This speech was delivered to the Oregon Medical & Dental Advisory Team
April 24, 2025
When I was preparing my remarks for this evening, I went online and looked at your website, and was struck by this sentence: “Being a physician or a dentist is an Art … and a Science. But the practice of medicine itself if a business.”
The is no question, but that the practice of medicine and dentistry is a business, much more so now than when I began my practice in 1974—but a business nonetheless, and an important one. Without the ability of medical practices and hospitals to operate on a sound financial footing, we would not have a health care system is the first place. We can’t lose sight of that fact.
At the same time, the business of medicine is unique, in the sense that the individual practices and institution which comprise that system, are collectively expected to achieve a larger social goal: the improved health of the population. We can’t lose sight of that fact either.
My North Star—the belief that has guided my approach to health policy throughout my long career in public service—is simply this: The goal of our health care system is not just to finance and deliver medical care. The goal is health: to maintain, restore and improve health. In other words, health care is a means to an end, not an end in itself. It has no intrinsic value—outside its relation to a positive health, or the alleviation of pain and suffering—except as an economic commodity.
So, while the practice of medicine is a business, health care itself is not just another economic commodity. The delivery of health care involves an ethical contract—not only a contract between practitioners and those seeking care, but also a contract with society as a whole.
I don’t believe we can successfully meet today’s mounting fiscal challenges, without elevating the importance of that contract—especially our contract with society—and without understanding the larger social and economic context, in which the business of medicine is practiced today.
Let’s start with a quick overview of the health care landscape here in Oregon, in 2025. It’s not good and it’s not pretty. Across our state, practices are struggling financially, many facing fiscal trajectories that are simply not sustainable—particularly for independent practices. The same is true for hospitals, with nearly half of Oregon’s 61 hospitals operating in the red on any given day.
Like wounded animals, these distressed practices and institutions—struggling to survive in today’s environment—have attracted the attention of predators in the form of companies like Optum, and private equity investors. These companies have no ethical responsibility to those seeking care, or to the heath our population. Their mission—their fiduciary responsibly—is to feed on the revenue streams of these practices to maximize profit for their shareholders. To these investors, health care truly is just another commodity to be bought and sold on the stock market.
There are those who see the dark lure of capital from private equity and large publicly traded corporations, as a viable option. Yet, if we believe our health care system should be rooted in a commitment to those who need medical care—and to the overall health of our population—this is the worst possible option for the practice of medicine. It is certainly the worst option for those who seek access to needed care, and the worst option for Oregon and for our society.
Some, however, have already succumbed. Since 2021, Optum, a subsidiary of UnitedHealthcare, has acquired Greenfield Health in Portland, the Corvallis Clinic, and the Oregon Medical Group in Eugene. And Bay Area Hospital on the South Coast, believes its only option is a partnership with Quorum Health, a private equity-owned health care management company.
The response of other hospitals has been to get bigger—believing that growth is the answer. OHSU, struggling financially itself, is seeking to acquire economically distressed Legacy Health. Corvallis-based Samaritan Health is also looking for a merger or an outside partner.
What this tells us is that the business of medicine in Oregon is financially unsustainable. It is at an inflection point, and the decisions we make in the next few years will determine the shape of Oregon’s health care system for years to come. Right now, however, the business challenge is being narrowly framed like this: “The reimbursement we are getting is not adequate to cover the cost of the care we are providing. Therefore: We need more money.”
In other words, we are not questioning the underlying structure of the system—we are not questioning the business model on which it is built, nor the financial incentives that drive it. We are simply looking for more money to pay for the same thing. As Einstein is reputed to have observed: The definition of insanity is doing the same thing over and over again and expecting a different result.
This evening I was asked to discuss “The Road Ahead: Healthcare Trends and Leadership Priorities.” To me, it’s very simple and very clear. The overarching trend in our healthcare system is the accelerating drift toward financial unsustainability. The overarching leadership priority is to address the total cost of care. Period.
Why? Because more money will not fix what’s wrong with our health care system, nor will it provide the long-term financial stability that hospitals and practices need to continue to operate as viable economic entities. In fact, as I will discuss in a moment, there is no more money—we are nearing the end of the road as far as an open-ended subsidy of an overly complex, inefficient and hyperinflationary health care system is concerned.
