The Business of Medicine Is Breaking America
Why it's only getting worse, and how we can improve
Healthcare is now an $11 trillion global industry.
That number is projected to reach $21 trillion by 2030 - a compound annual growth rate (CAGR) of roughly 7%.
Let me put that in perspective. That is a similar growth rate to semiconductor chips and Apple Inc.. Healthcare is growing faster than most technology sectors, and we are not curing anything or inventing something new. We are managing disease. We are keeping people alive, sick, and returning - year after year - to a system that profits from their continued illness.
That is not healthcare. That is the healthcare industry. And there is a profound difference.
We Are Not Curing Anything
The two primary drivers of this explosive growth are an aging population and the rising prevalence of chronic disease.
Diabetes. Obesity. Cardiovascular disease. Osteoarthritis. Conditions that, in many cases, are directly traceable to lifestyle - to processed food, physical inactivity, poor sleep, and chronic stress. These are not mysteries. The science is settled.
The global population aged 65 and older is projected to reach 1.5 billion in the coming decades, and healthcare spending on this age group alone is expected to exceed $1.2 trillion.¹ That is a staggering number. But here is the question no one in the healthcare industry wants to answer honestly: how much of that spending is curative versus palliative?
Very little of it is curative.
We are not winning the war on chronic disease. We are funding its perpetual management. The pharmaceutical companies are not incentivized to cure diabetes - they are incentivized to sell insulin, GLP-1 agonists, and metformin for the next 50 years. The hospital systems are not incentivized to keep patients away - they are incentivized to fill beds, generate readmissions, and maximize billing codes.
The business model of American healthcare is predicated on sick people staying sick.
I do not say that as a conspiracy theory. I say it as someone who has operated inside this machine for 20+ years.
The Trillion-Dollar Waste Machine
Here is what the system will not advertise: a landmark study published in JAMA estimated the annual cost of waste in the US healthcare system at between $760 billion and $935 billion - approximately 25% of total healthcare spending.²
A quarter of everything we spend. Gone.
Where does it go? Let me count some of the ways:
Administrative complexity - the largest single category of waste, estimated at $266 billion annually. The average physician spends the equivalent of $68,000 per year dealing with billing-related activities.³
Overtreatment and low-value care - procedures that deliver no clinical benefit, costing between $75 billion and $101 billion per year.²
Pricing failure - inflated rates for medications, payer-based services, and laboratory work, totaling $230 billion to $240 billion annually.²
Failure of care coordination - patients discharged without follow-up, readmitted unnecessarily, bounced between specialists who never communicate.
Fraud and abuse - upcoding, phantom billing, charges for services never rendered.
Unnecessary inpatient stays - keeping patients in hospital beds for days when the procedure required hours.
$4 billion hospital campuses - monuments to institutional ego that embed overhead costs into every single patient encounter.
Redundant diagnostic testing - the same MRI ordered by three different departments because no one shares records.
Prior authorization bureaucracy - clinical decisions made by insurance adjusters, not physicians, delaying care and consuming physician time.
Hospital-employed physician models - where a physician’s productivity is taxed at 40% to 60% by the health system overhead above them.
Pharmaceutical rebate games - where list prices bear no relationship to actual costs, and the spread disappears into the supply chain.
Defensive medicine - tests ordered to protect against litigation, not to treat the patient.
Supply chain opacity - hospitals paying 3x markup on devices because they lack price transparency.
Chronic disease management without root-cause treatment - managing downstream consequences rather than addressing lifestyle upstream.
EHR systems built for billing, not for care - physicians spending 2 hours on documentation for every 1 hour of patient interaction.
Credentialing and compliance bureaucracy - armies of administrators generating paperwork that does not improve a single patient outcome.
Preventable readmissions - failures of care delivery costing $102 billion to $165 billion per year,² much of it traceable to inadequate discharge planning.
Drug waste - hospitals discarding an estimated $3 billion in unused medications annually.
Executive compensation at nonprofit hospital systems - C-suite salaries that would embarrass a hedge fund, justified by “mission-driven” language.
The construction of $1 billion-plus inpatient facilities for elective procedures that belong in outpatient settings.
The US spends over $1,000 per capita on administrative costs alone - more than three times the OECD average of $194.⁴ Germany, our closest peer, spends $306. We spend $1,055.
The delta is not care. The delta is overhead, complexity, and institutional self-preservation.
The $4 Billion Hospital Problem
Let me address this directly, because no one in healthcare leadership will.
Henry Ford Health recently announced plans to build a new $1.8 billion hospital at its main campus in Detroit,⁵ part of a broader $2.5 billion development. They are not alone. Across the country, health systems are building flagship campuses that cost more than NFL stadiums, financed on the backs of insurance reimbursements and, ultimately, the patients and employers paying those premiums.
National average hospital construction costs have increased more than 20% over the past five years.⁶ These are not investments in better outcomes. They are investments in market share, in signaling institutional dominance, in capturing more inpatient volume for procedures that don’t require inpatient stays.
A hospital should be for life-threatening situations. Trauma. Complex cardiac surgery. Stroke. Oncology. That is what the inpatient environment is built for.
It is not built for a knee replacement. It is not built for a hip. Not for a rotator cuff. Not for a spine decompression. Not for the hundreds of elective procedures that require 90 minutes in an operating room and a few hours of recovery.
Yet patients are admitted, kept for 3 to 5 days, and billed at rates that would make the hotel industry blush - because the system is designed to maximize inpatient revenue, not to serve the patient.
530,000 Families a Year
While the health systems build billion-dollar campuses, the patients are going bankrupt.
Every year, approximately 530,000 American families file for bankruptcy due to medical bills.⁷ Medical debt is the leading cause of personal bankruptcy in the United States - a phenomenon that is virtually nonexistent in every other developed country in the world.
