Stanley Feld, MD, FACO, MACE. Creator of Repairing the Healthcare System Blog and Advocate of Ideal Medical Savings Accounts 
 

Preface: Dr. Stanley Feld and I go back a long ways. We have spoken to each

other about health reform for 25 years. We started our blogs the same year

2006– his, Repairing the Healthcare System, and mine, Medinnovation and

Health Reform. Given America’s current system and its consumer-driven culture,

we share skepticism about Obamacare. 

Stanley, if I may quote a cliché, has clinically “been there and done that.” He

is a retired endocrinologist, was President of the American Association of

Clinical Endocrinologists, and the American College of Endocrinology. 

He founded and grew a large endocrinology practice in Dallas. His particular

interest is diabetes and preventing its complications. In his practice, patients

signed a patient/physician contract describing the physician’s

responsibility to the patient and the patient’s responsibility for

his/her disease. He handed out “In Control” T-shirts to thousands of loyal

patients. His patients had 1/6 the complication and hospitalization rates of the

diabetic population as a whole. 

Stanley, a native New Yorker, is now an avid Texan of 45 years. He once

told me, “Texans are the smartest people I ever met. They understand freedom

and choice.” The economic performance of Texas, the nation’s leading employer

and the number one destination of businesses, workers, and physicians across the

land, affirm his judgment. 

President of American Association of Clinical Endocrinologists 

“In 1994 I became the third president of the American Association of Clinical

Endocrinologists. My mission was to put clinical endocrinologists on

the medical care map and to save patients and physicians from the

Washington induced bureaucratic destruction of medicine and

medical care. Physicians do not invest in lobbyists like other stakeholders in

the healthcare system.” 

“We tend to be polite. We are not aggressive. We don’t get our patients or our

best interests represented. Our interests in our patients and our profession

become distorted.” 

“As President of AACE among other things, I launched a “Patients First”

campaign. Putting patients first is not only logical it is essential to effective

medical outcomes in a healthcare system. With Obamacare, logic has not

prevailed and patients are not first.” 

Who The Customer Is? 

“Government does not know who the customer is. Neither do

insurance or pharmaceutical companies. No one knows who the customer is. I

do. The customer or consumer is the patient. I advocate a consumer-driven

healthcare system. I met Regina Herzlinger, a professor at Harvard Business

School in 1994. She subsequently wrote two books on consumer-driven care

– Market Driven Care (1997) and Who Killed Health Care (2007). 

Central Theme of My Blog – Consumer-Driven Care 

“The central theme of my blog is consumer-driven health care. 

Somehow Regina Herzlinger read diabetic guidelines I chaired for

AACE called a “System of Intensive Diabetes Self-Management. She

contacted me and said,” This is exactly what I am talking about

when I talk about consumer driven healthcare and focused factories.

A focused factory in medicine is a medical practice that is a one stop

shopping facility using a team approach to a disease (diabetic care)

with the patient at the head of the team where the physician is the

managers and the rest of the healthcare team are the coaches.”

 “Consumers driving the health care system in focused-factories are

the key to better medical outcomes by reducing the complication

rates of chronic diseases.” 

“Eighty percent of the cost of direct medical care is the result of

complications of chronic diseases.” 

“The end result would reduce medical costs. Policy makers are

finally coming around to the notion of consumer driven healthcare

system.” 

It is because most of the things being done with Obamacare are not

working. As Winston Churchill said, “ You can always trust the

Americans. In the end, they will do the right thing after they have

tried everything else.” 

Obamacare is a top-down central controlly system. America is a

bottom-up society where consumers want to have the freedom to do

what they want. “ 

Dr. Regina Herzlinger invited me to talk to her class at Harvard Business

School. We’ve been friends ever since. We both have ideas of how to make

consumer-driven health care happen. 

My son, Brad Feld, a venture capital and author of Venture Deals, suggested I

write a blog to “express my ideas” in 2006.” I have been at it ever since. 

“Physicians are so busy they haven’t paid attention to what’s going on. They

simply don’t have enough bandwidth to deal with the complexity

bureaucrats have built into the healthcare system. The same is true

for patients. Obamacare is too complicated and too abstract to grasp

its deficiency at a glance. Few people pay attention to what is happening

politically, economically and socially to them until it affects them

personally. It might be too late by that time.” 

Six Letters to Obama 

“Six years ago, I wrote six letters to then soon-to-be President Obama about what

he had to do if he wanted transformational change in healthcare. 

His ideology and the ideologues he was listening to held a different view. I tried

to point out that his agenda would lead to a system of increased dysfunction

because his agenda was not focused on the patient. 

I told him he had to align all the stakeholders' incentives. Consumers

are the only ones that can align their incentives. They are the

customers.