We simply can’t afford it. The system itself is unsustainable. And unless we can put the system on a sound financial footing, the multiple practices and institutions of which it is comprised, will continue to struggle … and fail along with it
Today across Oregon, physician practices and hospitals remain (understandably) focused almost exclusively on their immediate financial challenges, as though they are immune from what is happening around them. No one is suggesting—least of all me—that practices and hospitals should not be addressing the short-term financial circumstances that threaten their stability. We need to keep the doors open. At the same time, however, unless we are also willing to address the larger system problems that are contributing to this immediate financial distress, we will simply continue to move from one crisis to another.
Yet, today—in spite of the glaring fragility and instability of our health care system— no serious conversation about the future of that system is happening anywhere in Oregon, an omission made more astounding by the fact that health care is the largest all-funds expenditure in our state budget, and the second largest General Fund expenditure.
Despite the growing financial stress all around us, the health care landscape remains fragmented and contentious, with no center and no shared vision for the future. It is characterized by a politics of scarcity, driven by short-term financial considerations, rather than by mission, or the long-term stability of the system itself. Across the board, payers, providers, labor, and health care consumers are operating in silos, as though they are separate unrelated entities—when, in reality, they are all part of a larger ecosystem which, itself, is unsustainable and drifting irrevocably towards a fiscal precipice.
Now, let’s take a few minutes to unpack all of this, with the goal of demonstrating two things. First, why a strategy to simply seek more money to fund the current system is doomed to fail. Second, why the central leadership challenge for physicians and hospitals today, is to develop a shared vision for what we want our health care system to look like in 2030—the values we want it to reflect, and the path we must follow in order to get there.
Let’s start with the contract I discussed earlier. The contract between the provider and the person seeking care is easy to see and to understand. When I began my career as an emergency physician in Roseburg, Oregon—51 years ago last October—I was 27 years old and just four months out of my internship. And honestly, I was intimidated by my new responsibility.
What I remember the most about that first year, is how vulnerable the people were who came to see me. They were sick or injured, frightened and looking for help. They didn’t know me and yet had put their trust, and in some cases their very lives, in my hands. It was an awesome responsibility and one I took seriously. I did everything I could to help them, used everything available, all the technology I could get my hands on, regardless of the cost. That’s what they expected of me. That’s what my profession expected, and what society expectd.
Even then sometimes I would fail. And on those occasions when, in spite of all the technology I had at my disposal, I was unable to save a life, I walked across the hall. The hall ran from the ambulance ramp into the hospital. On the right the hall opened through the big double doors that led into the ER. On the other side of the hall, directly across from the ER, was a smaller room equipped with a couch, some chairs, small end tables and a coffee machine where the family and friends of those who arrived at the hospital by ambulance waited for news of their loved ones.
Walking across the hall became an almost ritual acknowledgement of failure for me; and it always felt like a long, lonely journey to cross the thirty feet of tiled floor carrying nothing but bad news and compassion to tell someone that their husband or father or daughter—who had come to me for help— was gone. This poignant intersection between compassion and human mortality is difficult, but for me, it was the very compassion and humility involved that drew me into medicine in the first place.
When I was in medical school in the early 1970s, I was taught—and still believe—that at the heart of medicine lies a very personal relationship, an individual relationship between a doctor and a patient. That is the contract we have with those seeking our care.
That relationship is also why medicine has traditionally been practiced in a kind of “bubble,” one which encompasses the provider and the individual seeking care. Treatment decisions are made within the vacuum of the bubble, one person at a time, one life at a time—regardless of the cost involved— as though those decisions have no consequences beyond the sanctity of the relationship.
We must honor that contract—our contract with those who seek our care—but we can only continue to do so, if we also act to fulfill the other contract, the one we have with society. Because the treatment decisions we make inside the bubble do, in fact, have consequences outside the bubble—consequences for the larger society in which we practice.
The most far-reaching consequence of the treatment decisions we make for individuals—and the cost of the system in which we practice—is that they deprive other individuals of access to needed care. We’re just not taught about these consequences in medical school—nor are they readily apparent to individual practitioners inside the bubble.
