The U.S. Healthcare System

Students of American health care’s history, structure, organization, management, regulation, and financing face a daunting challenge, confounded by the complexity and scale of that industry.  Until now, a modern comprehensive source book covering all of that terrain and more has been missing. 

The wait is over.  In The U.S. Healthcare System: Origins, Organization, and Opportunities, Professor Joel Shalowitz has provided a stunningly ambitious compendium with an unequaled combination of both scope and detail.  It covers both the current shape and the historical background of payment, classical and emerging organizational forms, professional roles, regulation, technology, efforts to measure, control, and improve the quality of care, and more.  It takes deep dives into the epidemiology of both disease and the utilization of care – important scientific foundations for proper health care policy and management.  Throughout it makes generous use of helpful figures and tables, as well as copious citations that mark this as a work of authentic scholarship.

Professor Shalowitz’s book is a must-have resource for the library of any health care scholar who wants to have ready and efficient access to the fundamental facts that shape American health care today.

Donald M. Berwick, MD, MPP

Former CMS Administrator

Professor of Health Policy and Management, Harvard School of Public Health

President Emeritus and Senior Fellow, Institute for Healthcare Improvement, Boston, Massachusetts

For anyone who picks up Joel Shalowitz’s book, The U.S. Healthcare System: Origins, Organization, and Opportunities, do NOT make the common mistake of skipping the prefatory material. The first two paragraphs of the “Foreword” (p. xxi) are worth the price of admission. As far as I am concerned, anyone teaching or taking an introductory survey course on our healthcare system needs to embrace and internalize the nuggets of wisdom here, obviously gleaned over thirty years of laboring on this topic.

What are some these nuggets? First, we do not have a healthcare system. Rather, we have a series of inter-related parts that are not aligned in their goals and incentives. That means the parts don’t work together and are not meant to work together. What that means is abandon efforts to try to “align the incentives” of all the parties using payment changes and structural models; the divides go deeper than this. The lack of a system also means that the parts impact one another in sometimes opaque ways. This means that efforts to change this monster with simplistic, top-down programs that only address one part are likely to fail. Trying to get all parties to participate in some reform might resemble the idealistic scene depicted in Edward Hicks’ painting, “The Peaceable Kingdom” (with William Penn in the background!).

Second, there is nothing new in our healthcare system. As Yogi Berra reputedly said, “it is déjà vu all over again”. Many of the problems we are trying to tackle today (improving quality, increasing access, controlling cost increases) are similar to problems we have tried to tackle in the past. The fact that we are still tackling them - - without realizing that we have been down this road before, unsuccessfully - - should send out warning signs to everyone. These problems are intractable. The only problem is that managers, policy-makers, and students of U.S. healthcare don’t know the history and the lessons learned from the last time we tried to tackle these issues, and thus don’t know (to quote an old management text) “the ropes to skip and the ropes to know”.

These words are meant as praise for what Joel Shalowitz has achieved in this hefty tome. He takes nearly 700 pages to (a) present several important frameworks for understanding the U.S. healthcare system, (b) trace the history of this system, and (c) present the relevant fact base on its major sectors - - but with an emphasis on “understanding” how this system really works (or doesn’t work). Unlike other introductory texts, Joel has avoided the mindless presentation of statistics and charts. I do not think those help anyone; moreover, it is boring. Instead, his book is designed to be thoughtful and thought-provoking - - i.e., to help improve your critical thinking about our healthcare system through some important lessons.

The lessons come quickly in this book. Chapter 1 introduces the reader to the three main policy goals pursued by the U.S. (and every other country) for decades: higher quality, improved access, and restrained rate of growth in healthcare costs. This framework needs to be on everyone’s learning agenda, since every country endorses it as their strategic aim (but have not yet solved it). Joel immediately gets to the task of explaining what each of these complex goals consists of - - not an easy task, since they are multi-dimensional in nature. More importantly, he correctly (I think) characterizes this tripartite set of goals as inherently contradictory and involving tradeoffs in their accomplishment. This will come as unwelcome news to many people who want to have it all and/or do not want to make tough choices. This is critical thinking that challenges many widely-held beliefs.