Almost one in five adults with healthcare debt either lose their homes or declare bankruptcy.⁸
Think about that. Not in a developing country. Here. In the wealthiest nation in human history, people are losing their homes because they had a surgery.
This is not a healthcare system. This is an extraction machine wearing a white coat.
The Blueprint Already Exists: The ASC Model
I am not here to complain. I am here to offer the proof-of-concept that the system can be redesigned.
At Indiana Orthopedic Institute, we built our model around a core operational truth: the right care, delivered in the right setting, at the right time, costs significantly less and produces better outcomes. Our ambulatory surgery center is not a compromise. It is the standard.
The data is not ambiguous. Outpatient joint replacements performed in an ASC cost 40% less than those performed in a hospital. Rotator cuff repair and knee arthroscopy cost over 50% less.⁹
A study presented at the 2024 AAOS Annual Meeting found that procedures performed at ASCs resulted in approximately 35% savings in total cost, 41% savings on facility fees, and 36% savings in Medicare payments¹⁰ - across the board, not as an outlier.
On average, the Medicare program and its beneficiaries share in more than $2.3 billion in savings each year when patients receive surgical procedures at ASCs instead of hospital outpatient departments.¹¹
The ASC model is not an experiment. It is a proven, scalable alternative to inpatient care for elective procedures - with lower infection rates, shorter recovery times, higher patient satisfaction, and dramatically reduced cost.
Why keep a patient in the hospital for 4 days for a procedure that takes 2 hours?
There is one honest answer: money. The hospital charges more. The system is built to capture that revenue. And as long as the incentives are aligned toward inpatient volume, that is where the cases will go - regardless of what is actually best for the patient.
That alignment has to end.
The Operational Directive
If you are a surgeon reading this, here is what you need to understand: the hospital will not fix this. The insurance industry will not fix this. The federal government, which has been debating healthcare reform for 40 years, will not fix this on any timeline that matters to your patients today.
You have to build the alternative yourself.
That means owning your surgical setting. It means vertically integrating your practice around patient-centered, outcomes-focused, cost-transparent care. It means refusing to be a revenue generator for a corporate system that sees your clinical autonomy as a liability.
The preventive side of this equation matters equally. We will not bend the $21 trillion curve by building more hospitals. We will bend it by addressing root causes - sleep, nutrition, exercise, metabolic health. Those conversations need to happen in every clinic, every pre-op appointment, every post-op visit. Not as an afterthought. As the core clinical mission.
I built Indiana Orthopedic Institute from two people to 100 employees and $40M in three years. Not by following the corporate playbook. By rejecting it. By building something that actually works for the patient and, by extension, for everyone who touches the system.
The $21 trillion future is not inevitable. It is a choice.
Choose differently.
What systemic waste makes you the most angry - and what are you doing about it? Let’s hear it.
- Dr. Michael Meneghini
Sources
Ken Research, Global Healthcare Market Outlook to 2030 (2025)
Shrank WH, Rogstad TL, Parekh N. “Waste in the US Health Care System: Estimated Costs and Potential for Savings.” JAMA. 2019;322(15):1501-1509.
Peter G. Peterson Foundation. “Almost 25% of Healthcare Spending Is Considered Wasteful.” September 2025.
DocBuddy. “5 Statistics on Wasteful Health Spending.” Citing OECD comparative administrative cost data, 2021.
Commins J. “Hospital construction slows amid rising material costs.” Modern Healthcare. May 2023.
Giffin S. “Hospital construction costs increase.” Health Facilities Management Magazine. January 2024.
Balancing Everything. “Medical Bankruptcies Statistics.” Citing American Journal of Public Health and Consumer Bankruptcy Project data. February 2024.
RetireGuide. “49+ U.S. Medical Bankruptcy Statistics for 2023.” March 2025.
OSSM Newark. “Ambulatory Surgery Centers vs. Hospital Outpatient Departments.” Citing Orthopedics Review and multiple comparative studies. October 2024.
Smith S, et al. “Hand and Upper Extremity Procedures Are Significantly More Cost Effective when Performed in Ambulatory Surgery Centers versus Hospital Outpatient Departments.” Presented at AAOS Annual Meeting. March 2024.
Advancing Surgical Care / ASC Association. “The ASC Cost Differential.” Citing University of California Berkeley Center on Health Care Markets and Consumer Welfare data.
Answering your closing question from the plan sponsor seat. The waste I see most clearly is the one you named only in passing: pharmaceutical rebate games. In self-funded plan pharmacy contracts, list price is still the basis for member cost-sharing in most structures, while the plan captures rebate value on the back end. Members pay as if no rebate exists. And the contractual opacity around admin fees, GPO fees, and manufacturer price concessions labeled under other names has quietly become a larger PBM revenue stream than the rebates themselves.
What I am doing about it is structurally the same thing you are doing, one contract at a time. The ASC model is proof that when plan sponsors and clinicians align around the right setting for the right procedure, the cost curve bends. The pharmacy equivalent is direct manufacturer contracts, transparent pass-through PBM structures, and carve-outs from the Big 3 orbit. The work is harder and the levers are smaller than they should be. But the principle holds: you do not wait for the insurer, the PBM, or the federal government to fix this. You build the alternative yourself.
Good piece.
I’m not a doc, but my wife had both knees replaced by Dr. M. I’ve also been a fan of free market economics all my life. As a fan of free markets, I don’t like the crony capitalism that pretends to be the real thing. As I understand it, these huge hospital systems operate technically as non profits, although in reality they are much more like any huge corporation with a profit motive. It a huge advantage over doctor owned hospitals and clinics as the huge systems pay no income, property, or sales taxes.