Indeed, I might have continued to practice in the splendid isolation of the bubble had I not been elected to the legislature in 1978, and for an experience I had in 1986, during my first term as Senate President. In those days, the legislature met only every other year—and during the interim between sessions, a legislative Emergency Board, co-chaired by the Speaker of the House and the President of the Senate, managed the state’s fiscal affairs.
In the spring of 1986, during the interim following the 1985 regular legislative session, the state budget fell out of balance by some $35 million, nearly half of which was due to unanticipated cost increases in the Medicaid program. At its May 1986 meeting, the Emergency Board acted to fulfill its constitutional responsibly to rebalance the budget. To do so, we reduced state reimbursement rates for doctors and hospitals by over a million dollars, and changed income eligibility criteria for the Medically Needy program, thus excluding some 4,300 poor Oregonians from state health care coverage.
Five months later, when I was back practicing in the ER in Roseburg, I begin to see some of the people who had lost coverage because of that decision. One was a middle age man with a history of hypertension, who I will call Mr. Johnson. He arrived by ambulance, incoherent and with an obvious left-sided neurologic deficit. A CT scan confirmed that he had suffered a stroke. After stabilizing him in ER, I admitted him to the intensive care unit, and called the neurologist on duty. Then, I walked across the hall.
Mrs. Johnson was waiting anxiously, sitting on the very edge of a chair with her hands clasped together, her wrists pressed between her knees, rocking back and forth. I sat down beside her and told her that her husband had suffered a stroke, that he was in critical condition and, while I did not believe his life was in imminent danger, it was too early to know to what extent he would recover. I told her that a neurologist was on the way in and would be able to give her more definitive information about the prognosis.
She told me that her husband had been diagnosed with high blood pressure three years earlier, placed on low salt diet, and given a prescription for a beta blocker. He worked as a janitor, getting paid minimum wage, which in 1989 was $3.35 an hour. Mrs. Johnson had a part-time job as a hostess at a restaurant. They had been eligible for Oregon’s Medically Needy program, so he was able to afford his medication and see a primary care doctor from time to time.
Earlier that year, however, he suddenly became ineligible for state health insurance coverage, although neither of them understood why. Nothing has changed in their lives—their income had not gone up, they were still working hard, trying to pay the rent and keep food on the table. He lost his primary care doctor and, after a few months, he stopped taking his medication because of the cost.
As I walked Mrs. Johnson up to the ICU, it struck me that I was just as responsible for her husband’s stroke as was his hypertension. He was the victim of an implicit rationing decision, in which I had participated five months earlier, a decision to deny health insurance to 4,300 Oregonians— people I didn’t even know—to balance state budget.
I had walked across the hall many times during the decade I had been practicing in the emergency room. And on each of those occasions I knew that I had done everything I could to save a life. This was different. In this case, I had made a decision that led to avoidable human suffering, a decision that might cost of life—not a medical decision, but a political decision with medical consequences.
This was a direct consequence of the total cost of care. The fact is, that the cost of the treatment decisions we make for one individual, impacts the ability of others to get care. And contributing to, passively condoning or simply ignoring unnecessary cost in the system—whether that is due to poor care coordination, overtreatment, low-value care, or overpricing—leads to countless others losing access to care…people like Mr. Johnson. And some of those people will die.
Our contract with society is to ensrue that does not happen. Simply seeking more money to fund an overly complex, inefficient system—in which between 25 to 30% of the cost has no relationship to a positive health outcome—does not fulfill that contract. In fact, it contradicts the basic tenant of the Hippocratic Oath to ‘Do no harm.”
I am not suggesting that practitioners are intentionally undermining the social contract. I don’t believe they are. The problem is rooted in the way the business of healthcare is financed—which disconnects those who are paying for our health care system from the cost drivers that make it so expensive—and from the relationship between cost, access and health. Let me try to make that connection more explicit.
Health care is perhaps the only business that produces goods and services that almost none of its customers can afford. Think about it. The only way this works from an economic standpoint, it that the cost of healthcare for individuals is heavily subsidized increasingly with public resources.
These subsidies are provided either directly through public programs like Medicare and Medicaid, or indirectly through the public subsidies in the ACA individual market, and through the tax exclusion for employer sponsored health insurance—which exempts the premiums paid by employers from federal income & payroll taxes. This amounts to an annual public subsidy for employer-based coverage of over $270 billion.
