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DISCIPLINING FORCES IN THE MARKET
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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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