I think that this is going to take more than one blog.
First, let’s look at economics. Everyone knows that the law of supply and demand dictates economics. Products that have high demand are offered at a high price. Of course this means that the latest high tech gadget gets to charge a high price because there are so few on the market. Once the product is out there for a while manufacturing starts to pump out more and more products, in order to reap the profits. Of course everyone owns the new gadget and he or she don’t want to buy a new one. The price then comes down to attract the lower income people and the process continues by lowering the price and making more products.
This seems like a very nice economic model and many products fit this model. So, let’s fit health care into this model and see what the capitalistic US society does for us. In health care, we also have supply and demand. Doctors and hospitals supply health care and sick people demand it. So, when a new procedure comes out the doctors can charge a premium and the rich sick people who can afford it will pay the price for it. The poor sick people would like the same procedure, but they can’t afford it so they don’t get it. Some people who have insurance can get the procedure because their insurance will pay for it. In manufacturing the company will produce as many gadgets as possible to make a large profit, but in health care doctors can not just do more procedures to make the demand go down. In health care there are a set number of sick people that need one particular procedure. This means that no matter what the health care provider charges the people either get the treatment or they stay sick. This means that people will beg borrow and steal to pay for health care, because they don’t want to be sick. It also means that there is no incentive for health care providers to lower prices, only raise them.
If you read this and think that this is a very cynical view of health care then read this short story from my personal experience.
Back in the early 1980s I worked on the development of the Magnetic Resonance Imaging (MRI) procedure now used in almost every hospital. When I worked on it we called it Nuclear Magnetic Resonance, but the doctors didn’t want to use the word nuclear. When we were trying to sell our system we would have doctors and hospital board members come in and listen to our spiel. Sometimes we would have large groups and have presentations with questions and answers afterward. One of the more shocking questions were:
“Could we get the image out in black and white? Our doctors wouldn’t know how to deal with a color image.” To this question we said, of course you can, but the color image contains more information and could show subtle differences in water density. To this they said, “Our doctors wouldn’t know how to deal with this additional information, we would prefer to have the black and white image so that it can be read like and X-ray.”
Now, and MRI image deals with water density and an X-ray deals with the ability of body materials to absorb radiation. The images are very similar, but they do have subtle differences. Why a doctor wouldn’t be willing to understand the differences and be able to use the difference to his advantage was stunning. But as I learned later doctors are not encouraged to understand procedures because if they did they could be subject to malpractice suits. This of course means that US doctors will soon rank lower on the world scale of being able to use new procedures or develop them on their own.
But, the most shocking statement I heard was:
“So, you are telling me that this (MRI imaging device) can give us more information than standard X-rays and it is cheaper to operate. So, we can raise the price because it gives more information but it costs less – so we will make more money.”
And this statement has come true. It is much less costly to operate an MRI device and it gives more information and the hospitals charge 20 times more for the procedure.