Health care in the United States is a much-discussed topic. It and its surrogate of the moment, the Patient Protection and Affordable Care Act, will be the subject of a political referendum in November of this next year. The topic is therefore timely and it is important. This evening I would like to use the literary device of Unintended Consequences to move us toward an understanding of just how we arrived where we are with health care in the United States.

I will use 3 examples to try to make my point: medical education, health insurance, and the scientific and therapeutic success of medicine in the 20th century. I would, then, like to offer you my ideas about changing the health care system in the United States, as it exists today.

Sometimes our actions have unintended consequences. In the year 1900, the United States had 155 degree granting medical schools with 28,000 students. Some of these medical schools were university based but most were private, established as profit-making enterprises and often the endeavor of 1 or 2 physicians. This so-called “system” of medical education, mostly proprietary at its core, promoted neither quality of care nor efficiency of practice and stood on an equal footing with the other medical professions of the day: chiropractic, naturopathy, and homeopathy. Our profession and our medical institutions were not held in high esteem. In 1904, the American Medical Association, through its Council on Medical Education, commissioned the Carnegie Foundation for the Advancement of Teaching to survey and assess the state of our medical institutions and recommend changes that would improve medical education in the United States. The president of the Carnegie Institution, Henry Pritchett, an advocate of medical school reform, chose Abraham Flexner to conduct the survey and author the report that today bears his name.

Abraham Flexner was the child of German immigrants and had traveled and studied in Europe, in particular in Germany. He understood that European physicians had extensive undergraduate education, followed by specialized training in medicine, at a graduate level, in a university setting. With these prejudices in hand, he visited all 155 American medical schools and offered the following recommendations in his now famous report:

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  Admission to medical school should require a high school diploma and 2-4 years of study in a college or university, with an emphasis on basic science. At the time of his report, only 16 of the 155 medical schools met this requirement. By 1920, just 10 years after the report’s publication, 92% of American medical schools had instituted this reform.

  
  
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  Graduate medical education should consist of at least 4 years of study: 2 years devoted to anatomy and physiology and 2 years of supervised but “hands on” clinical training in a teaching institution, preferably in a university setting.

  
  
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  All proprietary medical schools should close or be incorporated into a university based teaching institution.

  
  
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  Medical schools should appoint full-time professors of medicine, salaried by the schools for the teaching of medicine exclusively.

Much changed in American medicine with the implementation of these recommendations. Medical graduates in the United States began receiving at least 6 if not 8 years of post high school education. Undergraduate education began to concentrate on the sciences and medical education rejected older, dogmatic, and authoritarian models and initiated a systematic program of applying the scientific method to medicine, a strategy that ultimately led to an understanding of disease processes and real advances in treatment. Effective therapies were developed for infectious diseases, diabetes, hypertension, and heart disease. Average physician quality increased significantly. American medicine and American physicians became the new gold standard for the world’s medicine, supplanting their European counterparts.

In addition to and also as a consequence of the report, medical institutions throughout the United States were thoroughly scrutinized, often closed, or restructured. All now required credentialing and came under the purview of state regulation and licensing. No medical school could be created without the permission of a state government and to maintain quality, size was regulated as well. With all of this, the public esteem so lacking earlier, returned. American medicine distanced itself from its old rivals of chiropractic, naturopathy, and homeopathy. Medicine in the United States became a highly respected and highly remunerated profession.

Implementation of the Flexner Report’s recommendations had, however, unintended consequences. Between 1910, and 1935 more than one-half of the medical schools in the United States closed permanently. In 1920, there were 89 degree granting institutions with 13,800 students compared with the 155 medical schools and 28,000 students of just 10 years earlier. In 1935 only 66 American medical schools still existed with fewer than 10,000 students.

Not unexpectedly, the number of physicians per capita declined. In 1900, there were 175 physicians/100,000 population in the United States. In 1935, just 25 years after the Flexner Report, the number of physicians had declined to 125/100,000 population. This trend continued. In 1965, there were 115 physicians/100,000 population.

Also unexpected was a change in the demographics of the profession. With the requirement of 4 years of undergraduate education and the paucity of undergraduate schools for women, women who had up to that time played an increasingly important role in medicine, were excluded by the requirement of a proper undergraduate education. Moreover, an increasingly lengthy and costly educational process excluded students of limited financial means. The medical profession became increasingly the domain of white, well-educated, upper class males.

