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Is American Medicine Just a Big Market Failure?
This brief offering from Elevance is disturbing. The continuing consolidation of hospitals (some cities now have only one giant provider owning all or nearly all local hospitals) has lowered costs (mostly by firing people) but has not slowed price increases and appears to have measurably lowered the quality of service. Higher prices, fewer jobs, and worsened outcomes for consumers but potentially higher profits sound like the stock description of some corporate villain in a movie or TV show.
A few years ago, my daughter-in-law, an RN who left nursing for a better-paying administrative job in an expanding hospital conglomerate, almost quit when she was assigned to call doctors listed on a computer printout to tell them that they were spending too much time per patient and that was deemed unacceptably inefficient. Several told her that they were going to quit anyway because it was an intolerable setup.
My first legal job as a law student paralegal was doing document searches at NIH and the Library of Congress for medical malpractice litigators. (The world would not be online for another decade or so). I was hired in part because I had been a clinical lab tech in the Army and had worked nights at a local large hospital lab so I could navigate the material. Aside from a few cases involving really bad docs, it was surprising how much of a liability problem there was in information management and flow: Important things missed with disastrous results.
It seemed (seems?) as if MDs had to be dragged kicking and screaming into a far more integrated team approach in an increasingly complex environment. How do we encourage, liberate, and reward the best performers at every level and yet still make the quality of delivery uniformly better? I have seen firsthand that a change of shift from one set of nurses to a less gifted or less motivated crew is like night and day for service quality (and malpractice risk). The personal touch matters. A lot of medicine appears to remain a matter of intuition, empathy, art, and virtue, not just science. Are mega-corporate environments by nature hostile to that reality?
Maybe I have no standing to talk about medical efficiency or pricing. As an elderly but still working American, it was vastly cheaper for me to dump my employer health plan and go on Medicare with an AARP supplemental plan. I am sent to specialists and labs not because of any serious diagnoses but because there seems to be a kind of built-in surprise that no health major issues have been found, thus further testing and checkups seem warranted on account of my being old and still alive. Having seen the difference in bills between what the providers normally charge and what Medicare authorizes (and what trivial amounts I pay), I feel like I am ripping off both the private sector and the federal government with each encounter with the healthcare system.
Supposedly, the strongest argument against government-owned medicine is that the free market delivers higher quality and a higher output of care at an optimal cost. Somehow, we have managed to insulate much of medical pricing from market pressure such that we do not control costs nor deliver improvements in the quality or volume of services provided. What are we doing wrong?
Published in General
Getting the government involved in healthcare at all.
There is no incentive for lower costs when providers know that the government will pick up the tab. (See also higher education, among other things.) Rather, this incentivizes higher costs because payment is all but guaranteed.
Patients are very often not the customers of healthcare providers. They’re merely the vector by which money moves from government to provider. And they are treated as such.
There’s way too much government involvement to blame the market for any failure.
Leave it to an idiot like me to comment on an area I know nothing about, except my own encounters.
It seems this is a three stranded issue, wrapped around itself:
Insurance is for catastrophic events with statistically low probability.
There should only be a relationship between the doctor and the patient – no third parties.
Health records should be provided by the doctor directly to the patient themselves.
There are a growing number of docs who are removing themselves from the bureaucratic behemoth and refuse insurance and medicare/medicaid. That’s fine until you run into a catastrophe – cancer, rare disorders, accidents, etc. I think that’s where something like a health cost sharing organization comes into play, but those cap out after a certain amount (as does health insurance).
There’s so much in your post to talk about, and you probably know this, but the reason for the agglomeration of “providers” is that at this moment, Medicare, Medicaid, and the insurance companies set reimbursements geographically for the most part. The fewer the providers, the fewer the price competitors. If you are the sole provider of MRIs in your area, you get to set the price.
The hospitals are dancing with Medicare, Medicaid, and the insurance companies. The government tries to control pricing by taking action A. The hospitals respond by taking action B to preserve their level of income, something they really have to do. It takes a while because government moves slowly but eventually they respond by taking action C to reduce those action B prices. So hospitals take action D. And so it goes. Each trying to control their income and protect their assets.
Exactly. There is no market in health care. Competing on pricing is called “price fixing” and is treated by Medicare as fraud.
We have made competition illegal, and now we’re pretending to be surprised when prices go up and quality goes down.
Awesome post.
As you might imagine, I have A LOT to say about this. But the hurricane knocked a tree down (which just missed our house, thank God), so I have some work to do.
I’ll be back when I get tired.
@oldbathos, I’m hard-pressed to believe that this isn’t written ironically, or tongue-in-cheek.
If we can’t convince even people here on Ricochet that the problem with damned near everything is too much government, maybe the whole damned thing really is hopeless.
There is no market in most healthcare.
If you want to see free market healthcare in action, look to cosmetic surgery. Insurance is not involved. People compete not just on price but on patient/customer experience.
There is a reason that I, like many of my fellow therapists, have the long term goal of leaving insurance panels totally behind. I am down to three of the four I started with and looking to drop Aetna.
I think this is true for (most) veterinary health care as well.
