Broken by Design: Why American Healthcare Fails Patients, Doctors, and Everyone In Between
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David opens this episode with a statement that's hard to argue with: the American healthcare system is broken. Where it gets more complicated — and more interesting — is when you try to figure out who's actually at fault.
In this conversation, Dr. Lara Baatenburg and David Roden stop speaking in generalities and get into specifics: the math behind physician "kickbacks," a lab test that costs six dollars in cash and $230 through insurance, prior authorizations that take four months to resolve, and the structural reasons primary care is in crisis. Nobody escapes scrutiny here — including patients.
First, the donut math
A recent Vitals & Values clip went viral after Dr. Lara stated plainly that physicians don't receive financial kickbacks for prescribing medications. The internet, predictably, pushed back.
So David did the math. Over 10 years, $12 billion was spent on gifts and incentives to physicians nationwide. That sounds significant until you break it down: 800,000 physicians, 56% of whom received anything at all, which works out to roughly $2,600 per doctor per year. Divided across 52 weeks, that's $51 per week — and the average individual compensation tracked in the data landed between $14 and $21.
Which is, more or less, a donut. Dr. Lara grabbed one from a lab rep right before this episode started. It was average. It did not change her prescribing patterns.
Why primary care is collapsing — and why it matters
Primary care is the foundation of how American healthcare functions. It's referral-based at its core — specialists largely require a primary care referral to access. And yet, primary care physicians are consistently among the lowest-paid in medicine.
The reason is structural. Insurance reimbursement has historically rewarded procedures and in-hospital care. The cognitive work of whole-person medicine — listening, coordinating, managing complexity over time — isn't valued the same way in the payment model. As Dr. Lara puts it, rheumatology faces the same issue. Lots of thinking, not many billable procedures.
The consequence: to earn a reasonable wage relative to the debt load of medical training, primary care physicians have to see more patients. In the traditional system, Dr. Lara saw 20 patients a day in 15-minute appointments. You cannot build relationships at that pace. You cannot address complexity. What you can do — and what happens more than it should — is refer out, because you don't have time to address the problem in front of you.
Hospital systems run primary care at a financial loss. They keep doing it because the downstream referral revenue is enormous. The incentive structure is pointing in exactly the wrong direction, and medical students know it. The shortage of primary care physicians is constantly discussed. What's not being done is making primary care worth choosing.
The zinc test that explains everything
Dr. Lara ordered a zinc level for a patient. It got denied by insurance. The patient's out-of-pocket cost after denial: $230.
The cash price for the same test at Concierge Medicine of West Michigan is six dollars.
Same test. Same lab. $224 difference. Dr. Lara doesn't fully understand the mechanics of why it works this way — and she's a physician who deals with these systems daily. That opacity is part of the problem. Patients can't comparison shop when nobody knows what anything actually costs, and the pricing bears no relationship to the underlying cost of the service.
The game being played is one David describes as playing chicken. Large healthcare systems can't charge insurance their actual cost because insurance will negotiate it down, so they inflate the number to land somewhere viable. Insurance responds by tightening approvals. Nobody in the middle has a clean picture of what's real, and patients pay for the confusion.
Prior authorizations: the part that makes physicians furious
Prior authorization is the process by which insurance companies require physician approval before covering a medication, imaging test, or procedure. It was designed to reduce unnecessary spending. In practice, it's become one of the most consuming administrative burdens in medicine.
Dr. Lara walks through two cases. In the first, a patient had an incidental finding on imaging — something discovered while looking for something else. Multiple guidelines from multiple countries recommended the same follow-up CT scan. Insurance denied it. She submitted a letter with the guidelines. Denied again, with a note that the case was closed and no further appeals were possible. That's it. A physician, looking at clinical evidence, was overruled by a form letter.
The second case: a knee MRI for a patient with chronic knee pain. Denied. Dr. Lara called to provide additional information and was told she needed to set up an account on the insurance company's online portal. Setting up that account took four months. The patient got his MRI in April. He'd been waiting since December.
There's also the peer-to-peer process, in which a physician must call and argue directly with the insurance company's physician reviewer. David notes what everyone in medicine already knows: the reviewer isn't always in the same specialty. A cardiologist explaining the necessity of a cardiac procedure to an ophthalmologist is not a peer review. It's a bureaucratic obstacle wearing the clothes of one.
Insurance companies aren't exactly winning either.
David makes a point worth sitting with: most insurance companies don't actually make much money. The structure is genuinely difficult. When you consider that a top-dose GLP-1 medication runs close to $450 a month and a typical individual premium might be $500, the math stops working almost immediately. The system is under strain from multiple directions, and making physician offices jump through more administrative hoops doesn't solve the underlying financial pressure.
His more uncomfortable point — offered from personal experience as someone who was pre-diabetic, on blood pressure medication, and on metformin at age 15, while weighing over 400 pounds — is that a significant portion of healthcare costs are downstream of lifestyle. Not because patients are morally deficient, but because the environment most Americans live in makes the unhealthy choice the easy choice. That's its own conversation, and Dr. Lara is quick to complicate the picture: it's not simply a matter of individuals not trying hard enough. The reasons Americans are so unhealthy are as structural and multifactorial as the reasons healthcare costs are so high.
Drug prices, malpractice, and the things they didn't have time to unpack fully
American patients pay a disproportionate share of global pharmaceutical profit. Countries with national healthcare systems can negotiate hard on price — the UK can refuse to cover a drug above a set price. The US can't apply the same leverage, so pharmaceutical companies charge more here because they can. Dr. Lara also flags pharmacy benefit managers — the third-party intermediaries who negotiate drug costs — as a topic that deserves its own episode entirely. They're taking a cut, and their role in the cost of medications is underexplored.
Malpractice insurance gets a mention, too. The lawsuit environment in the US drives up the cost of practicing medicine, which drives up the cost of everything downstream. It's another variable in a system full of them.
What this all adds up to
David's conclusion is a fair one: the problems in American healthcare are not traceable to a single villain. Insurance has real constraints. Physicians are drowning in administrative burden and student loan debt that limits their ability to take professional risks. Hospital systems are top-heavy. Drug pricing is distorted by market structure. And patients — as a group — are sicker than they need to be, which makes every other problem worse.
None of that means the frustration patients feel is wrong. It's entirely warranted. What Dr. Lara and David are asking is that the frustration be directed carefully, because the most satisfying targets aren't always the most accurate.
This conversation is going to continue. Next episode: pharmaceutical reps — the full story, with Dr. Jana Baatenburg joining the table.
Vitals & Values is the podcast of Concierge Medicine of West Michigan, hosted by Dr. David Roden and Dr. Lara Baatenburg. New episodes available wherever you listen.