Today, the vast majority of Americans depend on some form of public subsidy to help them cover the cost of their health care. Medicaid is funded with state and federal dollars. If you are in the individual market and get your care through an ACA exchange, you get a federal subsidy. If you have employer-sponsored group coverage, your subsidy comes from your employer and from the federal treasury. And if you are on Medicare, your healthcare is financed primary with federal dollars.
The point, is that the business of practicing medicine (or running a hospital) only works, as long as the government and private sector employers are able and willing to pay these subsidies. As the cost of health care continues to escalate, however, both public and private payers have adopted a variety of strategies to limit their exposure to the cost escalation—not by trying to reduce the total cost of care—but, rather to simply shift the cost to someone else.
States, because they are constitutionally required to operate balanced budgets, are increasingly put in the position of funding the growing cost of health care, by reducing what they spend on education, public safety or other priorities, At, some point, they shift cost to individuals by changing income eligibility requirements to reduce the number of people covered. That is exactly what the Emergency Board did in 1986 when it dropped 4,300 Oregonians from state coverage.
Since the federal government is not required to operate on a balanced budget, it pushes the cost of Medicaid and Medicare into a growing national debt—leaving our children and grandchildren to pay the bill. I Leave it to you, to decide whether this is a morally defensible strategy.
Employers shift the cost of healthcare to their employees through increased premiums, copayments and deductibles—often to the point that, for all practical purposes, they are uninsured. Small businesses that are not required to offer health insurance under ACA, may simply drop coverage altogether
Cost shifting is a direct response to the total cost of care. And the end result of cost shifting is a steady increase in the number of uninsured and underinsured people who cannot afford to pay you for the cost of the care you are providing, further eroding your margin.
The point here, is that the overall cost of the care we are providing is compromising the ability of hundreds of thousands of other Oregonians to access needed care and, in the process, undermining the financial stability of the business of medicine. And that’s not all. The relentless increase in the total cost of healthcare, is actually undermining the health of the population—and driving huge avoidable costs across the system itself.
We know that among those things that have the greatest positive impact on lifetime health status, medical care is a relatively minor contributor. Far more important, are things like healthy pregnancies, stable families, good nutrition, affordable housing, safe neighborhoods and economic opportunity. Yet, as the cost medical care continues to grow, it undermines our capacity to invest in those things that would have a far greater impact on population health.
For example, over 85% of our health care budget is spent treating chronic conditions (including mental health and substance use disorders), and according to the CDC, over 80% of chronic disease is preventable or modifiable. The majority of chronic conditions are linked to a short list of risk behaviors, such as smoking, poor nutrition, physical inactivity, and excessive alcohol use.
Many of these risk behaviors, in turn, can be traced back to maternal stress—both before conception and during pregnancy. The growing science of epigenetics, has documented that poor nutrition and maternal stress can alter genetic expression in the unborn child, dramatically increasing the risk of poor cognitive functions, learning disabilities, the risky behaviors just mentioned, mental health and substance use disorders and the early adult onset of many chronic illnesses, from diabetes to cardiovascular disease.
All of these things are the direct and indirect consequences of an overly expensive healthcare system—a system that is increasingly unsustainable. So, reducing the total cost of care is of paramount importance for three reasons, First, to ensure that cost is no longer a barrier to access, Second, to create space in public sector budgets to make long-term investments in the socio-economic determinants of health. And third, reducing the total cost of care is the only viable way to put the practice medicine on a sound, sustainable business footing.
To illustrate the importance of this, for the future of the practice of medicine, let’s return to how the business challenge is currently being framed, and ask a few questions:] “The reimbursement we are getting is not adequate to cover the cost of the care we are providing. Therefore: We need more money.” Given what we have just discussed, where do you think the money is going to come from?
It’s not going to come from individuals, most of whom already can’t afford the cost of medical care. That’s why we have health insurance in the first place. And having health insurance is no guarantee that you can actually pay the bill. Indeed, the leading cause of personal bankruptcy is the inability to pay a medical bill, and the majority of those who go bankrupt from health care debt are insured.
And it’s not going to come from the government. States don’t have it, and the cost of health care is already in direct competition with funding for education, child welfare, social services, wild fire suppression, and upstream investments in the social determinants of health. And expecting a significant increase in federal reimbursement for health care is magical thinking.