Back during the Obamacare debate, I remember some commentator observing that the American health care “system” combined the worst aspects of both single payer/government and free market health care. That sounded about right to me.
There are 4 Trillion reasons per year to agree with this.
The correct move is to do away with most insurance (and taxes) and compel people to put money into a health savings account. Then we force price transparency into the system and remove tax incentives for employer proved health insurance. They say Singapore has a good system. They have great metrics for lifespan and total cost.
Glad you only have the tree down and not on the house. Looking forward your thoughts on this matter.
“Compel” is an interesting choice of word. That’s very anti-freedom.
I’m on board with forcing price transparency, though.
It used to be true for dentistry, too, but then dental insurance became much more widely available, and “unexpectedly,” as the economists would say, up went the costs.
To have a genuine market requires several things…
Both buyer and seller have to know what it is that’s being bought/sold.
Both buyer and seller have to agree on the price at which the transaction takes place.
In health care, buyers have neither. Is our physician any good? We don’t know and have no way to find out. John Madden used to do a bit about this …
”You want to know how a John Madden coached team performed against the Nickel defense you go to the record book and look it up. If you have to have a cardiac bypass, you’re keenly interested in whether your doc is 35 & 3 or 3 & 35. But you can’t find out.” It’s funny but it’s true. As consumers, we don’t know what we are buying
And we don’t know what it costs until after the fact. The best analogy I can think of is this…
Suppose you went into the grocery store and the shelves were filled with sealed brown paper bags labeled FOOD. What’s inside? Steaks and lobster? Maybe. Rice and beans? Could be. Fritos and Fruit Loops? Possibly. But you can’t open the bag until you get home. And there is no price listed. You’ll present your credit card when you arrive, but the store won’t charge your card until later. That’s health care in America for most of us.
I recently had abdominal surgery. Under “risks” the surgeon blandly said, “Of course, there’s a risk of perforation. I have perforated things, you know.” At least his honesty made me feel better.
@oldbathos I tried that Elevance link and nothing is coming up, interested to read that.
Interesting topic and post though. Except for a couple hip replacemnents about 7 years ago & a couple of stiches, I’ve been very lucky health-wise. I received very good care but must admit knowing what my employer pays for insurance vs. what we get/use – it’s not a very good deal.
Health savings accounts that accrue tax free, more fee for service procedures with price transparency & competition, high deductible plans (or high cost Gold Plated Plans with co-pays if that’s what you want), concierge medicine with “retainer-like” deposits, separating employment & health insurance and that would improve things dramatically.
Those savings accounts would increase dollar-wise (for most people) when young, healthy people and would serve as a buffer for high-deductable plans as people age. Health risks that are avoidable by lifestyle: obeseity, smoking & drinking, drug use, multiple genders, sexual partners/diseases… – those would increase premium costs.
Very interested in hearing what doctors& nurses here think.
If things are very bad in the world of “medical professionals,” they are about to become worse.
My spouse was informed that face-to-face meetings with the sleep specialist engaged by our local clinic are now a thing of the past.
Instead he had to drive over to the clinic, go to a special room and hook into a computer that allowed him to have his “office visit” via “tele-medicine.”
Only 2/3rds of the session was possible for him to understand as the static was a huge interference. When he mentioned to the doctor that it was not possible to hear her, she ignored his objection.
So it goes, as everyone, especially customer service people, tell us “No Worries.” Since a piece of equipment was ordered by the doctor, the clinic admins feel they have the right to bill Medicare for the full session.
I have thought of complaining to Medicare, but if they do not pay for this “doctor visit,” I imagine the clinic will come after us.
Again “no worries,” as we will soon be moving into medical care by AI. It is likely that AI will soon replace the “tele-medicine” scenario. I can hardly wait!
You can’t blame the market because health care isn’t in a free market. It’s so heavily regulated, there’s no room for innovations by insurance companies or the medical industry . . .
A potential issue I see with the “market” and “medical care” is that it seems there is only so much medical care people can use. In most markets the consumers have a lot more room to demand “more” and “better.”
No matter how much cars develop, I think there will always be room for consumers to demand better handling, more comfort, easier access, more carrying capacity, better safety, etc. No matter what the newest restaurant offers, there will be room for even better tasting food or a more entertaining experience. No matter how much clothes or dish washing machines develop, there will be some aspect on which improvement is possible.
But how much “medical care” can someone demand? Once the disease is cured or the injury fixed, what else can a medical provider offer or a patient demand?
Hospitals in the USA made an extra 26 billion dollars in profits during 2020 and 2021. This came about despite not allowing any of us who were COVID patients the cheap remedies that were available. Hospital admins happily complied with Fauci and CDC/NIH insisting on COV patients being given fentanyl, remdesivir, plus minor surgery allowing them to be intubated and then fingers crossed that these patients would be among the 25% of patients who survived the above protocols.
The modern hospitals have these lovely lobbies, fit for a contingent of Pharaohs. They can afford to present such a glowing, marble-enhanced lobby because they skimp on having decent help.
In Calif, in metro areas, most nursing assistants are hispanic, do not speak English, (or maybe they refuse to) and offer minimal assistance to patients because “No speak English.”
