My first wife had a cousin who died of a heroin overdose at eighteen.
I met her a few times. She was a beautiful but troubled girl who fell in with the wrong crowd, and found herself in a world she could not control. I do not know when she started using heroin, but I know she overdosed once, nearly died, got clean, and then just over a year later, overdosed again.
The first time, she was rushed to Bronson Hospital in Kalamazoo, Michigan. She received the very best treatment available, and her life was saved in what should have been a life-altering moment.
Instead, it only bought her a year. She got clean for a time, but drifted back to the same crowd and with the second overdose, help did not arrive in time.
She will always be remembered as a beautiful girl with a tragic end.
My father-in-law grew up in Communist Poland. He was exposed to asbestos as a student, and later worked in a coal mine. He was a smoker for most of his life.
At sixty-nine he was diagnosed with lung cancer. His doctors told him he was fortunate he was not yet 70, as under Poland’s universal healthcare system, treatment options were still available at sixty-nine. Had he been seventy he would have qualified only for end-of-life care, no matter how healthy he might otherwise have been.
Poland was not known at the time for having the most modern cancer treatments, so my second wife and I married quickly and flew to Poland to meet her parents. Her father already looked frail, and a few months later doctors found another cancerous lesion in his brain. He died shortly thereafter.
When the OECD evaluates countries on healthcare outcomes, neither the United States nor Poland rank particularly high. The metric that receives the most attention is life expectancy at birth: roughly 78.6 years in Poland and 78.4 in the United States. Neither nation sits in the top tier globally despite the fact that the United States spends far more per capita on medical care than does any other country on Earth. Poland measures slightly better than the United States in life expectancy, while the United States spends six times as much, per capita, on medical care.
Life expectancy, however, does not tell the whole story.
Polish society is less car-dependent. Obesity rates are lower. Processed food consumption is lower. Americans are more likely to be overweight, less likely to exercise regularly, and more likely to adopt lifestyles that accumulate long-term metabolic strain. Those choices shape health outcomes long before a physician becomes involved.
The American healthcare system receives constant criticism, but if the question is not obesity rates or life expectancy so much as the quality of medical care when it is delivered, the United States is one of the best in the world. The only countries that compete are much smaller and oil-rich.
A disproportionate share of global pharmaceutical innovation, medical device development, and advanced surgical technique originates in the United States. The world’s leading academic medical centers are concentrated here, operating at the intersection of research, capital, and clinical practice. Breakthrough cancer therapies, transplant techniques, trauma systems, and complex cardiac treatments are often pioneered and refined in American hospitals before spreading elsewhere.
When a patient gets a rare tumor, a complex neurological condition, or a catastrophic injury, the technical ecosystem available in the United States is unmatched in depth.
Advanced imaging, interventional radiology, robotic surgery, biologics, and experimental therapies are not theoretical capabilities, but routine components of high-end practice. Clinical trials are extensive. Research funding is immense. Global talent trains and frequently remains in American institutions.
Whatever one thinks about cost, distribution, or coverage, the ceiling of American medical care is extraordinarily high. The technological depth and clinical sophistication available in the United States is as advanced as anything in the world, and in many domains, we are better.
The OECD measures health outcomes such as life expectancy. It does not measure the technical ceiling of medical care, and health and medical care are not the same thing, no matter how politically useful it is to pretend that they are.
Health is largely behavioral and cultural. It reflects diet, exercise, sleep, substance use, stress, and long-term habits that accumulate over decades. Health is upstream. It is shaped in kitchens, schools, workplaces, and homes.
Medical care is something else entirely. It is an intervention system for when health fails: the emergency room, the oncology ward, the operating suite, or the intensive care unit. When we collapse those categories into a single political slogan, we design policy around sentiment instead of structure.
The American health crisis is cultural. The American medical pricing crisis is structural. Confusing the two leads us to diagnose the wrong disease, and to prescribe the wrong cure.