But he didn’t and hasn’t listened. “ 

Hospitals, Health Plans, and Physicians 

“ With the advent of managed care, health plans and hospitals figured out

how to maintain and increase their profits. Health plans and hospital systems

were organized. Physicians were too busy or didn’t know how to organize to

protect themselves and their patients. “ 

“Mistrust developed between hospitals and physicians. Physicians

began to set up outpatient surgical and diagnostic centers, and hospitals began to

hire unhappy doctors they thought they could control.” 

“First dollar coverage increased demand. Insurance premiums and healthcare

costs rose. Reimbursement for physicians was lowered by the

insurance companies to blunt the rise of premiums for patients while

increasing the insurance companies’ profits. 

What wasn’t decreased was physicians’ practice overhead. The more

regulations and more administrative complications, the more paperwork, the

more people physicians had to hire. Hence an increase in overhead.” 

Indictment of Doctors 

“Patients began to complain the doctor didn’t spend enough time with

them, didn’t let them complete a sentence, just gave them something to fix

them. Consumers’ complaints were widely publicized in the media. Complaints

sell newspapers.” 

This was viewed an indictment of doctors, but it was really an indictment of the

healthcare system that was evolving.” 

“The media began to destroy the patient’s trust in the doctor because it was a

good story that would sell newspapers. 

The media reported that Physicians do this, they do that, they over-test,

they under-diagnose, and they make mistakes. They are interested only in

money. This barrage of unsubstantiated talk diminished the physician/

patient relationship.” The physician/patient relationship is paramount to

the effectiveness of medical treatment. 

The Role of Physicians 

“But when physicians have time to teach the patient about the disease, the

patient has less anxiety about the disease and less distrust of the doctor. When

patients follow the physicians’ instructions they control their disease

better. Complication rates go down, and costs go down. 

The bottom-line is that patients listen to physicians they trust, and

physicians listen to patients who question them when the patients are

in control of their healthcare dollars. Both physicians and patients

benefit from the listening. So does the health system. 

“Organized medicine didn’t effectively explain to physicians what

was going on and failed to help doctors maintain the physician-patient

relationship. Things got worse for patients, things got worse for the doctors, and

now things are getting worse for all the stakeholders as the government

tries to take over the healthcare system. 

It’s getting worse for the insurance companies although they worked out a deal

with the government to be bailed out if they don’t make enough money by

their definition. Hospitals systems are complaining even as they build more

and bigger buildings.”

Getting It Right 

“Nobody has gotten it right. What will get it right is when consumers are

responsible for their health and their healthcare dollars, and are rewarded

financially for taking care of themselves. If the healthcare system would

permit the consumer to be a true consumer the cost of healthcare

would decrease dramatically. The technological tools to help consumers

figure out the best value at the best price could be made available on

the Internet.” 

Ideal Medical Savings Account 

“What is needed an ideal medical savings accounts. Health savings accounts are

the fastest growing healthcare insurance product despite the Obama

administration’s attempt to eliminate them. 

The trouble with Health Savings Accounts is that they keep the money in play

for the insurance company rather than the patient owning the money

not spent in a separate retirement trust.” 

“With the ideal medical savings account, the employers would give employees

$6000 in a trust account to be spent at their choosing for legitimate

medical care. The employer would also provide first dollar coverage

after the $6000 was spent to buy reinsurance. The total package

would be less than the yearly package spent the previous year.

If the employee takes care of his health and healthcare dollars the

remainder not spent goes into his personal trust account tax free to

be used and taxed at retirement. The remaining money is not carried

over for future medical expenses. 

This would provide the financial incentive for consumers to take care

of themselves and their healthcare dollars. 

Employers are willing to pay $12,000 per person for insurance. 

“The medical savings account would give the consumer $6000 in a trust

account. The remaining $6000 would be used to pay for first dollar

reinsurance. 

The payment interface ought to be between the consumer and the

physician rather than the insurance company. Prices would be

transparent. The consumer could be taught to know what he is

buying. Claims could be adjudicated immediately. Physician overhead

and insurance overhead would decrease immediately. The cost of

healthcare would decrease immediately. 

“An example of how patients spending their money directly decreases cost is

Oklahoma City, where the Oklahoma Surgery Center charges patients directly

and transparently. The Surgery Center’s fees are posted on their web

site. Consumers know what they are buying. They pay at the point of

service.” 

The Surgery Center’s administrative expenses are low because they

do not accept insurance payments. The cost of a surgical procedure is

one quarter to one half the cost of the same procedure in an overhead

bloated hospital system.” 

“ With an ideal medical savings account, if the patient spends $1000 for

medical and surgical care in one year, that patient would have $5000 put

into his tax trust fund at the end of the year. It does not have to be

spent on medical care in the future.” 

“Patients would have more incentives 1) to take care of themselves; and 2) to be

cautious about spending their health care dollar.” 