First, the Trump administration is moving in exactly the opposite direction. Second—and more importantly—even our current level of health care spending being borrowed from future generations. Cost of Medicare Medicaid is a major driver of our national debt and spending on these two programs is projected to rise by 73% percent over the next decade and will exceed all other categories of federal spending by 2028. The national debt is already $36.2 trillion – compared to $18.8 trillion in 2015– a 92% increase in only a decade. We cannot borrow our way to a sustainable system.
That leaves commercial payers—and the money is not going to keep coming from them either, at least not for much longer. Because both Medicare and Medicaid have fee schedules, public sector reimbursement is well below commercial rates. As a result, providers seek negotiate higher rates in the commercial market to compensate for lower public payment. But, as we have discussed, this simply shift cost to employers—and, eventually, to employees—who can’t afford it, and they show up in your practices as uncompensated or undercompensated care.
The ACA individual market is already unaffordable for many Oregonians, as is the small group market, where over 90% of Oregon’s employers purchase health care coverage for their employees. Yet this year, Oregonians will see yet another rate increase—an average increase of 8.3% in the individual market and over 12% percent in the small group market. Any anyone who believes that employers will continue to passively absorb double-digit rate increases, year after year, is operating in a different reality.
The money isn’t there. Ron Heifetz, founder of the Center for Public Leadership at the Harvard Kennedy School, has a way to describe what we are facing today. He categorizes problems into the three types: Type I, Type II and Type III.
A Type I problem would be something like bacterial pneumonia. You come to me as a physician, I give you an antibiotic, and you get better. The responsibility for solving a Type I problem, rest with the physician, not with the patient.
A Type II problem would be something like cardiovascular disease. I can give you medication to lower your blood pressure and a statin, but if you don’t stop smoking, start exercising and change your diet, you’re not going to get better. The responsibility for solving a Type II problem, rests with both the physician and with the patient.
A Type III problem would be something like terminal cancer, where there is no cure. The only solution is for the physician to work with the patient and their family to figure out how to respond to a set of circumstances that they cannot change.
Our healthcare system is set as though health is Type I problem when, if fact, most of what we are dealing with are Type II and Type III problems. The point is that practitioners alone cannot put our health care system back on a sound financial footing. It will also require the active participation of hospitals, payers, labor and health care consumer—all moving toward a shared vision of the future.
Health care financing, in particular is a Type III problem. A truckload of cash is not going to magically back up at the Oregon border and dump in enough money to support our current healthcare system. The truck isn’t coming. And the sooner we accept that, the sooner we can turn our collective attention and energy to the real problem—to the elephant in the room: reducing the total cost of care.
I am not suggesting that we don’t need an additional infusion of resources to stabilize medical clinics and hospitals in the short term. But the only way that is going to happen, is if that money is part of a larger intentional, and coordinated strategy to transition the system to one that is both affordable for individuals and sustainable for providers.
The only way we can move beyond day-to-day crisis management, the only way we ensure the long-term financial stability of our healthcare system, and the practices and intuitions of which it is comprised, the only way we can fulfill our social contract—is to squarely address the total cost of care by redesigning our business model and the financial incentives on which it is built.
For that to happen, we must develop a shared vision for what we want our health care system to look like in 2030—the values we want it to reflect and the path we must follow in order to get there. That’s what is missing from today’s debate—and I believe that the overarching priority for practitioners today must be to provide the leadership necessary to develop that vision.
The central question is whether we will continue to operate within the false security of our individual silos, blaming others for our predicament, while feeding the vicious cycle that is accelerating our drift toward the lip of the falls.
We are all in the same canoe, whether we are willing to acknowledge it or not. We can paddle together toward a safe shore, as we have done in the past, or we can continue to grip our individual stakeholder paddles, trying desperately keep our end of the canoe headed upstream—comforting ourselves in the knowledge that those in the other end will go over the precipice before we do.
We can do better—and we must do better. Failure is not an option, because the ultimate losers in this scenario are the very people we are supposed to be serving: our fellow Oregonians who need and deserve timely access to quality, affordable health care.
The choice before us is simply this: are we going to lead or are we going to continue to react? Will we remain the passive victims of the status quo, or will we become the proud architects of a new and brighter the future?
