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What price health?

December 8, 2016

Want to know who runs healthcare?

It sure isn’t the consumer.

In just about every other consumer-driven arena, the customer/client/consumer can easily research options and make informed decisions.

Not so with healthcare.

It has been an ill-kept secret for decades that determining the quality of healthcare you receive and even whether you receive it at all is, for all but the wealthiest patients, the sole province of America’s health insurers and providers.

Lest you don’t believe that, a quick read of this article in the New York Times might enlighten you.

Much is made out of President-elect Donald Trump’s interaction with Carrier and Boeing, with some calling it everything from crony capitalism to coercion to blackmail.

Along comes the healthcare industry to demand that any attempts to repeal and replace Obamacare MUST include the funding the industry wants, at the level it thinks it should have from the American taxpayer.

WTH!

After getting over the industry’s sheer arrogance implicit in the article, it does pay to examine the underlying issue.

Healthcare is just plain too damned expensive, and that makes health insurance astronomically expensive too, giving rise to the synergy that results in spiraling prices.

Considering that every nation on earth that assumes any responsibility for funding medical care has yet to come up with the perfect solution, there will likely not be one quickly forthcoming in America either.

That doesn’t mean we should just throw up our hands and accept the status quo.

This has to go beyond the sound-bite, propaganda level.

A big buzz phrase now is free-market pricing, and outcome-based payments. Fee-for-service payment is currently out of fashion.

When you talk about letting the free market determine health insurance costs, you are by definition required to include the providers of the care in the free market solution.

Countries with state-provided medical care are under constant criticism for rationing health care and for the massive bureaucratic cost overruns it takes to administer the system.

In a truly free market system, you would have hospitals and providers advertising healthcare rates the way department stores advertise sale pricing. The internet would look like this:

“Appendectomies on sale.  Get  another 10% off with purchase of an MRI.” 

“BOGO on eye exams.  First eye at regular price , ½ off  2nd  if purchased at the same time!”

Yeah, maybe a fully free market system isn’t quite the answer.

Still, there are some business principles that would work.

Economies of scale don’t seem to work the same way in healthcare as they do in other markets.

For instance, take groceries.  99% of the time, the larger better stocked grocery chains can sell items for much less than the mom-and-pop store on the corner.

That doesn’t work with healthcare. The larger the hospital, the more they charge for services.

The question is “Why?” Yes, their payrolls are larger and they have more machinery and beds to pay for, but shouldn’t they also have enough more cash flow from occupancy rates to lower their overhead?  What factors really influence their cost-per-unit numbers?

When you need a new refrigerator you can call around or use an app to compare prices and reviews..

Why not have the same convenience when shopping for routine healthcare?

If you want to check out that mechanic, you can look for reviews online, but try finding out whether a doctor or facility has a low quality of care factor.  It just isn’t universally available.

If you attack the cost and quality issues of healthcare the same way you would in any other industry, our healthcare dollars should be able to go farther without sacrificing quality.

The flip side would be that care that is inherently more costly would have real justification for charging higher rates.

There are certain overhead costs that could be better managed if the ancillary regulatory costs were out of the picture as well, i.e. tort reform.

There is no incentive to do that if the industry is able to continue telling us how much money they want to make.

Until we have a government that isn’t held hostage by the insurance and medical industries, none of that will happen.

Perhaps using the repeal of Obamacare as a springboard, a businessman-turned-president could convene development teams whose actual goal is to improve the product, and not just study it to death in the name of job security.

From → op-ed

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