← Book Two · The American Healthcare Investigation
Behind the System
How Financial Incentives Reshaped American Healthcare
It began in an examination room, not a boardroom: a routine diagnostic test the author's own physician considered essential, delayed six weeks by an insurance review that had nothing to do with medicine. That delay sends Behind the System into the machinery behind American healthcare — a "denial machine" that reverses itself four times out of five whenever a decision is actually appealed, the financial and moral damage that machinery inflicts on patients and clinicians alike, the fragmentation and consolidation driving costs to roughly twice the level of comparable nations, and the arrival of private equity and Wall Street in an industry built to heal people.
The Investigation
What this book is about
Book One of this trilogy, Before the Counter, began with something almost anyone in America could recognize: a prescription that cost far more than it should, for reasons that seemed to dissolve the moment anyone tried to explain them. That investigation followed the price of a drug backward through a hidden supply chain and arrived at an uncomfortable conclusion — the price at the counter was never really about the medicine. It was a symptom.
Book Two, Behind the System, picks up that trail. Its question is broader and harder: how did healthcare financing — the system of rules, contracts, incentives, and institutions built to pay for medical care — become more influential than the care it was created to support? The investigation that follows does not begin in a courtroom, a boardroom, or a congressional hearing room. It begins, as the author tells it, in an examination room, with him as the patient.
A Diagnosis Delayed
The author, Robert W. Coleman, spent his career as a clinical pharmacist and healthcare executive, eventually serving as Director of Clinical Pharmacy Services at the VA Palo Alto Health Care System. He understood, better than most patients ever will, why insurance companies review claims and why prior authorization exists. He had spent decades on the administrative side of that machinery. He thought he understood it.
Then routine blood tests revealed that his chronic anemia was worsening, and his hematologist recommended a bone marrow biopsy paired with specialized genetic testing. From his physician's standpoint, the two procedures were inseparable parts of a single diagnostic process. He expected the biopsy to be scheduled within days.
Instead, the process stopped. The insurance company questioned coverage for the genetic testing, and what followed was not a medical conversation but an administrative one. The delay lasted nearly six weeks. During those six weeks, nothing about his medical condition changed. Only one thing caused the delay — the financing system had inserted itself into the diagnostic process, and payment, not medicine, was what everyone was actually waiting on.
The testing was eventually approved. The biopsy confirmed myelodysplastic syndrome, and the genetic testing identified the mutation his physician had suspected from the start. But the six weeks were never given back. That experience turns this book from an outside investigation into a personal one, and it produces the question the rest of Behind the System is built to answer: when the same delay recurs across different insurers, hospitals, and states, is it a string of isolated hiccups, or evidence of a system behaving exactly as designed?
The Denial Machine
The investigation's first stop is the machinery that produced the author's own six-week delay: the vast apparatus of review that now stands between a physician's recommendation and a patient's care. The book is careful not to caricature this apparatus — some review is not only defensible but necessary. The problem, the investigation finds, is not the existence of review. It is its accumulation. Over decades, one reasonable rule was layered on top of another, until they built a bureaucracy of a size and intricacy that no one designed on purpose and few people fully understand.
Follow that machinery to its sharpest edge and a few recurring mechanisms appear. Prior authorization, once a narrow check on a handful of expensive procedures, is now applied at enormous scale: in Medicare Advantage alone, insurers made roughly fifty million prior-authorization determinations in a single recent year, and more the year after. Step therapy, or "fail first," requires patients to try a cheaper, insurer-preferred drug before their physician's actual prescription will be covered. And opaque denials — claims refused under vague, catch-all reason codes — are, by design, sticky.
The single most revealing fact in this part of the investigation is what the book calls the appeal paradox. When a Medicare Advantage prior-authorization denial is actually appealed, it is overturned — fully or partially — roughly 82 percent of the time. Four denials in five, reversed on review. And yet appeals are rare: even within Medicare Advantage, only about one in eight denied prior-authorization requests is ever challenged, and in the broader world of ordinary claims the appeal rate falls to a small fraction of one percent. A process that is wrong four times out of five whenever someone contests it is not, on this evidence, a process that is usually right.
The chapter is careful to hold both truths at once. Some denials are correct, and federal rules that cap what insurers may keep from premiums limit the crudest version of a "deny to profit" story. But a system that reverses itself four out of five times on appeal, while being appealed only rarely, is transferring effort, risk, and cost onto the people least equipped to bear them.
