Research Guide · Healthcare Financialization
How Financing Came to Matter More Than Care
A six-week delay for a biopsy that had nothing to do with medicine. This guide answers the most common questions about how American healthcare financing overtook the care it was built to support, synthesized from the reporting in Behind the System.
Why is a doctor's recommendation not enough to get care approved?
Prior authorization, once a narrow check on a handful of expensive procedures, is now applied at enormous scale — roughly fifty million Medicare Advantage prior-authorization determinations in a single recent year alone. Step therapy forces patients to try a cheaper, insurer-preferred drug first. Opaque denials, issued under vague catch-all reason codes, are sticky by design.
The "appeal paradox": when a Medicare Advantage denial is actually appealed, it's overturned roughly 4 times out of 5 — yet even within Medicare Advantage, only about 1 in 8 denied prior-authorization requests is ever challenged. A process that's wrong four times out of five whenever someone contests it is not, on this evidence, a process that's usually right.
What does this actually cost patients and clinicians?
Two connected wounds. The first is financial: roughly 100 million Americans carry some form of healthcare debt, and medical bills are a major contributor to personal bankruptcy — a predicament largely unique to the U.S. among wealthy nations. In a 2025 Commonwealth Fund survey, among people whose care was blocked by a prior-authorization denial, close to three in ten said a health problem actually worsened while they waited. Denial rates run measurably higher among patients of color and lower-income patients.
The second wound is moral, and it falls on clinicians. Physicians now spend roughly two hours on computer and desk work for every hour of direct patient care. A growing number of researchers use a more precise term than "burnout": moral injury — the distress of being forced, again and again, to act against one's own professional judgment. American physicians report psychological distress at roughly double the rate of other American workers.
Why does the U.S. spend twice as much as other wealthy nations?
In 2024, the United States spent roughly $14,775 per person on healthcare. Switzerland, the next-highest spender, spent about $9,963. The average among comparable wealthy nations, excluding the U.S., was roughly $7,371 — without the U.S. consistently achieving better health outcomes for the money.
No single culprit explains the gap. The United States runs a multiplicity of payers — private insurers, employer plans, Medicare, Medicaid, state programs, PBMs, hospital systems, independent practices — each with its own contracts and billing codes, which is why a large American hospital can employ more people to bill for care than to deliver it. That fragmentation is also difficult to police: in 2025, the DOJ announced the largest healthcare fraud takedown in its history, 324 defendants charged in schemes involving more than $14.6 billion in intended losses — still a small fraction of the nearly $5 trillion the country spends on healthcare annually.
Who owns your doctor's practice?
Over a few decades, hospitals merged into regional systems, insurers combined into a handful of giants, independent physician practices were absorbed into corporate organizations, and PBMs came to control an ever-larger share of prescription benefits. As of early 2024, roughly 78% of U.S. physicians were employed by hospitals or corporate entities rather than working independently.
The most consequential form of consolidation is vertical — a single corporate parent owning the insurer, the physicians, the PBM, and the pharmacy all at once. UnitedHealth's Optum alone employed or was affiliated with about 90,000 physicians — nearly one in ten U.S. doctors — inside a corporate family that also owns one of the nation's largest insurers and one of its largest PBMs.
“The dominant payment model under-rewards prevention relative to treatment.”— Behind the System
What is private equity doing in healthcare?
Private equity owned or backed roughly 6.5% of U.S. physicians in 2024, up from about 4.5% a few years earlier — still a minority nationally, but concentrated intensely in particular local specialty markets, where a single firm's share can exceed 30 or even 50 percent.
The documented case study is Steward Health Care: bought by Cerberus Capital Management in 2010, its hospital real estate sold and leased back in 2016 to generate cash while committing the hospitals to steep ongoing rent. In May 2024, that arithmetic ended in bankruptcy — roughly nine billion dollars in liabilities across thirty-one hospitals in ten states.
A large study in JAMA found hospital-acquired conditions rose about a quarter after private equity acquired a hospital, compared with similar non-acquired hospitals. A broader systematic review of private-equity ownership across healthcare settings — hospitals, physician practices, nursing homes, and more — found prices tended to rise afterward: one synthesis of cost-focused studies found increases in nine of twelve and decreases in none.
What can other countries teach us?
The sharpest, least contestable lesson concerns administration. The U.S. spends roughly $1,055 per person on the paperwork of insurance and billing, against about $245 per person in comparable countries — five times as much. Notably, Maryland has run a version of uniform hospital pricing across all payers for decades, a design many Americans imagine as foreign but that has operated quietly inside the United States for two generations.
No other system is a utopia — Canada's median wait from referral to treatment ran to roughly thirty weeks in 2024 — but Germany, Switzerland, and the Netherlands deliver short waits under universal systems, meaning long waits reflect particular budget-and-capacity choices, not universality itself.
Why hasn't reform fixed this?
Two answers. The first is structural: replacing the roof, rewiring the electrical, installing new windows are all real improvements to a house, but if the foundation is cracked, the deeper problems return no matter how fine the new roof is.
The second is political. The pharmaceutical and health-products industry is the largest spender on federal lobbying, year after year — roughly $391 million in 2024, a record $457 million in 2025. But money isn't an all-powerful lock on outcomes: in 2022, despite record industry lobbying, Congress passed a law letting Medicare negotiate the prices of some drugs.
What would a well-designed system actually look like?
Five design principles recur wherever health financing systems work well: simplicity, aligned incentives, transparency, accountability, and coherence. These principles name no political side — a single-payer system can satisfy or fail them, and so can a system of competing, regulated private insurers. They're a shared yardstick: run any proposal, favored or opposed, down the same five questions, and judge it on the answers rather than on who's proposing it.
Measured against those five principles, American healthcare financing today fails on simplicity, aligned incentives, and transparency, and fails most of all on coherence. It earns only a partial mark on accountability.
This guide summarizes the evidence. The full investigation — the sourcing, the reporting, the complete argument — is in the book.
Every figure on this page is drawn from the sourced reporting in Behind the System. See the book for full citations.