America does have a chronic disease problem. Obesity, sedentary living, metabolic dysfunction, addiction, and preventable cardiovascular disease are widespread. No payment reform can undo the arithmetic of decades of accumulated lifestyle strain in a country that is statistically the second most obese in the world.
A nation that is metabolically unhealthy will consume large amounts of medical care regardless of how that care is financed, and keeping unhealthy people alive costs a lot more than does keeping healthy people healthy.
This essay separates health from medical care and then examines the structural architecture of medical pricing. The goal is not to diminish access or deny need, but to diagnose the system, and to use lean methodology to redesign the American system to keep the world-leading quality we have come to expect, but at costs we can afford.
The Cost-Shift Engine
Some argue that Medicare for All would save money by forcing providers to negotiate with a single payor. That is largely correct. The issue is not whether payments would fall, but how and why.
Markets control pricing through multiple buyers and sellers, all negotiating with one another. When there is just one single buyer, that buyer does not participate so much as set terms. A single payor becomes a monopoly, giving it the power to set reimbursement rates below the full cost of delivery.
Lean reduces cost by removing waste. It does not rely on force.
Critics argue that hospital “cost” can be inflated by accounting models, but the truth is that any company that provides any kind of good or service has both variable costs, like direct labor, that go up or down as more goods and services are produced, as well as fixed costs, like property taxes, that stay the same no matter how many goods or services are produced.
Accounting models allocate fixed costs across services, and though the allocation method can be debated (I advocate Activity Based Costing), the underlying expenses cannot. The relevant figure is the full cost required to maintain a given clinical standard, not whether service A is measured too high while service B is measured too low.
Measured against that standard, Medicare and Medicaid reimburse below market rates. Payments are set administratively, and Medicare participation is effectively mandatory for institutions serving a large population.
Medicaid often reimburses even less.
When reimbursement falls below cost and participation is mandatory, someone has to make up the difference. Providers, then, are forced by economic necessity to pass those costs on to those with private insurance. Employer premiums and individual market premiums then rise. Cash patients face inflated pricing as well.
What many mistakenly label ‘excessive profit’ is often actually making up for public shortfalls.
Affordable Care Act subsidies follow the same logic. Insurers increase premiums for those who can pay in order to offset reduced payments for those who cannot.
When I left IBM, I joined a smaller competitor in Muskegon, Michigan. The company covered employees, but not families. IBM allowed me to keep my health insurance for a year, but when I priced insurance for my wife and son on the Affordable Care Act, I did not qualify for subsidies and the lowest-cost options were more than $800 per person, per month.
I did what I had to do for my family, and returned to the corporate world.
From a Lean perspective, this is a flawed system. Transparent subsidies permit evaluation and democratic choice, whereas embedded, hidden cross-subsidies conceal the true costs and distort price signals.
Emergency care intensifies the cost problem, with millions of Americans using the emergency room for all care, where it is illegal to turn patients away without first stabilizing them. The urgent nature of emergency care makes it the most expensive type of care, so pushing people to the emergency room for non-urgent care, when they cannot afford to pay, forces hospitals to charge private insurance more to cover the losses.
Crisis care should not depend on credit. Emergency departments, however, are designed for emergencies. They are the most expensive entry point we have. They also only stabilize patients, making someone with a chronic problem come back again and again.
If price feedback is removed from consumption, utilization rises, and when the highest-cost setting becomes the default access point for non-emergent care, system-wide inflation explodes.
A Lean system would not eliminate emergency care or public coverage, but it would align reimbursement with cost. It would separate crisis intervention from regular care, and it would make subsidies explicit rather than passing them on to others as hidden transfer payments.
Lean Solutions for the Uninsured
Access must be preserved while providing true cost transparency.
One practical step is expanding Direct Primary Care networks. Under a DPC model, patients pay a fixed monthly fee for defined primary care access. For the uninsured poor, states or municipalities can subsidize those memberships. Competitive local contracting would allow multiple providers to participate.
Community-based lean clinics provide another option. Nurse practitioner led centers, operating under simplified regulatory requirements, can manage routine conditions at far lower cost than hospitals.