Chapter 1 also introduces you to the many stakeholders in the U.S. healthcare system. This analysis should sober readers that “alignment” - - one of the most overused words in our field - - is going to be difficult given the plurality of interests involved. Anyone one who has studied plural societies (those with many, different ethnic or religious groups) should understand the difficulties of bringing all parties together for a common goal. Indeed, one of the strengths of this book is to emphasize the presence of stakeholders and their plurality in our healthcare system. Their mere existence tells the reader that, as far as “alignment” goes, “we have trouble in River City”. Efforts to cut costs in one area of healthcare are likely to “gore someone else’s ox” (e.g., income) and therefore be opposed and perhaps thwarted.

And this is just the Foreword and Chapter 1! I could go on further about why this book makes an enormous contribution. Chapters 2 and 3 deal with epidemiology - - a topic worthy of a physician author, but also important for an MBA business school audience that is interested in marketing (the managerial version of epidemiology). This should come as no surprise since Joel has co-authored another major text with Phil Kotler. Subsequent chapters (4 and 5) deal ably with the two biggest sources of spending in our healthcare system: hospitals (and hospital systems) and healthcare professionals. Chapters 6-8 then cover the multitude of payers, the multitude of technologies that need to be paid for, and (in particular) the advances in information technology. The final chapter does a deep-dive into the whole issue of quality - - how to measure it, how to manage it, and the tradeoffs necessitated in doing so.

I should acknowledge my biases. Like Joel, I have been teaching an introductory survey course on the U.S. healthcare system for over 30 years. It may take us that long to really appreciate what working in this non-system means. And, like Joel, I believe an understanding of the history of the system is important for anyone trying to work within it, let along trying to change it. And, like Joel, I have labored at this task in major business schools trying to teach MBA students about the importance of this all. So, I am already predisposed to like this book. I wish I had written it.

Lawton R. Burns, PhD, MBA

James Joo-Jin Kim Professor; Director, Wharton Center for Health Management and Economics; and

Chairperson, Health Care Systems Department, Wharton School, University of Pennsylvania

The U.S. Healthcare System: Origins, Organization and Opportunities is a tour de force— a must use textbook for those seeking to solve the problems of the U.S. health care system.

It discusses each of the major stakeholders in an accessible, detailed, and authoritative voice and presents a compelling framework for understanding how they function.

Coupled with Professor Shalowitz’s daily blog, https://www.healthcareinsights.md, which discussed current healthcare issues, this book will make for the lively, informed discussions that students of U.S. healthcare have been looking for.

Regina E. Herzlinger, PhD

Nancy R. McPherson Professor of Business Administration, Harvard Business School

This remarkably well-documented text provides important information and knowledge about the U.S. healthcare system within the context of historical developments and interpretative frameworks. The chapter on Managerial Epidemiology distinguishes [the book] from many other texts in the field, and there are particularly strong chapters on Payers, Technology, and Information Technology. The text will help readers understand and navigate the complexity of the U.S. healthcare system, why it has developed the way that it has, and some of the implications for its future evolution.

Stephen M. Shortell, PhD, MBA, MPH

Distinguished Professor of Health Policy and Management Emeritus

Dean Emeritus School of Public Health

University of California, Berkeley

No matter if you’re a seasoned executive or just entering the health care workforce, this book provides critical context about the history of care delivery and payment methodologies. This understanding is essential as we consider our health care future as a country, and the author has some fascinating ideas about possible paths forward for our industry. 

Susan Turney, MD, MS, FACP, FACPME

CEO of Marshfield Clinic Health System

To anyone who wants to really  understand the U.S. healthcare system, Dr.  Shalowitz’s book is a “must read”. Having participated in the healthcare industry for 40 years, this is the first time I have found a book that is comprehensive, factual and well-written.”

Harry Kraemer, Jr., MBA

Former Chairman & CEO, Baxter International

Clinical Professor of Leadership, Kellogg School of Management, Northwestern University

Executive Partner at Madison Dearborn Partners