The Healthcare Cost Crisis: Managing Symptoms or Fixing the System?

The United States has not built a healthcare system designed to lower costs. Instead, it has created an industry dedicated to arguing over them. For decades, the U.S. Healthcare system has relied on multiple layers of gatekeepers to control medical spending. These intermediaries sit between patients, providers, and payers, managing processes like utilization management, prior authorization requirements, network restrictions, payment integrity, and out-of-network claims repricing.

Most of these mechanisms review, challenge, or renegotiate costs after care is delivered; others act before the care is provided. For example, utilization management (UM) and prior authorization are designed to prevent unnecessary treatments by requiring approval before a service can be performed. While this sounds like it aligns incentives, in reality, it often benefits intermediaries more than anyone else.

Vendors in this space claim they can lower costs using a percentage-of-savings model, where they’re paid based on how much they reduce a medical bill. This might seem fair, but the system is far from equitable. Some intermediaries take 15-30% of the “savings” as their fee, which distorts how costs are measured and managed.

The Illusion of Savings

Consider out-of-network claims. A doctor might bill $100 for a service, knowing full well that the final payment will be lower. Vendors step in to negotiate the bill down, say to $50, then claim a $50 “savings” and charge a percentage of that amount. These reductions are marketed as cost containment, but the original price was never realistic to begin with. The system doesn’t just tolerate administrative waste; it depends on it.

I’ve seen firsthand how dependent the industry’s cost-containment infrastructure is on this approach. Employers and health plans rely on outside vendors to handle everything from repricing claims to challenging bills and recovering payments. While these appear to produce short-term savings on individual claims by reducing the amount paid per transaction, they also introduce significant administrative complexity.

Small practices play a critical role in healthcare delivery, but they cannot continue to absorb ever-increasing administrative demands without consequences. Dr. Michael Blackman, Chief Medical Officer of Greenway Health®, highlights this issue: “Small practices are being drained by hidden administrative tasks that are not only time-consuming but also financially burdensome.”

As healthcare costs continue to climb, it raises an essential question: if the industry’s primary cost-control tools depend on taking a percentage of the negotiated savings, are we fixing the problem or just managing the symptoms of a system built to reward complexity?

Why It Matters

After years of working within this system, I came to realize that the models designed to “manage” healthcare spending are unsustainable. We can no longer afford to prioritize transactional wins at the expense of patients. In 2024, the United States spent roughly $4 trillion on healthcare, a figure that continues to rise.

The true drivers of healthcare spending-such as high drug prices, inefficient care delivery, and administrative overhead-are not being addressed by these cost-containment strategies. Instead, they are perpetuating a cycle where complexity is rewarded, and patients often bear the brunt of the costs.

To truly lower healthcare costs, we need to rethink the entire system. This means focusing on preventive care, reducing unnecessary treatments, and streamlining administrative processes. Only then can we build a healthcare system that works for everyone, not just the intermediaries who profit from managing the symptoms of a broken system.