on hospitals, it is important to remember that the price might be truly difficult to distinguish, especially at large facilities. Because of the mushrooming medical bureaucracy at many hospitals, it is easier for many facilities to rely on software to generate markups. Say a hospital needs to mark up everything by five percent in anticipation of four percent increases in costs. The software may or may not tell billing exactly where those increases will show up.

Patients are angered and dismayed and sometimes doctors and hospital CEOs are embarrassed to learn what their hospital is charging patients. Some of the stories reveal that plenty of leaders in medicine are not greedy or malicious, just disconnected from what is going on or how their infrastructure impacts patients.

Take the story of Heather as another example. She got a bill for $10,000 for localized anesthesia. That’s a crippling sum for a husband and wife raising six kids on less than $60,000 per year. She asked the author to go to bat for her. After a months-long complicated ordeal involving calls and faxes and mail just to see an itemized bill that could explain the exorbitant costs, Makary had a heated conversation with the billing clerk. The clerk’s response was, “The law allows us to charge whatever we want. If we want to charge a million dollars, she has to pay it.” Makary was ready to take matters to her supervisor and the hospital’s CEO, but never pushed things further, because Heather paid the bill in full to save her credit and get onerous debt collectors off her back.

The colossal game that is the medical business is more expensive than ever because of all the costs involved in staying in the game: Contractors and subcontractors, entire teams of business people whose job it is to negotiate better discounts for their insurance firm—they all have to be paid. 

There is a thick layer of middlemen between patient and doctor who annoy the latter and create burdensome bills for the former. For every 10 doctors at a hospital, there are seven nonclinical full time staff on the business administration side of hospitals. Health care is a booming industry, but what exactly is the product to show for all the growth? Is it meaningfully growing our economy and helping sick people, or is the elaborate game of medical business just creating another bubble that will burst and harm ordinary people?

Maintaining the hefty layer of middlemen who reprice medical services is an expense in itself. The mushrooming medical bureaucracy contributes heavily to inflated US healthcare costs. But how vital are they to the process of health care? After all, they are not removing tumors, suturing open wounds, or replacing IV drips.

The absence of real prices prevents real competition between hospitals and opens the door for predatory pricing and surprise bills. Transparency is key to closing that door. 

Posting real prices benefits patients because when hospitals have to compete with one another, prices stay low. In medical niches where pricing is clear (e.g., cosmetic surgery and LASIK), the prices are more reasonable and the best physicians are recognized as such.

The federal government requires full disclosure of out-of-pocket expenses for people in emotionally turbulent times in life, but health care is an exception. The Funeral Law, effective since 1984, requires funeral homes to be upfront about all costs that bereaved families will have to fork over. There is something twisted about the fact that the federal government protects against extortion once people die but not while they are still alive.

Critics of price transparency worry that most people who use price shopping are not looking for the cheapest options, and some will choose the most expensive options, knowing that insurance will foot the bill. But these are not the shoppers who will be driving the market.

Think about a grocery store: Even if most people choose their grocery stores based on convenience rather than pricing, there is always that minority of determined comparison shoppers who want to find the places that deliver the most affordable goods, and it is this group that forces grocery stores to keep their prices competitive. By keeping their prices low, grocery stores hang on to bargain hunters, which benefits not only the bargain hunters, but all other shoppers, too.

Debates over what proportion of shoppers will be these proxy shoppers is a smokescreen that keeps us from understanding the issue. It is the kind of argument that lobbyists and special interest groups resort to in order to dodge the real issues. But the most crucial question is not how many people will be proxy shoppers but whether or not the governing bodies will give proxy shoppers the opportunity to evaluate health care options. The clarity of options will drive down prices for the rest of the public by reintroducing competition.

The phrase “health care reform” sends most American’s minds to Capitol Hill and the current policy debates surrounding health insurance. But there is a growing movement of concerned social entrepreneurs in the medical field who are tired of seeing patients pushed to the periphery of an industry that should be prioritizing them, and want to do something about it.

One reformer is Dr. Keith Smith, an anesthesiologist based in Oklahoma City.  He has built his medical center based on transparency. His slogan is simple, but revolutionary in the United States: "You can and should know the price." Smith believes that the surgery center’s transparency about pricing has restored people’s trust in medicine and their doctors. He has patients fly in from Mexico, Canada, and even Japan, and the reason is not difficult to discern: They are receiving American medical care with pricing that is reasonable and transparent.

Smith is even able to save money that would otherwise go into playing the game and funding an army of middlemen to keep it running. As a result, the hospital even sets revenue aside to provide free or heavily subsidized care for poorer members of the community.

Smith’s surgery center draws plenty of critics. There are a number of nearby hospitals that worry his transparency could spread and kill their cash cows. Insurance companies love their discounts and they expect hospitals to keep their discounts private. Posting prices and insurance discounts ruins the secrecy in which price gouging thrives. Some insurance companies will threaten hospitals that choose to disclose that information. In California, hospital price transparency caused rancorous rifts between insurance companies and hospitals so severe that the state government passed laws prohibiting insurance companies from resorting to vengeful tactics to spite hospitals that chose to post real prices.

Price transparency is not just a pleasant-but-theoretical dream. The hospitals that have chosen transparency win as well as their patients. In medical centers that have decided to part with the old ways of secrecy and middlemen and adopted a policy of complete transparency, patient volume was up by 50 percent and hospital revenue increased by 30 percent.

These kinds of models, which return to prioritizing the patient and model caring relationships for the patient, are shaking free from the old ways of doing things and have the potential to revitalize American health care.