Health Care: 11June2050

Authored by Francis M. Miller; Publisher: White Dwarf Communications; all rights reserved©

 

BEGIN

IN A NUTSHELL

VISION/STRATEGIES

Export Industry

COST EXPERIENCE

MARKET FORCES

DEREGULATION

DEFINED CONTRIBUTION

FUTURES CONTRACTS

TECHNOLOGY COMMONS

PRICING

MODELS OF CARE

TRANSPARENCY

INTERNET

COOPERATIVES

MORAL ECOLOGY

EVO DEVO

TRANSFORMATION

IN THE NEWS

HEADLINES

OUR NEWSLETTER

JOURNAL ABSTRACTS

BOOK REVIEWS

PEOPLE PROFILES

WEBSITES OF INTEREST

HISTORY

MEDICAL TECHNOLOGY

PUBLIC POLICIES

ESSAYS & COMMENTARY

Essay #1

FACTS & FIGURES

ECONOMICS_CONCEPTS

DENVER FUTURES EXCHANGE

LIBRARY

ESCAPE

DISCIPLINING FORCES IN THE MARKET
INTRODUCTION

It takes a disciplined marketplace to produce high quality services at an efficient price. That disciplining function, normally called supply and demand also establishes market price and quantities produced in a rational manner. Now, I know the first thing you are going to say: "competition has been proven not to work in health care". I agree. To argue that it might have worked if government had not tinkered with the system is to draw distinctions without a difference and get us nowhere down the road to transforming health care into an export industry. I think that the classical "Adam Smith" definition of competition does not work in mixed markets such as health care, education, and other public services. The reasons for this are not only the inability of the consumer to have data on price and quality so as to be a rational and informed, but also the nature of the good or service itself. When you are sick, you are not in the same state of mind lying on a gurney in the emergency room as you would be trying to pick the color of the iPod you want to buy at  Best Buy.

So, let's look at this from another angle. Clearly there would be huge problems having a committee of government bureaucrats play purchasing agent and run the health care system. I challenge you to identify a single government-run system that is efficient. If you want health car to be an export industry it is going to have to be such a high performer that a government run system won't get the job done.

Think about models in other industries. For example, the big box retailers: Home Depot, Target, Walmart, or K-Mart. Now when you enter one of these stores you assume that they sell name brands and you likely have a good sense of the price and quality they offer. You are relying on their hard-nosed store buyers and computer systems to be loyal agents to get you the stuff you want at a price you can afford. But, in health care you can't count on Aetna, Cigna, Kaiser or any insurance company or HMO to be your loyal agent. Why? Because they are financial intermediaries--money changers--premium seekers--commission takers--that's why!! They don't manage anything. So, the dozens of health care providers who operate on you when you are in the hospital are unmanaged and the care delivery process is undisciplined. Sure, some hospital administrator takes out a quality control report once a month to see how many lawsuits to expect, but there is no one managing the process at any level. It is the ultimate millieu. If Wal-mart ran its business this way, they would be bankrupt in a month.

Take another example: Toyota. It takes a manager ten years to be inculcated in the "Toyota Management System". In health care you can be a nurse who gets a masters degree in health administration at the local college and five years later you are running the entire hospital.

So, when we talk about disciplining forces in the health care market, we are not talking about competition as we know it in consumer goods. We are talking about a constellation of forces coming to bear on the health care system, the sum total of which have some hope to discipline it. I include government, which is a major payor, as one of those disciplining forces. And, it is not just on the demand side; it also includes the discipline exerted by the supply side. Financial underwriters such as insurance companies and issues of futures contract are a disciplining force to the extent that they accept risk, but do not expect them to manage the care delivery process. You don't look to GMAC when your car has mechanical problems due to poor manufacture. They just wrote the loan to buy the darned thing.

Above all, we need to adopt a new vocabulary and quit talking about competition in the Adam Smith sense of the notion. We need to talk about "force field functions" which are a constellation of forces we can count on to not only discipline Supply but also, Demand in the system.
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