Grading The American Healthcare System At Stanford University

Each year, I have the privilege to teach at both the Stanford University School of Medicine and its Graduate School of Business.

This week, I had a rather unique opportunity on campus. I was invited to speak with the undergraduate students enrolled in a public policy course that is currently using “Mistreated: Why We Think We’re Getting Good Healthcare—And Why We’re Usually Wrong” as its textbook.

I was fascinated to know what these junior- and senior-year students thought of the book, and whether they found the information relevant to their lives and career ambitions.

The class is part of the Stanford Institute for Economic Policy Research (SIEPR), and is taught by two experts in the field of public policy.

Stanford Professor of the Practice of Public Policy Joe Nation spent six years representing Marin and Southern Sonoma Counties in the California State Assembly, and has worked for both Madeleine Albright and Henry Kissinger throughout his impressive career. Lecturer David Crane previously served as a special advisor to California Governor Arnold Schwarzenegger from 2004-2010 and is now president of Govern for California, a network of political philanthropists.

Their students are incredibly bright and articulate. Most of them contribute thoughtfully to classroom discussions and get excellent grades.

So, I began by asking students in the public policy class how they would “grade” the American healthcare system. At their suggestion, we set the criteria to include: cost, quality, access and technology.

The students raised their hands to vote for the grade they wanted to allocate, and offered data to defend their decisions. We used the median to make the following determinations:

Cost: D

Regardless of whether the student used total healthcare spending ($3.4 trillion), or cost per patient ($10,345) or as a percentage of U.S. GDP (18%), America’s health system earned a poor grade, especially when compared to its wealthy global counterparts. Compared to all of Europe, America spends about twice as much to care for half as many people.

Quality: B+

Here, the students were much more generous than I would have been. They pointed to the U.S. being a world leader in innovation, noting how many new pharmaceutical agents come from American laboratories vs. the rest of the world. At the same time, they referenced the newest Commonwealth Fund report in which the U.S. system again ranked dead last in healthcare performance among eleven of the world’s wealthiest countries. We also discussed the hundreds of thousands of Americans who die prematurely each year from medical error and lack of preventive medicine.

Access: B-

This was a split grade. Questions arose as to whether the measure was specific to health coverage or the average patient’s ability to obtain medical care through a traditional insurance carrier. Most Americans with insurance report being satisfied with the care they personally receive. But the students pointed out that prior to the Affordable Care Act, nearly 17% of Americans (50 million people) did not have healthcare coverage. Even when the number declined to 9.4% after the law’s passage, approximately 30 million people are still uninsured. By comparison, nearly all other wealthy countries provide universal coverage.

Technology: B

Again, the room was split. Grading for technology depended on whether students were comparing the United States’ health information technology (healthIT) systems against other countries or against other service industries, such as retail, airlines and finance. Overall, the students felt we were not much worse than others, but could do much better than today.   

Averaging it out across all four criteria (cost, quality, access and technology), students graded American healthcare between a C+ and B-. That’s a grade few in the room would be pleased to receive for the course.

Here’s how visitors to the website graded the American healthcare system (poll closed Dec. 18):

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Following the grading exercise, I participated in a Q&A session. Students were interested in understanding the process of disrupting healthcare and what was needed to precipitate change. The consensus was that it would take a major recession, leading purchasers to demand increased performance.

They also wanted to understand why healthcare is so different from other industries. To answer that, we discussed supply and demand. I can think of no other industry that controls both. In healthcare, physicians determine the demand for tests and procedures (which are often performed needlessly and at a high cost) and at the same time they’re the suppliers of the care they recommend.

Finally, students were interested in the role that government can play in reforming healthcare. My answer was that I believe legislators can (a) level the playing field, (b) reduce monopolistic control in areas such as drug pricing, and (c) increase transparency of information for patients.

Our hour together flew by and I left feeling optimistic that the majority of students in the room could be future leaders in healthcare and policy. Perhaps some will be economists, others will focus on information technology, a few will go to medical school, and many will pursue business.  But regardless of the path they choose, all will remember what they learned from Joe Nation and David Crane. And I hope they will apply this information to improving the health of the all Americans.

Dr. Robert Pearl is the former CEO of The Permanente Medical Group, the nation’s largest physician group. He’s the bestselling author of “Mistreated: Why We Think We’re Getting Good Health Care–And Why We’re Usually Wrong” and a Stanford University professor. Follow him on Twitter @RobertPearlMD.