Ethics Toolbox: The Moral Hazard Undermining Healthcare


January / February 2007

Ethics Toolbox

The Moral Hazard Undermining Healthcare

In recent years, front-page articles about the escalating “healthcare crisis” have been a consistent staple of news reporting. At the end of the day, the content often boils down to:


  • Healthcare costs continue to accelerate;
  • Insurance premiums are increasing; and
  • Employers must transfer more financial and personal responsibility to patients, so that by having “skin in the game” patients will make “wise (and frugal) choices.”


Consistent with these themes, pundits offer solutions ranging from unleashing free-market competition to increasing regulation, and from embracing capitalism to establishing price controls. Respectfully, we note that these myopic “solutions” have failed to yield positive and sustainable results over three decades of economic trial and error.

But these news articles don’t address the continuing loss of professionalism in the healthcare transaction. Readers older than 40 can probably recall a time when your doctor knew your name, what you did, which pets you had, and how your vacation was. Nowadays, it’s not uncommon to be referred to a physician for a test or procedure where the first time you meet the doctor is when you are about to be anesthetized, prodded, or poked. Indeed, healthcare has been transformed from a relationship into a digital transaction! What does this mean for a profession of caring?

Consultants like to talk about “industrial models of healthcare” that emphasize productivity and throughput. All of this sounds fine and dandy except, unlike flying airplanes or making widgets, people are blessed with individuality. They may present with maladies aggravated by social complexity and literacy issues. Yet, the consultants often fail to account for the complexity of the patient’s condition and the caregiver’s interactions with the patient. Meanwhile, our current system encourages us to push square pegs (people) into round holes (guidelines) in the naive hope that all people will respond identically to treatment protocols and medications. Such expectations are a natural extension of our romance with population-based models of care that conveniently neglect to recognize that the individual patient wants her care shaped to her needs and preferences, not to that of men 50 to 55 years old.

Were healthcare solely a science, we could install the QDX-4000 “Personalized Office Health Assistant” from the Silicon Valley or the Redmond Forest in our practice, and instruct it to see the day’s patients while we were off sipping iced lattes and dreaming about beachfront property.

Sadly, though, this is not the case. Instead, with reimbursements declining, physicians are faced with seeing more patients each day to maintain their economic income. More concerning, some physicians have taken to perform ancillary tests that fit within a “guideline” and where there is a potential for anyone who can bill for the service to profit financially, even if the test offers little or no value for improving health outcomes for the patient. Meanwhile, patients armed with primitive weapons of “consumerism” are being asked to judge and decide whether the test was truly indicated and necessary. In an era of “super-sizing,” where a 24 ounce cup is a “medium” at the local fast-food joint, many have bought into the expectation that “if some was good, more must be better,” especially when there is an opportunity for the provider of the service to benefit.

One problem is whether these ancillary tests are necessary or junk food. While junk food may taste good and can be obtained immediately, it may be unnecessary or even harmful to your health. Are we facing a similar issue with a healthcare system where reimbursements are cut to such unmanageable levels that physicians must resort to “selling” ancillary tests and services, under the guise of “patient convenience” and “meeting guidelines,” but which might be offered more often when there is the potential to boost income? Can we show that the diagnostic test will result in an outcome that will change patient management, or is it being performed with an eye towards covering one’s overhead or liability risks?

Meanwhile, practices and hospitals are cancelling their insurance contracts, so that when patients visit their “out-of-network” facility the patient will have a higher financial responsibility while the provider gets to collect whatever the market will bear.

If this behavior continues, we could be faced with an interesting dilemma. We could have plenty of patients with insurance, but no physicians available in-network to take them on as patients. There was a time after World War I where it took a bushel of lira to purchase a loaf of bread. Could we see a day in the not too distant future where insurance isn’t worth what you paid for it, because nobody values it?

Thus, we pose this question: If you are spending a dollar to purchase healthcare, why should 25 to 30 cents of the premium disappear into the pockets of investors, senior health-plan managers, and insurance brokers? If that isn’t “junk-food fluff,” then what value does the patient receive from this administrative overhead? We suspect if the “fluff” was restricted, there would be more than enough money in the system to pay physicians appropriately as well as to implement electronic health connectivity.

Joel Brill is chief medical officer of Predictive Health, LLC. Board certified in internal medicine and gastroenterology, he has received national recognition for his expertise medical management, coding and reimbursement methodologies, pharmacy and therapeutics, and assessment of emerging technologies. Brill is the chair-elect of the American Gastroenterological Association Practice Management and Economics Committee, and serves on the Board of Directors of ABQAURP. He is an advisor to the American Medical Association (AMA) RBRVS Update Committee (RUC) and the CPT Editorial Panel, and is a representative to the AQA Alliance and the AMA Physician Consortium for Performance Improvement. Brill is a member of the Editorial Advisory Board for Patient Safety and Quality Healthcare and can be contacted at joel.brill@verizon.netor 602-418-8744.

Dennis Robbins is a nationally prominent healthcare innovator, ethicist, author, and thought leader. He is president of Integrated Decisions, Ethics, Alternatives, and Solutions (IDEAS). He has served as an advisor on ethics and related issues for major national organizations, associations, law firms, hospital systems, private industry, and government. Robbins holds a PhD in philosophy from Boston College and a postdoctoral MPH from Harvard. He has been awarded three fellowships, including a National Fund for Medical Education Fellowship at Harvard in the Dept. of Legal Medicine in the Division of Health Management and Policy. He is a member of the Editorial Advisory Board for Patient Safety and Quality Healthcare and is or has been a member of several technical, editorial, and scientific advisory boards. Robbins may be contacted at at 602-368-6455.