The Primary Problems with Healthcare Today: Part Two – High Costs

Problems with Healthcare

Last week we talked about the first problem facing healthcare consumers: lack of access. Today we’ll highlight another problem causing the global healthcare crisis: high costs.

High-quality affordable healthcare is important to help eliminate healthcare disparities and works to improve the overall health of the population, whereas more expensive healthcare increase the disparity between health of the affluent and the less well-off.

The cost of healthcare varies dramatically around the world. Many health systems are struggling to update aging infrastructure and legacy technologies with already limited capital resources[1]. As healthcare costs increase, affordability and insurance coverage remain problematic[2]. In the United States, deductible cost increases are far outpacing increases in costs covered by insurance[3]. Brazil’s private health insurance sector lost 2.5 million beneficiaries between 2014 and 2016 due to the country’s high unemployment rate[4]. Added to that, companies in Brazil had to cut expenses, and changing their employees’ health insurance plan to a cheaper one was a popular option[5].

As mentioned previously, lack of access to care causes an increase in hospital and urgent care visits[6]. According to Centers for Disease Control and Prevention (CDC), 79.7% of non-admitted emergency room patient visits were due to lack of access to a healthcare provider[7]. A recent study published in the Journal of American Medical Association estimated $734 billion (27%) of all healthcare spending was wasted on unnecessary services, inefficiency and inflated prices[8]. Similarly, according to Truven Health Analytics, 71% of emergency room visits with employer-sponsored insurance coverage are ambulatory sensitive, and could have been managed in an outpatient care center[9].

Moreover, as shown by the rise in medical tourism as a new industry, there is now a greater cost disparity in accessing healthcare than before. This new industry shows the cost of healthcare is such that patients are increasingly willing to travel overseas in order to take advantage of more competitive pricing for healthcare in other countries[10]. This makes it easier to connect patients in one geographic location to physicians in another, which can dramatically reduce costs, and create a freer and competitive market for high-quality medical services.

Today’s consumers want to take responsibility for managing their own health[11]. Yet, most feel they don’t have the information and tools to do so. In other industries, customers can easily access comparisons of features, benefits, and costs to guide their purchasing decisions. In contrast, the healthcare industry presents a huge array of confusing choices, contact points, and service flows without any upfront pricing information.

Seventy-five percent of consumers consider their healthcare decisions as the most important and expensive decisions they make[12]. Yet, the process of choosing and paying for medical services can be so daunting that patients often decline treatment simply to avoid the confusion and expense[13].

To make better decisions, healthcare consumers are increasingly expecting—and demanding—better information and more transparency from healthcare providers[14]. They’re also asking for more of a partner relationship rather than a one-way dialog from medical provider to patient[15].

At the same time, as healthcare costs continue to rise, consumers are required to assume responsibility for a larger share of the costs of health plan premiums, co-pays, and out-of-pocket expenses, with no way to offset the cost[16].

How to Solve It

Healthcare by membership is becoming more popular in the United States, and companies such as HealthSapiens can cover you for as little as $14.95 per month for unlimited consultations with physicians. HealthSapiens has done the market research and modeling to ensure that this is a fair and equitable price for both patients and physicians, and pays its physicians directly. This eliminates the greed that fuels much of the dysfunction in the current U.S. system. It also eliminates third-party processing that gets in the way of fast and accessible healthcare. Finally, physicians can charge less because overhead costs are lower using a platform like HealthSapiens.

Prices are still largely determined by third parties whose goals are primarily financial and profit-driven[17]. Patients often don’t know the price of a service or treatment until they need it— and very few are savvy enough to shop around, thinking a cost is fixed and non-negotiable. Even for savvy consumers, price comparison is difficult as current systems protect obscurity in order to control pricing[18].

We propose a completely transparent system powered by a blockchain. Like with other products or services, consumers will have the ability to compare pricing and make better choices. Cheap travel has made it possible for patients to travel where needed if it will ultimately save them money, meaning costs will lower on a global basis.

HealthSapiens is currently working to make this a reality. To find out more about the future of HealthSapiens 2.0, visit our website and sign up for our newsletter today.

About The Author

Karim Babay is Chairman & CEO of HealthSapiens, a nationwide healthcare provider that delivers on-demand access to healthcare anytime, anywhere, via mobile devices, the internet, video and phone. Mr. Babay is also the founder and Chief Investment Officer of Intrinsic Value Investment Partners, a value-focused hedge fund. Mr. Babay has over 15 years of global investing, entrepreneurial and corporate finance experience allocating capital across the capital structure (credit and equity), angel investing, liquid and illiquid investments in securities. Mr. Babay has published numerous studies and analysis while at Columbia University. Mr. Babay is member of the board of directors and Chairman of the compensation committee of GLYECO, a publicly traded company, principally involved in processing of waste into high quality ethylene glycol. Mr. Babay received a B.S. in finance and economics from HEC Institute and an MBA from Columbia Graduate School of Business.


  5. 2018 Global health outlook: Deloitte
  6. 232&context=capstone
  7. M. Gindi, Ph.D.; R. A. Cohen, Ph.D.; and W. K. Kirzinger, M.P.H, ‘Emergency Room Use Among Adults Aged 18–64: Early Release of Estimates From the National Health Interview Survey, January–June 2011’, CDC (2012)
  8. A. Phillips. ‘ America’s Healthcare Transformation: Strategies and Innovations’, Rutgers University Press (2016)
  9. Ann Arbor, ‘ Truven Health Analytics Study Finds Most Emergency Room Visits Made by Privately-Insured Patients Are Avoidable’ Truven Health Analytics (2013)