Healthcare Efficiency

Phillip Longman wrote “Best Care Anywhere” about the VA healthcare system.  He liked it.  His book raises many of the key issues in healthcare today, and this will be e pluribus unum of blogs from this source.

Longman begins by chronicling his wife’s dealings with Georgetown University during her terminal illness.  It isn’t pretty but not unexpected or unusual for University hospitals anywhere.  Why is this?  You would think that a group of smart people could get it right, at least some of the time.  I think the answer is that no one cares.  Longman didn’t pay the bills for his wife’s treatment, and it’s pretty hard to get attention when you’re not putting money on the table.  And no one else really cares either.  If the oncologist doesn’t have the test results, he just orders another test, and the insurance company pays for it.  There is no accountability and no recognition of the patient as a customer who’s needs should be considered.  Why would we expect anything different?  GTU (and others) gets paid the same, whether they provide good service or not.  Actually, they get paid more for doing a bad job—they are paid for correcting their mistakes.  Her blood tests “had perhaps a 50 percent chance of being misplaced . . . and never finding their way into Marjorie’s chart.”  Because “CT scans would be misfiled perhaps 30 percent of the time” he purchased personal copies.  He finally throws up his hands and comments that his wife’s condition was hopeless, so nothing mattered.  

But it might have.  And that thought sent him on a search to find a good healthcare system.  When he finally concluded that the VA was the best, Fortune magazine declined to publish his contracted article, so he wrote a book.

Longman makes some interesting economic comparisons with the 1960s, when the average American worked 78 hours to pay for healthcare.  In 2004, that had jumped to 390 hours.  Contrast that with the gains in productivity in virtually every other industry.  Have we gained value for this expenditure difference?  Well, yes, at least some.  I had all the diseases (except polio) that my grandchildren are now immunized against.  That’s value.  In my field of anesthesiology, there have been huge advances in equipment and drugs that make anesthesia safer, faster, and better for the patient than anesthesia in 1960.  At a price, yes, but, trust me, you don’t want to go back.  A few studies about 1990 showed that new, expensive anesthesia drugs were worth the cost.  (Since then, I don’t know.)  Most of healthcare has improved since 1960, and most—but not all-- of those improvements increased the cost.  The real question is whether the value received is commensurate with the price paid.  I’m not sure.  Much of today’s healthcare (particularly in universities) comes under the heading of “heroic, weird, and wonderful.”  Heroic at the extremes of life in the sense of desperate and futile, but fully covered by insurance.  As we have commented before, all this is done without any consideration of how much it costs to provide this service.  There is no restraint on the technological imperative.  And no one will ever care about efficiency until there is  price competition at the individual service level.  

Next time, chapter two.