The nurses are traveling nurses rotated from one hospital to another, in short order. So on day one at a hospital, they do not know where the medical cabinet is, the nursing assistants won’t help them unless addressed in Spanish and then if the med cabinet is located, no one knows where the key is.
By the 4th or 5th day when the traveling nurse finally knows her way around, she is sent off to another hospital. In a different part of the metro area.
Patient care seems to be, at least in Calif, something that has not entered the equation with regards to staffing, nor does it include sensible health protocols.
A few hospitals still function as though patient care is a priority. An example: UCSF Hospital in San Francisco is totally diverse, but the staff from the janitors on up are exemplary at whatever their field happens to be.
The joke-y meme that went viral some weeks ago: a guy who needed 18 stitches in the USA, and same guy in Great Britain.
In the USA, he immediately got the stitches but also received a bill for 16,000 bucks. In Great Britain, the cost would be 22 pounds, except the guy would need to wait 15 months!
Yes. I often tell people that we oldsters are no longer patients, we are the product that our doctors are selling to the insurers. As product, we have very little input regarding our health care – unless we take a very active part in the transaction.
Or is it possible that at this point the two industries are deeply entertwined?
Once in a while, a break through is made.
Some time ago, an insurance executive was told that one reason that expenses related to possible heart problems were so high was that if someone went to their doctor during a normal visit and presented with chest pain, then pricey heart tests would be ordered.
It would be a week or two before those appointments would be possible. In the interim, anti acids could be prescribed. If the anti acids worked, it meant that the problem was related to digestive issues and heart burn. Then if there was no chest pain after those anti acids were used, then the heart testing procedures could be forgotten
But doctors liked getting the more expensive exams to happen.
Anyway that one insurance executive told others in that field and it was then ruled that anti acids would be required before the pricey heart testing. (Except of course if symptoms indicated there was an immediate heart problem.)
Sorry. This link will work: you can download the report from there.
Yes. Next question …
When I started doctors were professionals who were responsible for their patents 24/7. If there was a problem with one of their patients they were called any time of the day or night. Unless they wanted to take a vacation, in which case they arranged for a trusted colleague to stand in. This sort of coverage could be hard to come by, and so vacations were rare.
Was it hard? Yes. Did it lead to early burnouts? Yes. Did it result in high suicide rates, drug and alcohol abuse, and so on? Yes. Was there a high divorce rate? Yes. Did it give the patient the most personal care possible? Damn right it did.
These days doctors for the most part are little more than shift workers, and they don’t know who will be responsible for their patients for the 12 to 16 hours of the day that they are not. That is taken care of by an administrator, who the “doctor” doesn’t know either.
Who is responsible for this change? Women.
I’m joking here. But we let women in the profession, and they demanded these changes, as did some of the nancy boy “men” who came with them. Now women are over half of matriculating medical students.
I’m oversimplifying the situation, of course.
Nevertheless, screw it. I’m out. Good luck to you all.
This is not how markets work. There are three things that help consumers: 1) Yelp type customer reviews 2) Ratings, insurance and accreditation agencies, 3) branding. Anywhere in the world you can get a can of Coke that tastes like a can of Coke. You can generic blue jeans online, or you can order the Levi’s and know what you will get without seeing or touching. If there was a market, there are solutions that would fill the gap between patient and medical expert.
For a market to work, there has to be open pricing. The entire medical industry has a hidden pricing structure. Do you know what a procedure would cost. Do the medical facilities have open pricing? No – even medical practitioners don’t know, they spend half of their energy arguing with insurance companies over pricing.
My first inkling that more women in medicine may not be an unalloyed good came 50 years ago when while working the night shift in hematology (and covering other areas as needed) a brand new doctor made repeat visits to the lab to complain about results. All such tests were duly repeated. In essence, her complaint was that it was unfair that the numbers did not confirm her diagnosis. If it was not expressly covered in the lecture or textbook, it is ever so unfair to put it on the test. SATs, good grades, and credentials were supposed to provide safety, predictability, and status. Uncertainty and risk of failure were not supposed to invade the safe space if one had touched all the bases on the designated career path. And the job was supposed to be consonant with the course content.
It is an attitude that was prevalent in the COVID mishandling. It was a new challenge. It required analytics and some humility. Instead, it was run by who those thought and studied less and demanded deference to their credentials more. It was just so unfair that closings, mask and vaccine mandates did not work.
I was a critical care nurse for 25 before retirement. A major factor in leaving a profession l loved, was the rapid changes from outside regulations, which diminished my ability to give great care. I recently was visiting a hospitalized friend and was struck by the nurse tethered to a robot, so she could input data (and not information) into the Medicare mandated electronic record. She didn’t even have a stethoscope! All charting now is check boxes. This tells the next person precisely nothing. I’m worried about a future where nurses don’t even touch their patient.
Between 1978 and 2002 l worked with three female physicians. One internist left to be home with small children. One pulmonologist/intensivist worked part time. The third, a family practice doctor started focusing on Botox. Sign me up with Dr. Kildare or Marcus Welby!