Reinertsen was appointed CEO of CareGroup in 1998, in the hope that he could implement cost cutting measures that would save the financially troubled institution without adversely affecting patient care. In this excerpt from his interview with FRONTLINE, he predicts that ultimately the health consumer has to take greater financial responsibility for the rising costs of health care.

We've allowed it to run to the point where people are getting far more than their employers and their government are, in fact, paying for. We need to either provide a more limited form of treatment from the form of "everything we always wanted," or we need to actually remove the waste from the system that is currently there. My own preference is to assume that there's waste and to remove it, rather than to assume that there is excess and ration it in some way.

It's very easy to very quickly start blaming the consumer for this problem. And that's not really where we should go. The truth is that the way in which the services are being provided to the consumer causes the consumer to believe that they are necessary and, therefore, they want those services. And the way they are provided is also extremely inefficient. Also, it costs a tremendous amount. The consumer wants the services, x-rays, pharmaceuticals, hospitalizations, visits to doctors, and all of these things we do far more today than we did 20 years ago. The exception is hospitalization--we don't go into the hospital as much. But we visit the doctor more. We get far more prescriptions per year than any population in history, and we pay very little for those out of pocket or have any other recognition of what the costs actually are.

So the demand is unchecked, the supply is inefficiently organized, and the result is that it costs us a lot more to deliver them than we're getting paid for. . . . .

Do you think it's a good idea for doctors to be thinking simultaneously about care and about the cost of care?

I think it's important for doctors to know the value of the services they're providing. That means they have to know both the quality of the care and the cost of the care. Let me give you a specific example.

I used to take care of a lot of patients in a first-dollar coverage situation in Minneapolis. . . . And they had no out-of-pocket costs for most care, and maybe a five-dollar co-payment for any prescription. I developed a certain way of taking care of them. After a few years, I started going out into the country, a couple of hours away, to take care of patients and see them in a small town one day a month. I did exactly the same sort of practice methods that I did in the city. After I saw patients back on the return visits, though, I began to learn something about the country insurance that I didn't understand about the folks in the city. The farmers out there would have catastrophic coverage, in which they would have a $5,000 deductible. After that, things were covered. They bought insurance so they wouldn't lose the family farm.

When I'd come back to see them a month or two later, they'd say, "Doc, do you know how much that pill you gave me costs?" And my bad answer was, "I don't know, what did it cost, John?" And he'd say, "Sixty bucks." And then he would ask a very important question: "Do you have something that would work just about as well, but would cost less?" And it turns out I did, but I just hadn't thought about it. He was paying out of pocket for this prescription, and I'd never had any mindset at all about what things cost, because my patients didn't have any mindset about it. It's very important in the doctor/patient relationship for us to be in sync on this one. I can be a valued adviser for my patients if they have concerns about the costs of the treatments or the interventions or the diagnostic methods that are being used.

Your doctors consistently say they're most worried about the doctor/patient relationship, that patients no longer trust me to give them the best care. They think the doctor is worried about the bottom line.

We've had an interesting transition in the country from the old days. There wasn't any insurance at all, and the doctor just took care of the patient in return for whatever they could pay, in which case the doctor's interests economically were, in an interesting way, not necessarily all aligned with the patients. And then there was an era where third-party payors paid on an indemnity basis for whatever the doctor and patient decided they want to go and get. Then managed care came in and said, "No, you can't get these things," after the doctor ordered them. The second era of managed care put the risk on to the doctor, so the doctor's pocketbook was now paying for the decisions. And that's the point that you're describing where the distrust starts to get into the room. We need to get past that phase of things, very quickly, and many plans are doing this. We are working at ways of getting out of such arrangements, where we, in effect, are aligning our interests with those of the patient.

The real critical thing for patients to understand is that when they walk into a room with a doctor and they sit down and the doctor's evaluating them, how that doctor is paid is a very important thing for the patient to know. The very best way for a doctor to be paid is on a salary, where whether the doctor makes decisions to do something for the patient, a procedure, an x-ray or something, or not to do something for the patient is totally irrelevant to the doctor's income. The doctor is simply there to make the best judgment possible on behalf of the patient. That is the very best method of payment. It's not silly or unwise for the doctor to be aware of costs when doing that, because ultimately the patient and the taxpayer literally pays for all of these costs one way or another. But there's no personal income at stake. A firewall needs to be drawn . . .

How do you get out of the situation where you're in now--that a lot of your doctors say they're in now--where the financial incentives are on them to limit treatment, particularly primary care physicians?

Probably the only way, ultimately, that we can get out of a situation where physicians are put in this bad guy role of limiting treatment is to put the patients back into a role of having a stake in the cost of the treatment. Then the physician's and the patient's interests once again become aligned, like my rural farmer. That farmer had a problem, and he knew that I could make recommendations one way or the other. If I made a very costly recommendation, I knew and he knew that he was paying the bill. And he might ask me to try a different tack here, and see how it goes, and I could counsel on the advisability of that. And I can tell you, very interestingly, I never ever encountered wanting to do something expensive because I knew it was potentially lifesaving or was really important, and had one of those people with catastrophic insurance coverage in my farmer population ever say, "No, I'm not going to do it, Doc, it costs too much." I never had trouble convincing them about what the right thing was to do. They often reminded me about how expensive my recommendations were, and I would often be able to find a less expensive path for us to go in. That aligns those interests. I didn't lose any trust with those patients. In fact, we had a better trusting relationship than I had with first-dollar coverage HMO patients in my practice in Minneapolis.

The only people making money in health care right now are the pharmaceutical companies and the device manufacturers. They're able to sell their wares to an intermediary, in this case to a hospital, who then delivers their products. If it's a device, the hospital puts it into the body of a patient to help them get better, or gives them the medications to cure their cancer. And then has to go to try to collect the bill. We do treatments here that cost us $50,000 just for the treatment in the hospital, for which the total payment from the federal government and from the payors for the whole hospitalization is $11,000. And we do those every day. We're probably doing several today, such as giving chemotherapy like Interluken-2 for some advanced cancers. The people that are making the drug are getting their investment repaid. We bought it from them. It costs us $50,000, we're putting it into a patient, and getting paid $11,000 for it.

And when you're saying that the patient needs to be a co-payor, it's a fact that people are complaining about paying higher health insurance premiums. Employers are shifting more of the burden onto their employees to pay more of the premium. We have 44 million people who have no insurance in this country today. . . . We have over-insured 80 percent of the public, and that costs us so much that we can't buy it for the rest of the 20 percent. By over-insurance, I mean they have access to a lot of stuff that simply has little or no value, and it is being done every day all over the place--x-rays, knee arthroscopies, and procedures of one kind or another are being done all over America today that have relatively little value, although they are evidence of quality in the sense that they show that we're trying hard.

And the reason they are being done to the extent they are, and the reason that they are priced as highly as they are, is because none of them have had to stand the scrutiny of a patient market saying, "Wait a second, if I have to buy that, I'm not paying $800 for this x-ray. I might pay $300 for it." I think several things would happen if patients bore a greater portion of the costs for certain kinds of interactions at the time they happen. One is that the price would come down, because the market wouldn't sustain it. If patients judge many things as having no value, the market would not sustain the prices. And the second is the frequency with which they're done would dramatically decrease. The total cost would go down so far, we could extend coverage to the other 20 percent who now don't have it.

	Read Reinertsen's entire interview