These clinics do not require tertiary-care infrastructure. They require examination space, basic diagnostics, and clear pricing. When designed around function instead of institutional hierarchy, they absorb routine demand and relieve emergency departments.
A tiered model preserves emergency stabilization while adding short-stay observation capacity, structured referral into primary care networks, and defined discharge pathways.
Many urgent care centers today function as little more than triage points to redirect patients toward emergency rooms. We need centers that actually provide care.
Hidden cross-subsidies should be replaced with direct transfers. Rather than forcing providers to hide unpaid or underpaid care by passing costs on to private plans, governments can issue primary care vouchers for the poor, or pay the full costs directly and report it to the taxpayer. Preventative care pools and capped chronic disease management support should similarly be funded transparently.
Entry barriers must also be reduced. Certificate-of-Need laws, restrictions on ambulatory surgery centers, retail clinic limitations, and unnecessary telemedicine restrictions protect incumbents and artificially increase pricing.
Incumbent providers have incentives to limit new entrants and preserve scarcity. Standards are necessary, but governance bodies should maintain clinical standards without functioning as gatekeepers that protect market share.
Employer-Based Insurance: The Structural Accident
During World War II, federal wage controls limited salary increases, so employers competed for labor by adding more and more benefits. Health insurance was exempt from wage caps and later reinforced by favorable tax law. It became a hiring tool and then a default structure.
We now treat employer-based insurance as the standard.
Tying insurance to employment creates structural distortion. Workers hesitate to move when it puts coverage at risk.
Employers become intermediaries between patient and insurer. Human resource departments negotiate plans and benefit managers evaluate options. Employees select from predefined menus with limited visibility into actual pricing.
Premiums are embedded within compensation packages, and rising medical costs lead to slower wage growth. Businesses may absorb the increases themselves, but salary increases compensate, passing the costs on to employees indirectly. Salaries stagnate even when employers don’t pass costs on directly.
This obscures trade-offs. Individuals rarely see the full cost of coverage, so meaningful comparison is impossible. Employers negotiate for large groups, encouraging standardized plans rather than individualized risk assessments. In Lean terms, purchaser and consumer are misaligned. The person experiencing the service is not the one negotiating the price.
This system grew through tax preference, regulation, and employer adaptation until it became entrenched, and a system born from wartime labor caps became permanent, but that does not make it good.
Lean begins by examining architecture. Insurance tied to payroll solved a temporary problem and became a permanent framework, but in a modern and mobile economy, we need to reconsider.
When purchaser and consumer align, feedback improves. When coverage attaches to the individual, mobility improves. When insurance functions as risk management rather than disguised compensation, price signals return.
Tax policy currently reinforces the existing structure. Employer-sponsored plans receive favorable treatment that individually purchased plans do not. That imbalance directs behavior. Tax neutrality would remove the distortion and allow individuals to purchase and retain coverage without penalty.
When insurance is continuous and independent of employment, labor can move. The true cost of coverage becomes visible, and insurance resumes its role of managing risk.
Insurance should be for catastrophic events, such as cancer, traumatic injury, stroke,or major surgery. These risks are unpredictable, financially destabilizing, and urgent.
Routine and predictable care is different. Annual physicals, maintenance medications, minor infections, and chronic disease do not require an insurance layer. When insurance processes predictable expenditure, administrative costs rise and prices grow.
Health Savings Accounts could be expanded to make subsidies transparent by having the government deposit them directly into the accounts of those who qualify for support.
Regulatory mandates further distort the system. Federal and state rules dictate coverages regardless of individual risk profile. Baseline protections may be justified, but excessive standardization eliminates lower-cost options and enforces uniformity where variation would reduce costs across the board.
A Lean framework permits tiered insurance products. Basic plans, catastrophic plans, expanded plans, and premium plans can all coexist. Consumers select coverage consistent with age, health status, and risk tolerance.