The Human Damage
Having mapped the machinery, the investigation turns to what it does to people. The book draws a firm distinction before going further, one that runs through the entire trilogy: the people who deliver American medicine are, overwhelmingly, extraordinary, and they are not the target of this investigation. The financing system built around their work is.
The pattern the investigation traces has two connected wounds. The first is financial. Roughly one hundred million Americans carry some form of healthcare debt, and medical bills are a major contributor to personal bankruptcy — a predicament largely unique to the United States among wealthy nations. In a 2025 Commonwealth Fund survey, among people whose care was blocked by a prior-authorization denial, most reported real worry or anxiety, roughly four in ten said the denial delayed their care, and close to three in ten said a health problem actually worsened while they waited. And the burden is not shared evenly — denial rates run measurably higher among patients of color and lower-income patients.
The second wound is moral, and it falls on clinicians. By careful study, physicians now spend roughly two hours on computer and desk work for every hour of direct patient care. A growing number of clinicians and researchers argue for a more accurate term than "burnout": moral injury — the distress of being forced, again and again, to act against one's own professional judgment about what a patient needs. American physicians report psychological distress at roughly double the rate of other American workers.
The Cost Explosion
If these are the outputs, the investigation next asks why the most expensive healthcare system in the world keeps producing them. The United States spends roughly twice as much per person as the typical wealthy country, without consistently achieving better health for the money.
No single culprit explains the difference. The explanation lies in the shape of the whole system — and the defining feature of that shape is fragmentation. The United States runs a bewildering multiplicity of payers — private insurers, employer plans, Medicare, Medicaid, state programs, pharmacy benefit managers, hospital systems, and independent practices — each with its own contracts, payment rules, and billing codes. It is why a large American hospital can employ more people to bill for care than to deliver it.
Fragmentation carries a second, harsher cost: it is difficult to police. That vulnerability became visible in 2025, when the Department of Justice announced the largest healthcare fraud takedown in its history — 324 defendants charged in schemes involving more than $14.6 billion in intended losses, double the previous record. The book keeps this in proportion: $14.6 billion is a small fraction of the nearly $5 trillion the country spends on health care annually.
A second force compounds fragmentation's cost: market power. Wherever bargaining power concentrates, it tends to push prices toward whoever holds it. Beneath both sits the deepest driver of all — an incentive structure. When a payment system rewards volume, organizations produce more volume; when it rewards higher prices, higher prices multiply.
The Consolidation Machine
That observation about market power leads directly into the investigation's next stage: tracing who actually gained influence as American medicine reorganized itself into fewer, larger hands. Over a few decades, hospitals merged into regional systems, insurers combined into a handful of giants, independent physician practices were absorbed into corporate organizations, and pharmacy benefit managers came to control an ever-larger share of prescription benefits.
The most consequential form of this consolidation is not sideways but vertical — a single corporate parent coming to own the insurer, the physicians, the pharmacy benefit manager, and the pharmacy all at once. As of early 2024, roughly 78 percent of U.S. physicians were employed by hospitals or corporate entities rather than working independently. UnitedHealth's Optum alone employed or was affiliated with about 90,000 physicians — nearly one in ten doctors in the country — inside a corporate family that also owns one of the nation's largest insurers and one of its largest pharmacy benefit managers.
An insurer's revenue is largely fixed — it collects premiums — while its costs are variable, since it pays for care. The most direct route to a wider margin is therefore not a healthier population but a smaller payout per member, a tension so built into the industry that its own vocabulary calls money spent on patient care a "medical loss ratio." The book takes care not to overstate this: federal rules require insurers to spend 80 to 85 percent of premium dollars on actual care, capping how far the "minimize payout" logic can run. The defensible finding is narrower: the dominant payment model under-rewards prevention relative to treatment, and a generation of consolidation gathered that misaligned incentive under fewer, larger roofs rather than correcting it.
Wall Street Moves In
As health care consolidated into large, cash-generating organizations, it began attracting a kind of participant that had previously paid little attention to hospitals and doctors: outside investors. Much of this capital arrived through private equity — a firm raises a fund, uses it plus substantial borrowed money to buy a company, works to raise its value over a holding period of roughly three to seven years, then sells.
