If you're new here, you may want to subscribe to our RSS feed. We also have another blog you may be interested in reading. If you have decided that you like us and want to talk more, contact our sales team. They would love to talk. Thanks for visiting!

You know I love a  solid economic assessment of healthcare:

Either Americans in the higher income strata must step up to the cashier’s window to help subsidize, with higher income taxes, the health care of the most hard-working members of the lower income classes, or the United States will have to evolve toward a noticeable two-tiered or multi-tiered health care system, with bare-bones, low-tech health care for families in the bottom half of the income distribution and increasingly superior, high-tech health care for families in the upper-income strata.

– from The Health Care Challenge: Sailing Into a Perfect Storm, The New York Times

The writer, an economist at Princeton, sees what most in healthcare like to ignore: that healthcare is a commodity of which there is limited resources and that which can be quantified.  The question, in economic terms, is how much healthcare do Americans need vs. how much are they willing to pay for?  And how should they pay for it?

In our current model, the answer to the first is as much as possible, and to the second, as little as possible.  Aye, there’s the rub.

I have spent the week in Singapore, learning about healthcare here and seeking to understand why medical tourism can flourish.  I have noted that a key feature of the Singaporean system is that medical expenses are all out of pocket — whether you’re rich or poor, you still pay cash based on a sliding scale fee.   That means, in general terms, more money = “better” care.  

You can go to a public hospital where you will wait for 4 hours to see a doctor for $65 or to a private hospital with a nicer facility and no wait time for $100.  One outcome of a cash-based system is that the prices are more closely tied to the costs of delivery.  Why?  Competition.  You need to have a justification for being more expensive than another hospital and I must see, understand, and value that difference enough to pay for it. 

In the US, we charge the people who pay cash the most money.  This is just bad business. It’s like showing up in need at a hotel and having to pay rack rates – rates 50% higher than what anyone else pays.  Hotels price the demand, not the supply.  Meaning, whether they have 100 free rooms or 1, when you show up in the lobby, desperate, they’re going to charge you the highest rate possible.

Only unlike a hotel, you have less control of when you “show up.”  You never are forced to check in because, for example, you’re bleeding out one ear. 

Also, unlike a hotel, you can show up to a hospital with no money, and still get a room.  This is even worse business.

A two-tiered system of healthcare is not only inevitable but it may be a positive outcome for all, as long as this is best settled from a policy standpoint. 

Here’s my latest crazy idea:

• What if we offered surgery credits that hospitals could trade with each other, much in the way carbon credits are spoken about for factories?  
• What if a hospital system needed to offer fast, cheap, preventative care at certain volumes, perhaps delivered via clinics located in post offices, to earn those credits? 
• What if those systems that did the most clinic care could then fund themselves entirely by selling surgery credits to free-standing, doctor-run hospitals?

The conclusion is that the government needs to facilitate a dialog about the social value of health care and help bring rationalization to a market which has the wrong incentives.  I think the output of healthcare should be good health.  It’s not, because hospitals don’t get paid for keeping people healthy.

In the US, it is in my best interest for my tax dollars to ensure that my fellow citizens are productive members of society.  The longer, heathlier lives they live, the better their economic output and great contribution back into the collective tax system from which all American derive value.

(It’s worth noting that the countries with the longest average lifespan are Japan and Iceland, both of which are island nations with limited resrouces that, nonetheless, have enriched their population.  Ok, I know Iceland is bankrupt, but that’s unrelated to the productivity of their society.  My point stands for much of the last 60 years.)

So, when I say I want a lot of fast, cheap, and nearly free preventative care, I am being utterly selfish.  I’m saying I want America to grow, I want American to prosper, and I want my fellow Americans to live long, productive lives. 

I do not think it is as expensive of a proposition as people think.

Per our webinar on the financial crisis: 

In another sign of the economy’s toll on the nation’s health care system, some hospitals say they are seeing fewer paying patients — even as greater numbers of people are showing up at emergency rooms unable to pay their bills.

– Hospitals See Drop in Paying Patients, New York Times

I was hoping this wouldn’t happen for 2 years or so, but a client alerted me to this after noting a downtick in volume and wondering if it was pandemic.

MedTouch Webinar: The Impact of the Global Financial Crisis on Healthcare, Part II from MedTouch on Vimeo.

The news about the financial sector meltdown is everywhere, but how will it impact healthcare?

In this second part of a special webinar, Paul Griffiths, the CEO of MedTouch, will walk through how the sub-prime crisis led into Wall St. failures, which has spilled over into the bond market, threatening usual routes of funding for healthcare, muncipalities, and non-profits.

We’ll review what hard decisions providers will have to make over the coming year, and talk through some possible short and long term results from the financial bailout.

The Impact of the Global Financial Crisis on Healthcare

What you’ll learn:

* Why the financial crisis started
* Why the crisis will make it harder for hospitals to stay in the black
* Which healthcare providers should do today

The Impact of the Global Financial Crisis on Healthcare, Part I from MedTouch on Vimeo.

If, like me, you’ve been watching the global financial crisis with awe and dismay, you’ve probably started wondering how all of this will impact healthcare.