Decoupling coverage from employment, limiting insurance to catastrophic protection, expanding savings mechanisms, and reducing mandates will not eliminate medical need, but it will restore clarity. When individuals see what they purchase, what it costs, and what risks it covers, price signals strengthen and distortion is reduced.
Lean reform does not claim perfection, but it restores alignment between risk, responsibility, and consumption.
Regulatory Inflation and Facility Mandates
Medical inflation is often blamed on physicians, insurers, and pharmaceutical companies. Less attention is given to the regulations that reshape hospital costs.
Facility mandates have increased in scope and expectation. Multi-bed wards have largely been replaced by private rooms. Square footage per bed has grown. Staffing ratios are more tightly regulated, and building codes and accreditation standards require ongoing upgrades. Infection control rules, safety protocols, and reporting requirements grow every year.
Each requirement may be individually defensible. The issue is the cumulative effect.
When comfort and infrastructure preferences become regulatory baselines rather than competitive options, costs rise across the board, and those overhead increases occur before clinical care even begins. Whenever costs grow, so too must payments.
Facility design is one layer of cost growth. Administrative structure is another.
Hospitals now employ substantial nonclinical staff dedicated to navigating regulations. Coding specialists, utilization review teams, documentation auditors, accreditation managers, legal counsel, and reporting personnel all exist to navigate unnecessary complexity.
Administrative growth does not generally add clinical value. It frequently reflects the burden of reimbursement rules, liability exposure, and reporting mandates. In Lean terms, this is overprocessing. When a system requires multiple handoffs, redundant documentation, and compliance layers to sustain itself, resources are directed toward maintaining structure rather than delivering care.
This does mean eliminating safety standards or oversight. It does require evaluation of cumulative mandates. Intent alone is insufficient. Structural consequences must also be measured, and rational trade-offs made.
Lean systems examine whether each step adds value to the patient. When non-value steps are unavoidable, they are optimized to minimize the waste.
Third-Party Payment and Price Opacity
In most industries, the buyer sees the price before purchase, and transactions only occur if the consumer believes the product is worth the cost. Multiple sellers compete at different price and quality levels, and sellers adjust or go out of business.
Medical care operates differently.
The consumer rarely sees the true clinical cost of procedures. A hospital stay can generate a number of separate bills. Some arrive months after care was performed. Insurers negotiate rates privately, and discounts are applied out of view, while explanation-of-benefits forms obscure more than they inform.
I’ve paid for medical care only to be billed again with no idea whether I am being charged for something else, or double-charged for something I’ve already paid for.
Cross-subsidies are hidden, so a privately insured patient does not see how much of a premium reflects Medicare underpayment, uncompensated emergency care, regulatory overhead, or administrative growth. These are all blended together into a single number.
Facility overhead follows the same pattern. Capital costs for private rooms, expanded square footage mandates, compliance departments, electronic record systems, risk infrastructure, and accreditation layers are spread out across procedures. The patient sees one charge, but not the justification behind it.
The payment chain diffuses accountability. Employers negotiate plans. Insurers negotiate contracts. Government programs set administrative rates. Providers submit coded claims. The individual patient stands at the end of the chain, insulated from the full economic cost. When costs increase, responsibility is unclear and each party deflects blame.
Lean systems depend on visible feedback loops. When cost and value are transparent, inefficiency is exposed. When consumers experience marginal cost, utilization adjusts, and providers compete on measurable performance. Price clarity and operational improvements follow.
Emergency care is an exception. In a true crisis, treatment comes first, but most medical spending is not trauma care. Scheduled procedures, diagnostics, chronic disease management, and elective procedures dominate total costs, and in those contexts, open pricing does not undermine care.
Lean reform restores the feedback loop. Clinical cost and facility overhead costs should be visible. Cross-subsidies should be explicit, and consumers should be able to select providers based on the options they are willing to pay for.
Systems improve when information flows cleanly. Medical care is not exempt from that.
Tort Law and Defensive Medicine
No examination of medical cost is complete without addressing liability. Malpractice is often framed politically, but really, it is an incentive problem.
