Wednesday, March 18, 2015

Market Forces in Health Care

What role should market forces play in health care?

As a general rule, we Americans believe that market forces are very useful.  People having to make choices based on what things cost assures a certain level of economic discipline, directing resources to uses considered most valuable and giving producers an incentive to innovate and be more efficient.

But we have been ambivalent about applying those forces when it comes to providing and obtaining health care services.  We tend to think of health care as a ministry that should be shielded from commercial considerations.

At the same time, if by driving an extra five miles a patient needing an MRI could receive one for half the price, that seems to be a reasonable thing to expect.  But if the MRI is covered by health insurance, the incentive to do so becomes very weak because the savings go to the insurance company, not the patient.

Many have addressed that problem and suggested the need for a system of financing that gives the patient some “skin in the game.”  The February 16 issue of Modern Healthcare included an interview with Mark Ganz, CEO of Cambia Health Systems, a health plan conglomerate operating in the northwest states.  Ganz is quoted as saying “Imagine if healthcare were priced to consumers.”  He cites drugs as an example and argues that involving the patient’s pocketbook more heavily in the purchase would reduce the cost of health care.

He may be right, but I am also impressed by the argument that sick people are not good shoppers for health services because their attention is focused primarily on their illness.

My own view is that a better approach is for health plans to assemble panels of providers with which they have negotiated prices.  They then offer separate health insurance policies, each covering services provided by a specific panel at a stated premium price.  Customers choose from among the competing panels and prices when they are well and able to give careful consideration to the choices.

It is an issue that we ought to be debating. 

Monday, March 09, 2015

Reinventing Health Care

The February 23 issue of The Boston Globe carried an article headlined “To reinvent health care is goal of 22 fellows.  The lead sentence read as follows:

“Harvard Medical School’s Center for Primary Care has launched InciteHealth Fellowship, a new program that brings together 22 talented individuals eager to transform the delivery of health care in the United States.”

I wish them luck, but caution them to be modest in their expectations.

It is easy for us to ignore the depth to which our system of health care is rooted in our culture.  Our feelings about the importance of health are intense.  Our attitudes towards the caring professions and our relationships with them are strongly held.  Those feelings and attitudes change over time, but very slowly.

As is often the case with the print media, the content of the Globe article didn’t quite live up to its headline.  The project as explained seems more oriented to the use of technology to improve care than to a total redesign of the health care system.

Useful gadgets and computer applications are always welcome but reinventing health care requires tinkering with the organ located between our ears.


Friday, March 06, 2015

Professional Licensure and the Cost of Care

Last February 18, the US Supreme Court in a 6-3 decision ruled that the Federal Trade Commission was allowed to charge the North Carolina State Board of Dental Examiners with “anticompetitive and unfair actions.”  It seems that spas and salons in the state had been offering teeth whitening services, a service that had been shut down by the Board as constituting the practice of dentistry without a license.  The Board is dominated by dentists and Justice Kennedy opined that “Active market participants cannot be allowed to regulate their own markets free from antitrust accountability.”

Professional licensure is among the major barriers to cost reduction in health care.  Adopted for the purpose of protecting the public from charlatans and unqualified providers, they now effectively prevent provider organizations from experimenting with different, more efficient ways of organizing and staffing the delivery of health care services. 

A case in point is the use of nurse practitioners and physician’s assistants to provide primary care.  There is reason to argue that it ought to become standard practice and some of it is happening but the change is proceeding at snail’s pace.

The North Carolina decision does not address that issue, but it reminds us that professional licensure can have consequences other than those initially intended.


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