Our Broken System – Example #2: Fat Cats


We have a cat.  He\’s fat.  His name is Zander, but we call him \”Cat,\” \”Kitty,\” \”Loaf of Bread\” (because that\’s what he looks like when he lies down and his fat spreads), lard butt, and \”Fatso Catso.\”  In the picture above he is sitting on a puzzle because…well, because he\’s a cat.

There are two main reasons he is fat:

  1. He always wants to eat.
  2. We feed him too much.

Lest you think that we are bad cat servants (which is what you call people who own cats…I mean, people who live in the cat\’s house), let me paint a picture.  It\’s 6 AM and I go downstairs.  The cat immediately meows continuously until I feed him.  Then I go upstairs and do my normal morning routine.  While I am up in the shower, my wife comes downstairs and is met by meowing and an empty bowl.  We\’ve learned that the cat\’s desperation for food is not indicative of his eating history, but my wife\’s natural reaction is to assume I did not feed the cat, and so give him a second bowl.  He will do this every morning, sometimes tricking us into feeding him 3 times.

The same routine happens in the afternoon (we feed him at 6 PM).  Around 3 o\’clock, the cat begins his campaign of meow assaults on whomever he can bother.  If you walk to the door of the garage, he rushes to it, knowing that behind that door is his food.  Naturally, the only reason we would walk to the door is to feed him, right?

You get the picture.  He is deceptive and is difficult (if not impossible) to satiate.  We\’ve gotten better at regulating his weight, but only at the cost of the persistent meowing which serenades 50% of our waking hours.

What does this have to do with our broken system?  Just change the food to money, and then think of all of the people who profit off of health care.

The second broken thing in our system is the fat cat.  A fat cat is a person, group of people, or company that gorges off of the money in our system.  Not everyone making money in health care are fat cats, most are simply getting money they earned from providing goods or services.  But there are a number of fat cats in health care who are being given all the food they meow for.  Here are a few examples:

Drug companies:  Why are drugs so expensive?  Because they can be.  If government and private insurers were not paying for most of the drug costs, who could afford $200/month for Lipitor?  People wouldn\’t buy most medications if they had to pay full price; the full price is impossibly high.  Even many generics are over $100 per month.   Despite this fact, the prices continue to be high and drugs continue to sell.  Why?  Because someone else picks up the tab.

It\’s as if the auto industry charged $500K for a new car.  Since nobody can afford this, the government mandates car insurance to cover most of the cost.  This brings the cost down to $20-50K for car buyers.  Or if Bananas cost $100 per bunch, but food insurance brought the cost down to $4.   If you sold cars or bananas, would you resist this model?  Would you trade a $500K payment from the government for a $20K check from the consumer?  No more than my cat would turn down the third bowl of cat food.

Hospitals:  Stents \’R Us hospital in our town just built a large cardiology wing costing 600 Gazillion dollars.  They did this using money from a procedure that has not been shown to prolong life or save lives.  Sure, stents make a lot of sense logically (opening a blockage is a good thing, one would think), but it is, as of now, an unproven thing.  But the marble lobby and the spiral staircase bear witness to the fact that they are not only paid for, they are paid for quite handsomely.  Eat up, kitty.

Ancillary Services:  Why does a CT scan in India cost a fraction of the cost in the US?  Are scanners more expensive in the country in which they are made?  Are the companies that sell the CT scanners warmhearted toward the people of India?  No, CT scans are expensive in the US because they can be.  Again, it\’s the fact that the third-party payors shield consumers from the exorbitant amounts charged that makes it reasonable to price CT scans out of the realm of affordability.  So what do the payors do about these high costs?  They pass them on to the taxpayers or raise the rates of the insurance policies.  It doesn\’t hurt them to pay so much, so they just keep feeding the kitty.

Doctors:  Yes, we doctors are not immune to eating the cat food.  Some docs pile up the number of appointments, giving less time for care so they can make more money.  We primary care docs are stuck with a decision between money and quality of care.  It\’s a terrible decision to have to make, and many decide that money is the most important thing.  Other PCP\’s just order a lot of tests from their own labs or x-ray facilities.  We did this for a while, and the seductiveness of the dollar sign was too much for us, and we got rid of our x-ray equipment.