Medical outcomes vary, reflecting biology, timing, patient compliance, and other variables that are outside of physician control. Identical treatment can produce different results, and an adverse outcome is not proof of negligence.
Negligence is a departure from accepted standards of care that a reasonably competent provider would not make under similar conditions. Error can occur without negligence and adverse outcomes can occur without error. When those categories collapse, doctors resort to what I call in other industries ‘defensive work,’ the difference being that ‘defensive work’ in a manufacturing company is done to try to avoid getting laid off, whereas defensive medicine is done to avoid getting sued, or to help win a lawsuit should one occur.
Liability should require negligence. When every undesirable result carries potential legal exposure, behavior adjusts and defensive medicine follows. This issue has grown so bad that doctors now often get sued for positive outcomes that fall short of optimal, with lawyers promising that they won’t get paid unless you do.
Defensive medicine is predictable and litigation is costly even when claims fail. Physicians respond by increasing documentation, and ordering unnecessary tests and procedures, to create legal protection.
Imaging may serve both clinical and legal purposes, and documentation expands beyond clinical needs. Legal risk becomes an implicit participant in clinical decision making.
Cost shifting compounds the issue. Uninsured patients or for those covered by programs that reimburse below cost can also sue, and those lawsuit costs are transferred to whomever can pay the costs.
Plaintiffs’ attorneys operate within their own set of incentives, caring far more about a doctor’s willingness to pay than about actual liability. Weak claims are often settled. Malpractice insurance aggregates these risks, with private premiums reflecting aggregate costs ultimately passed on to patients.
Reform must preserve accountability, though. Patients harmed by negligence deserve legal recourse,and trust depends on enforceable standards. That said, accountability must correspond to incompetence, and not to statistical variation.
Safe harbor protection for adherence to accepted clinical guidelines would narrow exposure when evidence-based protocols are followed, and pre-suit expert certification can screen weak claims before litigation. Independent medical review panels can quickly evaluate disputes.
Specialized medical courts staffed by judges trained in clinical reasoning could replace juries untrained in probabilistic evidence. Alternatively, juries could be drawn from medically qualified pools. Lawyer penalties for objectively groundless claims would adjust incentives. Escalating consequences for repeated frivolous filings would rebalance risk between plaintiffs’ attorneys and practitioners.
A liability framework should protect patients from incompetence and protect physicians from punishment for inherent uncertainty. When negligence is separated from error and from outcome variation, incentives stabilize.
Accountability must remain, but incentives need to be calibrated. Without balance, defensive medicine becomes another embedded cost within an already bloated price system.
Physician Compensation
Becoming a physician requires exceptional ability, sustained discipline, and delayed income. The training includes undergraduate study, medical school, residency, and often fellowship, taking well over a decade in total. The profession also carries liability exposure, regulatory burden, and emotional strain.
If a society wants its best and brightest to become doctors, it must allow that profession to pay well. Finance, technology, engineering, and law compete for the same talent, and compensation levels influence the fields people select.
When medicine offers growing responsibility with diminishing reward, the applicant pool adjusts. Over time, there are fewer qualified people entering the field. Subspecialty shortages in particular intensify, and people burn out. This may happen over time rather than all at once, but the results are predictable.
Lean systems distinguish value from waste. Waste includes overprocessing, distortion, and misalignment. Competence represents value.
A highly skilled surgeon earning high compensation is not waste. A pricing system that hides cost signals is.
Incentives shape behavior across systems. If reform reduces the attractiveness of medical practice while leaving structural distortion intact, performance will decline. The same principle applies to production lines and professional pipelines.
A sustainable system must correct distortion without degrading excellence. Visible cost reduction that produces invisible capability loss is a net failure.
Equality of Treatment vs. Equality of Comfort
In debates over medical reform, equality is often treated as a single category. It is not. Safe air travel does not require everyone having the same seats. The same aircraft, pilots, and safety standards serve every passenger, no matter where they sit. The difference lies in space and service, not in structural integrity. Medical systems can apply the same logic.