Private equity owned or backed roughly 6.5 percent of U.S. physicians in 2024, up from about 4.5 percent a few years earlier — still a minority nationally, but concentrated intensely in particular local specialty markets, where a single firm's share can exceed 30 or even 50 percent.
The book grounds this pattern in a fully documented case: Steward Health Care. In 2010, the private equity firm Cerberus Capital Management bought a struggling nonprofit hospital system in Massachusetts and renamed it Steward. In 2016, Steward sold the land beneath its hospitals and leased the buildings back, generating cash while committing the hospitals to steep ongoing rent. In May 2024, that arithmetic ended in bankruptcy: roughly nine billion dollars in liabilities across thirty-one hospitals in ten states.
A large study in JAMA found that after private equity acquired a hospital, patients suffered about a quarter more hospital-acquired conditions than at comparable hospitals. A broader systematic review of private-equity ownership across healthcare settings — hospitals, physician practices, nursing homes, and more — found prices tended to rise afterward: one synthesis of cost-focused studies found increases in nine of twelve and decreases in none.
“A process that is wrong four times out of five whenever someone contests it is not, on this evidence, a process that is usually right.”— Behind the System
What the World Can Teach Us
By this point, a reasonable reader might conclude that all of this is simply the unavoidable price of modern medicine in a wealthy nation. The investigation tests that assumption by looking abroad. In 2024, the United States spent roughly $14,775 per person on health care. Switzerland, the next-highest spender, spent about $9,963. The average among comparable wealthy nations, excluding the United States, was roughly $7,371.
The sharpest, least contestable lesson concerns administration. The United States spends roughly $1,055 per person on the paperwork of insurance and billing, against about $245 per person in comparable countries — five times as much. Notably, Maryland has run a version of uniform hospital pricing across all payers for decades — a design many Americans imagine as foreign has operated quietly inside the United States for two generations.
None of this makes other systems utopias. Canada's median wait from referral to treatment ran to roughly thirty weeks in 2024. But Germany, Switzerland, and the Netherlands deliver short waits under universal systems, which means long waits reflect particular budget-and-capacity choices, not universality itself.
Why Reform Falls Short
If the American arrangement is a design rather than a fixed fate, it should be reformable — and America has tried relentlessly. None of that is failure, and the book insists on saying so plainly. The real question is why, after decades of serious reform, the core problems — cost, complexity, fragmentation — remain so stubbornly familiar.
The book offers two answers. The first is structural, illustrated through the image of renovating an old house: replacing the roof, rewiring the electrical, installing new windows are all real improvements, but if the foundation is cracked, the deeper problems return no matter how fine the new roof is.
The second answer is political. Year after year, the pharmaceutical and health-products industry is the largest spender on federal lobbying — roughly $391 million in 2024, a record $457 million in 2025. But the book resists treating money as an all-powerful lock on outcomes: in 2022, despite the industry's record lobbying, Congress passed a law letting Medicare negotiate the prices of some drugs.
Principles Before Politics
Before that design question can be answered, the investigation pauses to ask what any workable financing system is actually for. Drawing on the evidence assembled across the book, five design principles recur wherever systems work well: simplicity, aligned incentives, transparency, accountability, and coherence.
Crucially, the book insists these principles name no political side. A single-payer system can satisfy or fail them; so can a system of competing, regulated private insurers. Their purpose is to hand the reader a shared yardstick: run any proposal, favored or opposed, down the same five questions, and judge it on the answers rather than on who is proposing it.
The Architecture Beneath the System
The final chapter assembles everything the investigation has traced into a single image. American health care, it argues, did not arrive at its current condition through one law or one villain. It accumulated — each individual decision reasonable in its own moment — until the financing system became intricate, fragmented, and remarkably resistant to change.
Measured against the five principles from the previous chapter, the verdict is not close. On simplicity, the architecture fails. On aligned incentives, it fails. On transparency, it fails. On coherence, it fails most of all. Only on accountability does it earn a partial mark.
Behind the System deliberately stops at diagnosis. It names no policy, endorses no model, and tells no reader which bill to support. Evidence first, solutions second. If the architecture is what shapes every outcome this book has traced, then improving those outcomes may require more than repairing its parts — one Book Two deliberately leaves unanswered: if healthcare financing is the problem, what should replace it?
That is the question Book Three, Beyond Reform, takes up next.
Not the same book as the standalone Hostile Takeover — this trilogy volume was originally drafted under that title before being renamed. How the two relate.