In any serious industry conversation about healthcare, there inevitably comes a point where someone says what everyone is already thinking but is too polite to say: the system is broken, and we collectively broke it.
“There’s a lot of chaos in our world,” expressed Vanessa Guzman to her co-panelists before our cameras even began rolling. “Those of us working in healthcare are responsible for finding a way to translate that chaos and dysfunction into good care for patients.”
Guzman and her peers were gathered to discuss the overwhelming predicament this chaos creates for healthcare providers and the communities they serve. It was a topic they hoped to tackle collectively – an approach that reflects the multifaceted, interconnected webs of cause and effect that underly all healthcare challenges. After all, bridging the gaps between underfunding, tense payer relations, and an uncertain regulatory climate would take more than just operational acumen, reorganization, or a new software suite.
For Guzman and her peers, It would take a moral and professional reassessment of how the industry views its purpose, deliverables, and the roles of healthcare leaders therein. Or, as the panel would come to summarize it, the “wisdom” to peel back the layers of dysfunction and re-anchor decision-making in one’s personal values and lived experiences. At first blush, the sentiment may seem more suited to a feel-good LinkedIn post than an executive’s business plan. After all, any CFO can tell you that virtues don’t pay the bills, nor do they keep the leviathan that is the US healthcare system afloat. Or do they?
Like any good question, finding its answer requires an unbiased assessment of what led to its asking.
“The business of medicine is a $5 trillion spend for the country,” explained panelist Dr. Lou Hart. “It’s approaching 20% of GDP while disparities in care continue to rise.” Dr. Hart, a pediatrician who has trained and worked in myriad locales from Nashville to California, brought exceptional clarity to the conversation by contextualizing the landscape of modern medicine. That one-fifth of national economic output is nearly 1.5 times what peer nations spend per capita despite the US’s demonstrably worse outcomes – $14,885 spent per individual only to be ranked 14th in core measures like life expectancy, infant mortality, childbirth safety, and diabetes management.
“We have to be relentless on driving costs down,” chimed panelist Kerry Gillespie, introducing a note of hard pragmatism. “More specifically, administrative costs.” While these are only one factor of the country’s worsening healthcare cost crisis, the numbers behind it are absolutely staggering. Admin costs account for more than 40% of a provider’s total expenses while delivering care to patients, driven in large part by the quintessentially administrative phenomena that are claim denials.
McKinsey estimates that health systems are conservatively spending upwards of $40 billion on billing and collection costs, with a size able portion of that used to combat the excessive proliferation of denied claims. An AHA report found that between 2022 and 2023 alone, denial rates increased by an average of 20.2% for commercial claims and 55.7% for Medicare Advantage claims – just one part in an ongoing upward trend that has plagued us into 2025.
Panelist Stephen Rosenthal, who has spent his career working on the healthcare challenges of diverse communities in need, traced a sizable amount of bloat back to an unassuming source: the proliferation of insurance companies, each with its own rules, incentive structures, and bureaucratic apparatuses.
“We got distracted from our patient-centric focus over time because now we’re juggling multiple insurance companies, who are in some cases managing the same book of business,” Rosenthall explained. “They pay you slightly differently, with different incentives and different models, even though [in the case of government payers] they work within the same basic government ruleset.”
As systems were buried deeper by administrative noise, the business model of care shifted in favor of consolidation. The north star of care delivery was no longer holistic patient support, early interventions, or community uplifting – systems were incentivized to cull patient engagements down to as few highly-profitable services as possible. This administrative friction has reached the point of diminishing returns, turning the industry’s long- standing incentive structure on its head. Dr. Hart articulated the perverse incentive clearly:
“To give an example, the prior business model in Connecticut didn’t have Managed Medicaid, and they only paid under fee for service. As such, there was very little incentive to keep people out of the hospital. Why would I pay to help manage your diabetes in a more regular, outpatient setting when I can only get maybe $60 for each visit? In fact, I wind up with a financial incentive for you to have a diabetic coma or a stroke so I can bill it in neurosurgery.”
Obviously, no healthcare leader would ever consciously make such a senselessly cruel decision. But when an entire industry is built with costly administrative emphasis on payer requests, providers feel they need to optimize for what’s profitable. Volume takes center stage as the country continues to struggle with broad implementations of viable value-based models, and the invisible hand of the market exerts its pressure to cut as much “wasted effort” as possible, no matter the impact on patients. To put it bluntly, the crisis isn’t about any one healthcare leader’s decision at all – it’s systemic, baked into fabric of healthcare strategy and operations at every turn.
“If the system is built to only measure what’s billable, how do you think we’ll align our financial predictions,” asked Dr. Hart. “We provided amazing acute and emergency care to patients with government insurance, but we felt unable to provide a lot of the preventive care because there was no profit incentive. […] It’s not until we start to measure trust, fairness, and dignity alongside clinical efficiency that we start to build systems that are both high-performing and human-centered.”
For all of healthcare’s complexities, the reasons why providers make the choices they do seem straightforward. After all, industry thought leaders and headlines have sounded the alarm about our country’s healthcare incentive structure for decades. Panelists, however, were quick to assert that what followed from these conditions was anything but typical. One would expect traditional, for-profit strategies to excel amidst volume-based incentives, but in actuality, the opposite was happening.