Better medical schools and better physicians coupled with increasing success in diagnosing and treating disease, generated an exponential increase in patient demand, a demand that could not be met by the medical profession. Such demand, paired with a diminished physician supply, slowly changed attitudes among America’s medical practitioners who increasingly adopted a “business model” rather than a “mission model” in addressing the demands of their patient populations. A tiered system of health care for haves and have-nots evolved. Physician flight away from rural America and into the cities began. Physician practice became so increasingly urban that the federal government in 1963 launched a 30-year epoch of open-ended subsidies to teaching hospitals to increase physician supply and its redistribution to rural America. There developed a large divide between scientific discoveries, advances in understanding of disease, and the evolutionary treatment of those diseases and the systematic delivery of health care to the American population. We were better at “practicing medicine” than ever before in our history, but not in reaching populations that needed care.

In the end, changes in American medical education have had the unintended consequence of limiting patient access to care; driving up the cost of that care; polarizing the distribution of that care from rural to urban; and, most importantly, moving that care away from a “mission” model and toward one with very distinct entrepreneurial overtones.

Interestingly, group health insurance arose not from a demand from those wanting to be insured but from a hospital seeking to smooth its revenue stream. It all began in 1929 when an innovative hospital administrator at Baylor University Hospital floated the idea of insurance premiums, collected in advance, to pay for any admission to or use of the hospital’s services during the year. First to enroll was the Dallas School District, followed shortly thereafter by other employers in the area, thereby establishing the insurance-employment linkage that has endured in the United States to this day. This system of quasiinsurance expanded rapidly throughout the country as significant advances in medicine led to effective but increasingly costly treatment. Individual states stepped in and sanctioned the practice, determining that such “prepayment” did not fall under the purview of insurance commissioners. This ruling meant that hospitals were not required to keep cash reserves to cover potential liabilities. Thus were born the “Blues” (Blue Cross Hospital Associations). In return for this view by the states, the Blues accepted the responsibility to serve the entire community. They were not expected to enroll groups or individuals who were unable or unwilling to pay, but they were expected to use a “community rating” of risk: everyone in the community would pay the same premium, a premium that represented the “average” risk in that community. This meant that whether one was old or young, working in a dangerous or safe occupation, enjoyed good health or bad, the premium would be the same.

During World War II, government instituted wage and price controls prevented companies from attracting workers by offering higher salaries. Instead, they competed by offering fringe benefits such as employer-paid hospital insurance plans. In 1943, the United States Internal Revenue Service ruled that these insurance plans were income tax exempt for employees and tax deductible for employers. This odd anomaly of public financing for private health insurance by use of the tax code persists to this day in the United States. Health Insurance was now in big demand and coverage spread dramatically. By 1950, one-third of all Americans were covered by employer provided plans and by the end of the 1950s most Americans came to expect health insurance coverage from their employers. Two large groups remained excluded from health insurance coverage: the elderly and the uninsured poor. In 1965, 2 pieces of legislation remedied this deficiency: Medicare and Medicaid. Health insurance in the United States now covered a spectrum of young and old, healthy and sick, wealthy and poor with both private and public financing. All of these changes significantly expanded the market for health insurance and in the end led to the entry of “for profit” insurers. These new players were real insurance companies with cash reserves and they departed from the community-rated model used by the Blues by substituting “experience” rated premiums: the healthier the individual or group, the lower the premium. Two great philosophic systems of risk management now did battle. One sought to benefit the group by spreading risk, the other the individual by trying to define the risk and mitigating or eliminating it. The Blues did not fare well.

After its beginning as a cash flow management tool, health insurance evolved to cover increasingly effective but expensive medical treatments. In the early days of the insurance industry, most people did not have coverage and paid directly for their own health care. Doctors and hospitals faced standard competitive price pressures in setting their charges. A free market of sorts really did exist for physician and hospital services. Patients with insurance, however, became increasingly price and utilization insensitive. Price competition was basically eliminated and consumption of health care became more akin to a one price, all you can eat smorgasbord rather than a la carte dining. Not surprisingly, health care costs rose.