In brief, there are three main financial instruments that have kept many hospitals open in the last few years — bonds, investments, and charitable giving — and each of these is at risk given the current market situation.    

To explain these issues, we’re giving a special webinar this Weds, October 15th at 2pm EDT, 1pm CST, Noon MST, and 11am PST.

We’ll talk about how the crisis happened, why it spread so quickly, and how providers and payors made be impacted by the continued market gyrations, the freeze up in commercial paper, and the financial bailout package approved by Congress.

This webinar is free to attend and will last about 45 minutes.

We’ve done a fair amount of research this year on the impact of the physician shortage and how it will hamstring the marketing, planning, and delivery of healthcare services in the future.

The silent killer is patient access.   The less chance a patient has of being seen quickly, the worse off he or she will be.  Having an adequate supply of doctors is the basic ingredient of healthcare delivery.  And primary care doctors, who provide those front-line services, are getting even harder to find.

Here’s three reasons why you might be facing an uphill battle, wherever you are.

1. Supply is dwindling.

The AMA reports that nearly half of its members are 50 or older.   If you segment out primary care docs, the news gets worse.   Medical schools are graduating an increasing rate of some specialists, but primary-care graduate rates are falling as medical school becomes an increasingly costly investment.   In the wake of the Patriot Act and the falling value of the dollar, there’s also the fact that more international students are going back home instead of staying put.   (Thomas Friedman calls this the “reverse brain drain” in his book, The World is Flat.)

2. Demand is growing. 

The US population continues to a) grow and b) require more healthcare.   From an economic point of view, there’s no reason to think demand will curtail any time soon.  In fact, hospitals are seeking to drive more care to newly created Centers of Excellence to address complex diseases and conditions.  As more people demand more care from more providers, the rate of demand increases in both directions: hospitals need more doctors to improve patient access as well as treatment.  A client recently told me that a few treatment positions added to ease the strain on the existing physicians were now completely swamped with diagnostic visits.

3. Increasing alternatives to traditional practice models.

While graduating physicians can choose to start or join a traditional practice, there are a variety of other avenues as a result of the changing demands of new docs.  Whether hospitalist positions, physician-run speciality practices, locum tenens assignments, or roles within bio-tech companies, these options often provide fewer hours and more work/life balance than the classic physician practice model.  (Example: many hospitals around the country are now paying for “on call” services.)  Considering that 50% of the med school population are now women, these options will increase, primarily clustered around delivering less hours and less stress.

What’s the solution?

More on that later this week, but we’ll give you a hint: it has something to do with our upcoming webinar.

Wall Street Journal’s Article, “GOPers Think U.S. Health Care Rocks, Dems Not So Much”

“America has the best medical care in the world,” Rudy Giuliani said last year.

Most Republicans agree with him, but most Democrats don’t, according to a new poll from the Harvard School of Public Health. The difference is striking: 68% of folks in the Grand Old Party said the U.S. has “the best health care system in the world,” compared with 32% of Democrats. Forty percent of independents said we have the best care.

I hate to split hairs, but the crux of this question involves the word “system.” Do we have the best physicians world-wide? I think so. The best technology? Again, I think we might. But does our healthcare system provide consistent, successful preventative care for all? As anyone working in healthcare would tell you, not at all. And as Cato notes, that systemic failure creates outcomes which organizations like the WHO over-weight in their rankings.

That said, I think the notion of ‘costs’ are a bit of a red herring — healthcare has its own economic forces and changes to these economic inputs and outputs would impact associated ‘costs.’ For one, fairly compensating hospitals for the cost of healthcare provided would be a start. Why? Because whenever the federal government or insurers reduce the reimbursable level for providers without regard to dollars only, they do not provide incentives for providers to innovate or increase efficiency. Instead hospitals, who often have months if not weeks to react, raise their fees on the only group they can – patients who pay out of pocket; patients without insurance.

The ‘rising costs of healthcare’ is a red herring as well. I’ve seen doomsday statistics that cite the rate of healthcare spending is growing at twice the growth rate of the U.S. GDP and by 2040, such spending would be larger than the U.S. GDP.

To which I respond: Yeah. Right.

Should anyone quote such a statistic to you, please assure them that those same statistics mean healthcare spending is only rising 3% over GDP annually. Or you might note that such figures include elective care which means patients are participating more in receiving care via discretionary income. And then suggest that a simple solution would be for the U.S. economy to grow at 6% per year as it did back in the 1990’s. (If you really want to win the argument, ask what percentage of current yearly GDP growth is attributable to the investments made in healthcare technology and life sciences over the last 20 years. Suggest greater than 50% of it.)

Ultimately, I believe the healthcare system needs to be measured on outcome, quality, and efficiency first and ‘costs’ second. As we tell our clients, if you focus on ‘costs’ you’ll the miss the results and the converse is true: if you’re focused on results, the costs seem like a minor point.

Perhaps if all Americans could participate in receiving quality healthcare that managed their entire course of treatment, with universal, electronic medical records available to every provider along the way, we would feel a lot better – both about ourselves and our healthcare system.