Saturday, April 05, 2014

Planned vs Market Economy

We still can’t decide whether we want the health care economy to be centrally planned or market driven.

The situation is illustrated in Omaha where the University of Nebraska Hospital system has decided to discontinue an arrangement in which it cooperated with Alegent, an affiliate of the Creighton University Medical School, in providing Level I emergency trauma services.  Previously, each had a Level I program but rotated the days on which they operated.  Alegent announced it will continue to operate its Level I program so now Omaha will have two programs, each open 24/7.  Although the article did not say so, Medicare, Medicaid and private insurance companies will presumably continue to pay as before.

The reason given by Nebraska University is that while the previous arrangement worked alright, it was not eligible as a divided program for American College of Surgeons certification as a Level I facility. Currently the programs have state certification only.  ACS certification is the gold standard and not having it has made staff recruitment more difficult and generally detracted from University’s status as an academic medical center.

There may be something to that, but the impression left by the article is that University, being the stronger of the two, decided it could make it on its own, get ACS certification, and get a leg up on its competition.

The volume of Level I cases in Omaha, about six per day, is well within the capacity of a single unit.  So if operations continue as in the past, having two full blown programs will clearly be more expensive.  In other kinds of activity, that disadvantage would be offset by market competition in which each would strive to grow and prosper by becoming more attractive and efficient than the other.  But if only one was to continue in operation it would be considered to be a monopoly and regulated as such.

But it seems we are to have neither one.

And we wonder why the cost of care is so high.

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