Then there are the highly-paid specialists.  A banker friend of mine recently told me about a specialist who was complaining about how horrible reimbursement is, and how bad medicine is now.  Then he found out that this doctor earns over $750,000 per year.  Why do docs see so many patients that they can\’t offer good care, and why do other docs feel entitled to incredibly large salaries?  Because they can.  Someone keeps filling the bowl.

I think that the biggest cause of this gluttony is the third-party payor system which hides the cost from the consumer and gets us all used to the idea of paying for all that cat food.  How many people are getting rich off of medicine?  How many professions wouldn\’t exist without this all-you-can-eat buffet of cat chow?  How many companies are rewarding investors with huge profits because their devices or drugs are paid far above their cost of manufacture?

All of this money is thrown at care, and what does it get us?  Does it get us better care?  Does it get us longer lives?  Does it get us happier patients, or satisfied doctors?

No, it just gets us a bunch of lard-butt kitties meowing for more to eat.


\"\"Zander appreciated the comfortable spot we made in the back of his minivan.

7 thoughts on “Our Broken System – Example #2: Fat Cats”

  1. Lard-butt kitties…now there’s an analogy I can totally relate to. Yours is cute, and appears to be a perfect example of the “impossible to satiate” problems you describe in the health care system. Cut out those fat cats, and there’d be a whole lot less expenditure being wasted. I find myself wondering sometimes where they get the insanely inflated numbers (like on a hospital bill, for example, where there are hundreds of things itemized to death that add up to an exorbitant amount) so they charge, say, $272.48 for an aspirin that cost 12 cents to make. Such are the insanities of a capitalistic system…

  2. It’s nice to have you back, and to see that you’ve lost none of your insights, perspectives, wit, and sadly, grasp on the reality of the situation.  Fat cats, lard-butt kitties–interesting, yet apt analogies, or perhaps metaphors, for the challenges that face us. As long as we as a country don’t have the “will” either politically, ethically, or personally, to address the mess we’re in, fat cats get fatter, the rest of us get thinner, and the gap between the two grows.  It’s Elinor Ostrom, and the “tragedy of the commons” playing out right in front of us…but we keep chomping at the commons for our own benefit, and ignoring the consequences that behavior entails.  And that  applies to us as individual citizens, communities, professions, businesses, and regions—seems a pervasive part of human behavior within the present American culture.

  3. A brilliant analysis of that which is wrong with our system… combined with an analogy to an actual fat cat. Brilliant. Thank you for returning to blogging!

  4. One of my three cats is similar to yours in appetite.  We tell ourselves that Emily (from a cat rescue — and they got her from the local pound 3 days after the date she should have been euthanized), much like Scarlett O’Hara, has determined that As God is her witness, she will never be hungry again. 
    I’m pretty sure she’s kept her vow.  She is quite round. 

    On the medical industry fat cats, I think you’ve nailed that issue — from the patient perspective it’s quite frustrating as well.  For example, this fall I had a (non-elective, non-emergency) procedure done on an out-patient basis.  It seems that it would be reasonable I could get what my share of the cost would be prior to the procedure and be able to pay everything ahead so I wouldn’t have to deal with nasty things like Fresh! Medical! Bills! during my recovery.  But no, it’s impossible.  I paid their best guesstimate beforehand (which is fine — again, I’d rather pay prior!), and then about 2 months later I got a bill for several hundred more dollars I owed.  Again, I wouldn’t mind at all paying this up front.  I’d rather do that, and I’d think the surgical center would prefer to have all its patient-contributed costs up front as well (sure saves on billing and the cost of pursuing delinquencies), but due to the insurance mayhem and other things I can’t understand, it’s apparently flatly impossible.

    The mind boggles.

  5. Devices from  medical manufacturers can be sold for a hundred times its cost. Think your kid needs stitches? Be careful, even if they don’t your bill may be in the hundreds of dollars. I usually ere on the side of ‘doesn’t need stitches’. Keep the area clean and covered, over the counter stitch glue if needed. 

  6. It now costs $1.2 billion to for development and approval for a single pharmaceutical drug, up from just $800 million a few years ago. That’s why costs per pill are so high thanks to the brokenness of the FDA. So don’t blame the pharma industry for charging you’ll such high costs.
    -Former MD and Current VC partner

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