The unintended consequence of health insurance in America has been a seemingly irrevocable linkage to employment; financing of health care by use of the tax code; a system of insurance coverage that protects the well and excludes the sick on the basis of risk, and the generation of price and utilization insensitive incentives for health care consumption leading to ever increasing health care costs. Anachronistically the physician fixed fee for service model has been left untouched and without price competition physicians have had an increasing incentive to see patients often and treat them more.

One of medicine’s major goals has been the elimination of disease and this, indeed, has been 1 of the great success stories of 20th century medicine. Unfortunately, we have eliminated all the cheap diseases. The consequence of medicine’s success had been the virtual elimination of mortality and morbidity from acute disease. Improved sanitation and public health efforts have virtually eliminated food, water, and pest-borne illnesses such as the bubonic plague, cholera, yellow fever, and typhoid. Childhood vaccinations for smallpox, measles, mumps, rubella, and polio have reduced infant mortality dramatically. The discovery of the ABO and Rh blood groups facilitated the reality of blood transfusion that has saved countless lives both in war and peace. The discoveries of the sulfonamides, penicillins, and other antibiotics have confined deaths from bacterial disease to all but the very sickest. Antihypertensive medicines have prolonged life and prevented crippling disabilities secondary to stroke. The discovery of insulin eliminated early death from diabetes but not without the long-term consequences of living with this disease; and, perhaps, it is here, with the treatment of diabetes, where our current story begins.

One percent of the US population accounts for 35% of our health care dollar expenditure; 5% of the population for 60%. It is painfully evident that a small number of people account for a large share of our health care expense. The problem is chronic disease. Diabetes, congestive heart failure, coronary artery disease, asthma, and depression are the current big-ticket items in our health care budget. These 5 diseases account for more than 70% of our nation’s health care expenditures. Medical conditions such as trauma, cancer, infectious diseases, and perinatal care do generate real expense that cannot be ignored.

However, our health care dollars are primarily spent on chronic disease. This is the great, unintended consequence of 100 years of scientific research and its translation into the treatment and prevention of disease.

We are now engaged in this country in a great civil discourse on health care. We are not alone in the world on this point. For those of you paying attention to health care outside our borders, the Germans with an employment model health care system similar to ours (or more appropriately ours to theirs) are also struggling with the twin bugbears of access and cost. That the tenor of the debate has revolved around access and cost both here and there should not surprise us. These insidious problems are the unintended consequences of the successes that I have tried to briefly outline for you today. What should surprise us, however, is the lack of serious attention paid to the current structure of the health care delivery system we have, which, of course, is no system at all, but an evolutionary hodge-podge of proprietary self-interests comprised of physicians, hospitals, the pharmaceutical industry, private insurance, and, of course, our federal, state, and local governments.

So, although access and cost currently dominate our health care discussions, they are really just symptoms of an organizational dislocation that must change if we are to provide our citizenry with the health care they deserve. The changes I am suggesting in our health care system are structural. We will side-step the contentious issues of health care cost and health care access, but hopefully, you will agree, deal with both of these issues in a more meaningful fashion. The changes include who will practice medicine, as we know it in the future, where it will be practiced, how it will be practiced, and, finally, what the relationship will be between physicians and hospitals in that future.

The structuring of our current health care delivery system focusing on a physician-only model or a physician-dominant model ignores the increasing capabilities of nurse practitioners, physician assistants, and other well-trained nonphysician personnel. In today’s America much of the simple, straight-forward medical care, largely preventative, can be provided by well-trained nonphysician practitioners with good results at much diminished costs. Physicians, of course, should be available to establish algorithms of care, deal with complex diagnostic and therapeutic issues, and be available for consultation for the front line nonphysician practitioners. However, those front lines of American medicine should be increasingly staffed by practitioners without an MD behind their name.

It is also obvious that our modern medicine has become increasingly arcane. Our therapeutic efforts are no longer confined to the treatment of fractures, lobar pneumonia, or bacterial induced gastrointestinal disease. Highly focused treatments requiring extreme specialization are the order of the day. Now, for instance, we can truly alter the course of cancers such as glioblastoma multiforme, a disease with a 3% 5-year survival. By producing autologous tumor lysate-pulsed dendritic cell vaccination accompanied by the use of toll-like receptor agonists, we can achieve 3-year survival rates of almost 50%. Moreover, we can perform microarray gene proliferation of these tumors and demonstrate that mesenchymal gene expression of such tumors conveys dramatic increased survival using this form of immunotherapy. This is an example of the translational approach to the medicine of our future. In this study, we see laboratory discovery translated into patient treatment options. This is an example of just how complicated and specialized medicine has now become. Contrary to the prevailing wisdom, we need fewer generalists and more specialists. We need fewer physicians and more nonphysician practitioners.

Where we practice medicine in the future will have significant effects on the structure of our health care system. The hospital system in our country has evolved out of local need. At the turn of the 19th century medical care began to move out of the home and into the hospital as advances in medicine led to increasing capabilities of care. First, religious organizations and then community governments stepped in to fulfill the need. Later, proprietary for profit organizations evolved. With the addition of health insurance, Medicare, and Medicaid, as I outlined previously, hospitals began to concern themselves with money as much as medicine. Hospitals, like physicians, moved from a mission model to a business model. Each has staked its claim to a certain amount of health care territory and each is reluctant to give it up. Hospitals now compete for a piece of the health care pie, ever trying to expand or refine their capabilities, usually at the expense of others. Such a system is redundant, expensive, and disruptive to any semblance of integrated care. What we need for an effective hospital system in this country is to have hospital competition replaced by hospital integration. We would have fewer hospitals, with costs controlled and expertise concentrated.

So medicine as I see it, should be practiced by physicians and nonphysicians in a hospital setting that promotes integration and communication, not isolation and competition. How do I envision the structure of this medical practice? My reasoning goes like this. The knowledge necessary and expertise required to care for a patient in the hospital differs from that necessary to care for a patient in the clinic or office setting. The hospital involves itself with intervention, the clinic, and office with prevention. The focus is different. The knowledge required is different. The expertise is different. Few physicians today can successfully straddle this divide. I would argue that none should. Our hospital system should have hospitalists and clinicians and the medical education at our universities should embrace training programs that reflect this inevitable dichotomy of care.

Finally, we must deal with the relationship between physicians and hospitals as the 2 great players in our health care drama. For physicians today, the practice of medicine is a business and a physician’s business is often at odds with that of the hospital. Emergency room coverage, call arrangements, and physician-owned surgical-centers generate legitimate conflicts of opportunity, incentives, and economics. Aligning objectives, opportunities, and incentives for physicians and hospitals is the obvious solution. Physicians and their patients will do better if care is integrated with physicians working as an integral part of a hospital system. The age of individual, entrepreneurial medicine should be over. We cannot afford it medically or economically.

So the brave, new world of health care as we envision it consists of fewer physicians and more nonphysician practitioners, more specialists and fewer generalists, an integrated hospital system tiered by difficulty and acuity of care, an emphasis on prevention and accessibility in clinics staffed by “clinicians” but intervention if necessary by “hospitalists” who deal with the most difficult problems on a daily basis, and finally an employment model that aligns objectives and incentives, with physicians and nonphysician practitioners employed by a hospital or hospital system. This restructuring of our health care system should go a long way to addressing the contentious issues of access and cost. The wide spread use of physician extenders should improve access while reducing the cost of care. Hospital integration should provide an efficient and effective way of dealing with problematic programs, needless and expensive competition and costs and, finally, integration of physicians into a hospital system of health care should provide alignment of opportunity and incentive while providing improved and integrated patient care.

The alternative is to tolerate a health care system that, by almost any measure, has proven itself indifferent, indulgent, and inadequate.

Thus far this “system” has netted us an abysmal ranking among the world’s wealthiest nations for measures of the health of its citizenry at a cost unmatched by any other nation. This is a system that excludes 50 million Americans (at last count), 16% of our population from accessing health care. We, in this room this evening, bear some of the responsibility. We in the medical profession need to be the yay not nay sayers in restructuring this health care system of ours that is in so much need of reform. It is our business. It should be our mission. It is in our interest and, most importantly, it is in our patients’ interest.

We must be engaged and concerned for it is we who can form the future of our health care system.