“It’s ironic,” recounted Dr. Hart. “I’ve been in rooms with financial leaders lamenting that the costs of care aren’t keeping up with reimbursements. We’re going to have to make the necessary community investments to keep people out of the hospital and away from our emergency departments. We’re approaching a correlation of one between social needs and healthcare outcomes.”
Amid soaring employment costs and stagnant reimbursements unable to keep pace with inflation, the unintuitive truth was that volume-based models incentivized community-centered care – not intentionally, but as a consequence of their astronomical failings. It had become an objectively better financial decision to begin treating patients’ problems at the source. In turn, this loosened the grip of the market’s invisible hand, its pressures an illusion based on faulty assumptions, outdated conventional wisdom, and an unfounded fear of potential losses disconnected from today’s material realities.
For our panelists, this became a pivotal first principle from which they could deduce arguably the largest barrier to achieving more profitable, more sustainable provider-patient symbiosis. The inertia dissuading patient-first community healthcare wasn’t financial or clinical. In fact, both those considerations would be improved by a step toward more holistic models. Our reluctance seemed rooted in our perceptions. In our culture even. Moving forward therefore necessitated conscious defiance, as well as faith in both the promise of success and in patients themselves.
Progress required the courage to choose a different path.
“There aren’t any solutions,” expressed Rosenthal. “There are really only choices. I’ve always believed that if you focused on the quality and management of care […] and you just cared for patients in the best ways possible, and made the appropriate community connections, you actually reduce the cost of care significantly. We were able to demonstrate that you can actually do well if you do good.
”This is no longer aspirational. As Kerry Gillespie would attest, the CFO’s core duty is now to model the financial disaster of inaction, proving that investments in social needs as small as $500 can prevent up to $20,000 in readmission costs.
Panelists recognized that choosing to go against the grain of an entire industry is hard. It’s easier to simply default to “best practices” and take the safe path that, on the surface, aligns with what the incentive structure demands. Panelists spiritedly insisted, however, that the road less traveled was not just the best option for patients, providers, and pocketbooks alike. It was actually easier to head down once you reminded yourself that proximity matters.
“You get so far away from patients as your hard work and dedication allows you to amass financial resources and privilege,” summarized Dr. Hart. “It’s easy for executives with humble upbringings to forget where they came from, and easy to focus on what’s easy to measure. Ultimately, our moral responsibility as healthcare leaders is to make sure that we measure what reflects our values of liberty, fairness, and justice.
”Panelist Jasmaine McClain, whose work with the Health Management Academy involves advising leading health systems across the country, offered a slightly different perspective. “I see the world through the lens of a scientist,” she explained. “I think when you are engaging with folks of different backgrounds and from different parts of the country, it’s important to stay curious about the perspectives other individuals have.
”McClain’s approach to navigating the rich tapestry of patient needs and perspectives was hard-won through a lifetime of character defining experiences. She recounted watching a family member in their twenties succumb to cancer, along with all the devastation that entailed for their family. The victim was a young, black woman living in the South – a confluence of social determinants that drove McClain to confront the nation’s inadequate investments in health literacy and social safety nets. She also reflected on her experiences as a mother, and how all the time she’d spent researching maternal health did little to alleviate her burdens when experiencing post-partum hypertension herself.
“I didn’t want to go to the ER,” she explained. Even having the knowledge, resources, and network to navigate the crisis, she nonetheless found herself reluctant to seek emergency care amid life’s many competing priorities. “It was ultimately a physician that sat me down and said, ‘I need you to understand how high the stakes are when it comes to something like this.’ […] The stakes are literally life or death for many folks in our country.
”The purpose of sharing these sobering anecdotes wasn’t self-pity. They were instead a direct, humanizing reminder that proximity and lived experience create the kind of wisdom that cannot be imported from consultants or best-practice seminars. Even more critically, it was a plea for executives to keep a tight grip on their connections to humanity lest they lose themselves to the minutia of healthcare delivery.
“As the world becomes more and more complex, which it will with the introduction of AI and a whole host of other political barriers,” quipped Rosenthal, “we can’t lose empathy and kindness for the folks we care for. They’re scared to death, and we need to hold their hand and help them over that hump.”
Gillespie found a refreshing, elegantly direct way to synthesize the panel’s wisdom with yesterday’s adages. “Let’s make sure to treat people like we want to be treated,” he stressed. “Like we’d want our family members to be treated.
”Ever the pragmatists, our panelists proceeded to stress that empathy and wisdom can’t be sustained on good intentions alone. They require institutional architecture, such as patient and family advisory councils, a reimagining of patient data collection and analysis, community partnerships, and a hostof other strategies that can be found in the conversation’s full recording.
More importantly, making empathy sustainable would take a willingness from leaders to model the behaviors they’d ask of their organizations. It would require leaders to question whether current arrangements actually serve the people they swore oaths to, as well as the courage to act on the answer even when that means disrupting the status quo.
A cheeky closing from Guzman cut to the heart of it: “Make ethical decisions your priority, even if that means going against the status quo. Give yourself permission to break some rules.”
Watch the full interview with the panel on YouTube: