Part 1: What is “healthcare” in the US

My grandfather, an engineer on NASA's Apollo missions, often joked that rocket science was simple: you just point the rocket in the right direction and light it. The real challenge was all the engineering required to make that simple act possible. American healthcare presents a similar paradox. The goal of pointing a patient toward the right treatment should be straightforward. But, it is often tangled in the complexity of byzantine data systems, misaligned business contracts, and fragmented healthcare organizations. My aim with these posts is to untangle that web, and explore the what makes American healthcare feel harder than rocket science.

As a technology leader at forward thinking healthcare companies like [Cityblock Health](https://www.cityblock.com/) and [Firsthand](https://www.firsthandcares.com/), I built platforms that delivered preventative care to tens of thousands of our system's most underserved individuals. We proved that new models could simultaneously improve outcomes and reduce costs. But, the landscape continues to change. The strategies that powered those successes are no longer sufficient in an era defined by AI and the market dominance of a few healthcare giants. I believe we need to take a new approach to healthcare data, business contracts, and health organizations. ## **Let's get started: Where are we now?** _This first part gives an overview of the business of US healthcare in 2025. You can likely skip it if you already work in the industry._ Healthcare is a massive industry and the largest employer in the United States, with over 22 million workers. It makes up 17.7% of the nation's total economic output (GDP) and is expected to reach 20% by 2032. The growth in healthcare costs has far outpaced other industries. From 1996 to 2024, health insurance premiums increased by 339%, while average wages grew by only 126%. During that time, over half of the average employee's pay increase was absorbed by health insurance costs. As a result, the take-home pay for many Americans has not changed much in 30 years, despite major gains in productivity from new technology. This huge and uneven growth in healthcare costs is one of the reasons most Americans feel so frustrated. See [here](https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#Annual) for a much deeper dive:

## **Healthcare in the US vs the UK** You'd hope that all that money spent would mean the U.S. has the best healthcare in the world. Well, that's not true for everyone. A good way to see this is by looking at maternal mortality, which is how many women die during or after childbirth. It's often seen as a good way to tell how healthy a society is overall. Let's compare the U.S. rates with the UK. I'm not saying the UK system is perfect, just that it's a similar country to the U.S. and is more different than Canada. In 2022, the US had 22 maternal deaths for every 100,000 live births. The UK had only 5.5. The UK achieves this while spending 10% of its GDP on healthcare, compared to the 17.7% spent in the US. However, It is misleading to talk about a single "US healthcare system." A person's health is best predicted by the [the zip code you were born](https://hsph.harvard.edu/news/zip-code-better-predictor-of-health-than-genetic-code/). There are vast differences between states. For example, California's maternal death rate is half the national average at 10.5. Louisiana's rate is 37.3, which is similar to that of developing nations like Cuba or Mongolia. These wide gaps in health outcomes make it difficult to agree on national policies.

# The big players

## **The basics** In short there are 5 may groups at play in American healthcare: - **Patients/Consumers:** The people who need healthcare. - **Providers (Doctors, Hospitals, Clinics):** Deliver the actual care. - **Payers (Insurance Companies, Government Programs like Medicare/Medicaid):** Pay for the care. - **Pharmaceutical Companies/Medical Device Manufacturers:** Develop and sell drugs and equipment. - **Employers:** Often facilitate insurance for employees and purchase healthcare products for them. ## **The big Players: Payers / Insurance companies** Payers, or insurance companies, are the most powerful group. All the money flows through them. Over the last 20 years, they have shifted from simply paying bills to actively managing care. They can deny treatments and reduce payments to providers they consider poor-performing. Insurance company revenues are staggering: UnitedHealth Group at $400 billion, CVS Health at $372 billion, and Cigna at $241 billion, and the list goes on. However, their profit margins (how much money they actually keep) are quite low and are similar to a restaurant, ranging from 1.5% to 3.8%. This is partly because they invest a lot in growth and research. Growth has also come from **Managed Medicaid** and **Medicare Advantage**. These "managed" programs are where private insurance companies handle government-sponsored health benefits. This means that some of the $1.8 trillion spent on these government programs to flow through them. These programs connect patients with a network of doctors and hospitals, as an alternative to the traditional government system where every service is paid for separately. While these plans might reduce costs for people on these plans, they can also lead to higher costs for taxpayers, and it's not always clear if they actually save money in the long run.

## **The big players: Hospitals** Hospitals have also grown into powerful economic engines through consolidation. For example, HCA Healthcare, the country's largest hospital system, had more revenue in 2023 than Netflix, Uber, and Starbucks combined. Key problems with hospitals are a lack of price transparency and a heavy focus on tasks related to billing. Patient information is often not shared between hospitals, doctors, and insurers, which makes coordinated care difficult. Even though prices are now more transparent due to recent legislation, the costs vary wildly. For example in NYC, a C section at one hospital may cost you 20 times as much as at a different one down the street.

## **The big players: Providers** Providers like doctors have also seen major changes. Most physicians, around 75%, are now employed by hospitals or corporations, whereas 20 years ago they were almost all independent. Many have joined larger groups called Accountable Care Organizations (ACOs) to help coordinate care and meet performance goals. Practices now employ more support staff to handle the documentation required by electronic health records and complex payment models. These larger groups help with better coordination of care among their doctors and can support each other in meeting "value-based care" goals, like **Clinical Quality Measures**. These measures look at things like how well doctors follow guidelines for preventive care (like vaccination rates or cancer screenings) and how well they manage long-term illnesses (like controlling blood pressure for patients with high blood pressure or A1c levels for diabetic patients).

The second big change for healthcare practices is the number and type of people who support each doctor. Currently, practices have about 4.79 support staff for every doctor. This ratio of support staff to doctors is a big topic and has changed quite a bit over the past 20-30 years. This is due to more documentation needed for electronic health records (EHRs), the need to report data to calculate all the performance measures mentioned above, and the shift toward doing more "care management," which is often called a **Patient-Centered Medical Home (PCMH)**.

# Today: Consolidated fragmentation

Over the last decade, every part of the healthcare system has consolidated. Insurers, hospitals, and provider groups have each grown into powerful, separate entities. I call this "consolidated fragmentation." From their own fortresses, these groups argue over who pays when things go wrong, who gets rewarded when things go right, who controls patient data, and who pays for shared technology. This structure creates gridlock. While new technology like AI should make innovation easier, the most logical financial move for each group is to seek an advantage over the others. This comes at the expense of working together for patient health. As a consumer, I want all these companies trying to innovate to find lowest cost and highest value ways to keep me as healthy as possible – the science of health. In the next post, we will look at why a more integrated approach called "value-based care" might be the solution. Check it out [here](https://www.zamiang.com/writing/what-is-value-based-care). Recommended reading: - [https://www.nytimes.com/interactive/2025/07/03/business/economy/healthcare-jobs.html](https://www.nytimes.com/interactive/2025/07/03/business/economy/healthcare-jobs.html) - [https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#Annual percent change in total national health expenditures per capita and personal consumption expenditure price index, 1980-2023](https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#Annual%20percent%20change%20in%20total%20national%20health%20expenditures%20per%20capita%20and%20personal%20consumption%20expenditure%20price%20index,%201980-2023) - [https://bioethics.hms.harvard.edu/journal/healthcareparadox-review](https://bioethics.hms.harvard.edu/journal/healthcareparadox-review)