You hear all the time politicians and pundits saying that we should let the Free Market™ work in health care, that Free Market™ solutions are the best. But it should be obvious that Medicine exists in a world even less like Economics 101 than most industries. To begin with, while our basic needs for food, clothing and shelter are predictable and roughly similar for everyone, our need for medical services is largely unpredictable, and it varies radically from person to person and time to time. Some people go for decades without really needing any at all, although there are some preventive measures or screening tests that are recommended even for people who think they’re perfectly healthy. Then suddenly, by surprise, people can face medical costs they cannot possibly afford; and the alternative might be horrible suffering, disability, or death.
Another major reason Medicine is not like Economics 101 is that Bob knows what kind of food and other goods he likes, and he has some idea how to evaluate the products on offer and compare the prices. In other words he can shop around and exercise his power as a consumer. But for the most part, as consumers of medical services, we can’t do any of that -- the problem of information asymmetry is extreme.
We might have a symptom that bothers us and go to our physician to get it diagnosed, but we have to rely on the physician to tell us what is happening and what to do about it. We might not even have a symptom. We may go for a checkup, feeling just fine, and learn from a test or a physical examination that we have a condition that the physician thinks we should do something about. That could even be something very expensive. We might even be in the position of Bob when he was starving, and face the choice of buying the thing or dying. Or at least that’s what the doctor tells us. This is called provider induced demand. In Economics 101, consumers generate demand. (Advertising and some other tricks mean that producers can generate some amount of demand for other goods and services, but the effect is much stronger in Medicine.) So the theory of prices, supply and demand, perfect information -- none of that applies at all.
Next, we'll cover externalities.
7 comments:
Perhaps you could expound on the movement for medical procedures and hospital charges as well as surgeons' outcomes to be publicly posted so that there is more information and consumers might better be able to judge value.
The problem with posting prices for procedures is that a) the actual consumer generally doesn't pay for them, insurance does and b) the price is negotiated with the insurer and different insurers pay different prices. The actual sticker price is what the hospital or other facility would try to charge you if you paid out of pocket, and it's far higher -- maybe several multiples -- of the actual price insurers pay. So generally speaking, that would not be very helpful.
The idea of posting surgeons' outcomes seems intuitively appealing, but the problem with that is that patients present very different risk profiles for a given surgery. That means it would give surgeons and incentive to refuse to operate on high risk patients -- their outcomes will look good because they're cherry picking the easiest cases. This is a fundamental problem with any scheme to reward good outcomes. Practitioners or facilities that take on higher risk populations will end up looking bad or being penalized.
Then what other scheme would you suggest to rate qualify of care?
If you're going to say there is none...that is unacceptable.
Well, if that were the truth, why would it be unacceptable? But actually it is difficult, and it's something that health services researchers struggle with constantly. The main problem, as I've suggested, is case mix. Outcomes aren't determined solely by what providers do, they're determined by the severity of the person's condition and their overall state of health going in, the environment in which they live, and their own health related behavior. Hospitals that serve relatively disadvantaged communities are going to have worse outcomes, all other things being equal, but you wouldn't want to punish them for that -- actually you'd probably want to give them more resources. So, in a nutshell, there are two possible approaches. One is "process of care" indicators -- do people get what are considered the appropriate prescriptions and procedures within the appropriate time frame? The other approach is called "case mix adjustment." You create a vector of factors that affect the risk, such as age, a comorbidity index, SES indicators, a measure of severity of the index condition, gender, maybe some global rating of health, and use multiple regression analysis to try to isolate care provision as a predictor of outcomes. Neither of these works as well as we would like in most circumstances, but conceptually it's the best we can do. Really answering your question would take a book, however.
There is nothing wrong with comparing outcomes for common procedures.
If I were to have a new heart valve, I'd want to know more on that surgeon's stats compared to others in the field. Can't just go with "trust me, I'm a doctor..."
Read what I just wrote. The best way for a surgeon to get better stats is to refuse to operate on high risk patients.
But my point was that you don't have any idea how the public can be informed as to which surgeons, doctors, hospitals can be rated. Again, unacceptable.
Because this is an important and wanted service the public needs, several non-profit groups have attempted to take up the slack and start their own rating systems. Here is an article of interest on this topic.
One has not been updated since 2015 so apparently, they're pretty much defunct. The other is now being built.
https://www.healthline.com/health-news/how-good-is-your-surgeon-now-you-can-look-it-up-071515
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