RB: That may be too facile a conclusion. But I agree that there are other approaches that offer promise for patients and patient safety that get little attention because trial attorneys and physicians both are defending somewhat different versions of an adversarial approach that may not well serve injured patients.

TL: If journalists should not be talking about malpractice reform as a solution to rising health care costs, what should we be talking about?

RB: Providers and some physicians have found how to get tremendous market power—the payment rates they get from insurance companies are a major cost driver. This was not talked about in the health reform debate. There are hospitals already with assets in the bank of over $1 billion that are able to generate price increases far in excess of the cost of doing business. As we move toward universal coverage, it’s hard to justify that they need those kinds of profits—called “retained earnings” for non-profits—to cover uncompensated care.

TL: Was this discussed during the debate?

RB: No. Most of the talk was about insurance companies driving up premiums and insurers became a convenient—and often deserved—target, whereas hospitals and other providers were viewed more favorably. But what’s partly driving up premiums is providers demanding higher prices and fighting limits on the excessive volume of services they generate.

TL: What should be done?

RB: The new law has important pilot programs for serious cost containment approaches, but the market power of providers is not addressed. Also, there needs to be more evidence-based medicine. That would hold providers to account for producing services that serve their own financial interests, rather than what is best for their patients.

And a much more vigorous attack on fraud is needed. Agencies such as the Centers for Medicare and Medicaid services (CMS) often can’t spend one dollar to save ten dollars in fraudulent activities. So whatever budget constrains are placed on administrative budgets, it would be foolhardy to reduce the resources that CMS and other agencies need to go after fraud and abuse. There are fewer employees at CMS today than in 1980. That’s crazy.

TL: What do providers do to exploit these weaknesses?

RB: A growing minority of physicians apparently are putting their financial interests above the interests of their patients and society. Many argue they have no duty to be prudent in the spending they generate. I am not now referring to the outright crooks, a different group altogether.

TL: Can you give some examples?

RB: There are examples where physicians are succumbing to financial incentives and doing things that are not in the best interests of their patients. A lot of cardiologists own CT angiography and PET scanners that have limited role in diagnosing heart disease, but are very lucrative. Some oncologists promote fourth and fifth rounds of chemotherapy within days of death. Other oncologists have said their colleagues are concerned more about their pocketbooks rather than having admittedly difficult conversations with patients and families about end-of-life care.

TL: Will the so-called accountable care organizations (ACOs) control costs?

RB: This is still a concept in evolution. The basic concept is that physicians, hospitals, and other institutions like nursing homes, which are all doing their thing in separate silos, would be incentivized to come together into an organization that would work together to achieve common quality and spending targets. But in contrast to how managed care works, patients would not be “locked-in” to the ACO. The ACO would have to earn its allegiance by actually producing what patients want. That’s the concept. It’s a compelling one. The next five years should be spent getting the details right as this will be new for all involved—providers, payers and patients. I am concerned that the ACO will be seen as a magic bullet and be rushed—and then fail to measure up. I have said we have other things we can do in the short term to reduce spending.

TL: What’s the difference between an accountable care organization and HMOs?

RB: There’s no requirement that patients will be locked into the organization’s networks as there is with HMOs. Also, the ACOs are provider organizations, not insurers, so that eliminates the middleman, which takes ten to fifteen percent off the top to support administration, marketing, and profits. The action is with the doctors and hospitals themselves.

TL: Will they lower costs?

Trudy Lieberman is a fellow at the Center for Advancing Health and a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR’s healthcare desk, which is part of our United States Project on the coverage of politics and policy. Follow her on Twitter @Trudy_Lieberman.