There is equality of treatment and equality of comfort. Collapsing them into one metric raises costs.
The standard of care for a procedure, diagnosis, or emergency intervention should not vary by income. If two patients require the same appendectomy, cancer protocol, or trauma stabilization, the medical standard must be the same.
Comfort is separate.
Regulation and expectation have expanded from clinical standards into environmental and amenity mandates. Private recovery rooms become default requirements. Facility design and hospitality features move from preference to baseline. Food service, square footage, and aesthetic upgrades become embedded cost drivers.
When every bed operates inside the same high-cost infrastructure, the price floor rises. That overhead attaches to every procedure delivered within the facility, regardless of medical complexity.
Variation in comfort does not violate justice if treatment remains equal.
Lean preserves universal clinical standards while permitting accommodation tiers. Shared recovery rooms and private suites can coexist. Optional upgrades can be funded directly rather than embedded across all patients.
When comfort is regulated as a universal entitlement, particularly in settings where the patient does not bear marginal costs, costs for everyone explode. If accommodation tiers are allowed while clinical standards remain constant, costs come back down. Lean evaluation asks which elements create clinical value and which create environmental preference. Both may have merit, but they do not justify identical financing structures.
Lean Medical Policy and Cultural Reality
A Lean medical policy begins with transparent cost accounting. Hospitals and payers should publish cost per case, complication rates, infection rates, and outcome metrics in comparable forms that consumers can read. Cross-subsidies should be visible such that if subsidies are required, they appear in public budgets rather than being hidden inside private premiums.
Medicare and Medicaid reimbursement must be addressed. If public programs pay below cost, that gap should be acknowledged and debated openly. The public deserves to know that they pay a special tax every time they see a doctor.
Insurance should be owned by individuals and portable across employers. Tax neutrality between employer plans and individually purchased plans would help return insurance to risk protection, rather than it being a part of a compensation package.
Routine and predictable care does not require an insurance layer. Direct primary care and expanded health savings accounts can manage those costs.
We need to treat the uninsured outside emergency departments, unless there really is an emergency. Subsidized direct primary care networks, community-based clinics, and chronic care centers can preserve access while reducing waste, so that emergency care can remain universal without exploding costs.
Tort reform must rebalance incentives while preserving accountability. Liability should require negligence, not just outcome variation. Safe harbors for adherence to accepted protocols, expert certification requirements, medical review panels, and specialized courts can narrow defensive behavior while preserving accountability.
Facility mandates should allow accommodation tiers while maintaining universal clinical standards. Equal treatment at the operating table does not require identical surroundings. Flexible infrastructure lowers capital burden without diminishing competence.
Lean operational benchmarking should emerge from transparency and competition rather than centralized process mandates. Standardize outcomes, but not methods.
Architecture, however, is only part of the equation as medical care treats what culture produces.
An effective medical policy must hold two truths: structural reform reduces distortion and restores price feedback, but cultural reform creates better overall health. Confusing healthcare and medical care prolongs debate while preventing actual, workable solutions.
Poland, incidentally, now operates two systems. One remains socialized while the other is entirely private.
We have a friend who practices as an OBGYN in a Polish town. She works two days a week in a public hospital, and the rest of the week in private care. She makes almost all of her income privately, treating her public work as a duty without which her town would have no OBGYNs outside of private care at all.
If Gosia’s father were diagnosed today, we would not rely on the socialist system. We would send him to private care.
My first wife’s cousin demonstrates the other side of the equation. She did not die because America lacked competent medical care. She died because though medicine can reverse an overdose, it cannot make someone stop using.
A sane system should preserve quality while removing the distortions that make routine care expensive. It should also tell the truth: the nation’s health is upstream, and though we can change government incentives, no financing model can substitute for the choices we freely make.
Many Americans want to have Medicare for All, but we may find, as Canadians have, that while saving a life may bankrupt it, we can all die for free.
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