“The medical savings account would put the consumer, not the insurance

company, in charge. Suppose a patient has diabetes mellitus and it cost

about $3000 a year to control the disease and avoid acute and chronic

complications. If that person took of himself, controlled his blood

sugar and did not have to go to the ER, the employer could afford to

give that employee a $1000 bonus because that patient did not have to

use the reinsurance coverage. If the employee used the reinsurance

coverage the price of the reinsurance would increase the following

year. These systems could be set up so the consumer with diabetes mellitus is

rewarded for taking care of himself.” 

“The ideal medical saving account could apply to every age group. The

average cost to the government for direct medical care for Medicare

patients is $6700 a year. The average includes Medicare patients with

end of life care in ICUs. 

The low-end Medicare Part B per patient is $1500 tax-free dollars per

person plus an additional non-tax free $3200 per couple if Medicare

Part F is purchased to cover hospital and physician deductibles.

Medicare Part D is n additional $1800 per couple per year. Patients

still have to deal with Part D drug deductibles. 

Premiums at the high end because of means testing can cost up to

$16000 in pre and post tax dollars per year.” 

It’s not generally known, but the insurance company, which is in the middle of all

of this, takes 40% of your health care dollar off the top.” 

“This is the reason Medicare is unsustainable. It is not because

physicians keep raising prices. In fact physicians have not had a

reimbursement increase in 10 years. Reimbursement goes down each

year.” 

The ideal medical savings account would reduce costs because

there would be not insurance claims and little administrative costs.

Physicians would be paid immediately upon patients’ request.

Consumers would force the healthcare system to be transparent. 

Free Market Economics 

“Healthcare would become a true marketplace.” 

“The healthcare insurance industry, government, hospitals

and physicians have already negotiated prices. Retail prices are

meaningless. “ 

“Consumers would be in a position to decide if they wanted to

pay for certain services and tests, not the insurance companies or

government.” 

“Medicare and Medicaid patients should have the same access to

medical savings accounts and the same decision making power as

others.” 

“Most Medicare and Medicaid patients are smart enough to handle this kind of

decision making. “ 

 “I don’t think people are stupid when it comes to money. For any

other commodity or service, people figure out how to get what they

want at the price they are willing to pay. They can figure out what to

do and what to buy, especially when it is their own money.” 

The Trouble with Entitlements 

“ The intentions of food stamps and other entitlements are good.

The problem exists when the design of the entitlement encourages

dependence on the entitlement rather than providing the incentive

to become independent of the entitlement. Entitlements put power

in the hands of the central government, not the individual. The

individual becomes the slave to the entitlement. Entitlements do not

work. Incentives will work.” 

“Physicians would be relieved if free-market principles were applied.

The armies of hospital administrators and health plan managers

would be eliminated. Buildings full of claims people would be

eliminated with medical savings accounts. These high salary and low

salary people all add to health care costs. It doesn’t work. It makes

healthcare costs unsustainable.” 

“The only way to make it work is by putting the patient in charge with

appropriate education and appropriate protections so no one can game the

system. The key is getting rid of the administrative cost. 

At the Oklahoma Surgery Center, Dr. Keith Smith has found his center can

perform surgeries at one fourth (1⁄4) to one half (1⁄2) the cost hospitals

charge by simply eliminating administrative costs. The same is true of insurance

companies. Once you end the long-drawn out process of adjudicating claims, you

save health care dollars.” 

A Princely Profession 

“My view is that medicine is a princely profession. Unfortunately, physicians

are feeling they are so enslaved and criticized by the others in

the healthcare system that they do not want to participate. This

feeling accounts for the evolution and growth of the concierge/direct pay

system. 

Concierge medicine is attractive to patients because feel their

physician care about them. They have someone to talk to. They are not

some number or abstract commodity.“ 

“The healthcare system’s problems will not be solved by electronic

health records or clinical guidelines or other management or

monitoring tools."

“The only way to make health care more effective, efficient, and

affordable to consumers is to set up the system so consumers can

drive the healthcare system.” 

“ The government’s role should be teach consumers the best way to

drive the healthcare system and not to tell them what care they can

and cannot get.” 

Consumers and Doctors as Boiled Frogs 

“Patients and doctors are feeling like the frog in that story of how to cook a

frog. If you turn up the heat slowly, one degree at a time, the frog won’t know

he is being cooked until he is dead. By then, it is too late. This is what’s

happening in healthcare today to consumers and doctors. It’s gotten so

hot consumers and patients feel they can’t move.” 

 “You don’t have a health system unless you have patients and physicians. Policy

makers think you can replace physicians with managers or with non-doctors with

some medical knowledge."

"They are wrong. The system needs patients and physicians who talk and listen to

one another.” 

“In order to deliver cost effective medical care America’s healthcare

system most maintain a patient /physician relationship with

consumers being at the head of the healthcare team controlling their

health and healthcare dollars and the physician being the manager of

the team with physician extenders as his coaching assistants.” 

“This can be accomplished with medical savings accounts.” 

“Medical care is not a commodity! Attempts to make it a commodity

will fail at a great cost to society”