Socialized Medicine and the business of medicine

[SanDiegoSOD]

As a future or current physician and businessman, does the prospect of socialized/universal healthcare worry you? Would it present a new and exciting range of opportunities for the healthcare manager, or would it spell ruin for medicine as we know it? Your thoughts please.

[ASDIC]

Oh no...it would ruin it.

Remember the need for MD or DO/MBAs arises from the fact that medicine is becoming increasingly commercialized, healthcare systems are becoming increasingly incorporated, there are mergers and acquisations of doctors etc...
all these things create a need for physician managers.

If medicine becomes socialized, medicine will be ruled by politicians.

[mward04]

Originally Posted by ASDIC

Oh no...it would ruin it.

Remember the need for MD or DO/MBAs arises from the fact that medicine is becoming increasingly commercialized, healthcare systems are becoming increasingly incorporated, there are mergers and acquisations of doctors etc...
all these things create a need for physician managers.

If medicine becomes socialized, medicine will be ruled by politicians.

I think too often people confuse "Socializing" medicine with simplifying the administration of medicine. Centralizing the administration of medicine would not socialize it and the cost savings would be huge.

[rgarg3]

Originally Posted by mward04

I think too often people confuse "Socializing" medicine with simplifying the administration of medicine. Centralizing the administration of medicine would not socialize it and the cost savings would be huge.

mward,

Usually I don't disagree with you, you have really forced me to. Granted centralized system may lower the cost of medicine initially, in the long run (as with any monopolized system) the costs (in terms of productivity and more importantly innovation) will definately be higher. Don't believe me, look at how the VA (veterns affairs) hospitals are run, how much they cost compared to many of the private hospitals and also in terms of service. Competition and free markets are the best way to lower costs. Socializing in most ways is synonymous with the centralizing you speak of. Let the free and open markets prevail..

rgarg
MBA 2006 (University of Chicago)
MD 2008 (Rush University)

[rgarg3]

Healthcare is a resource (finite in terms of doctors, hospitals, and medications), and like any resource, the free and open markets are the best way to allocate resources to the public. Either we can have the big bad government do it or allow competive businesses to take charge. To be quite honest, I can't get the government to deliver my mail correctly (United States Postal Service is a government mail provider) , I can't imagine how they'll deal with delivering healthcare to the American public. Although, my heart truely goes out to those countries with successful socialized models, I honestly do not believe this is the solution. I've done a lot of work with healthcare models and I firmly believe the Americans, finally, are on the right track. Thanks to some great regulatory changes passed by this administration last year, consumers, through health savings accounts, are beginning to take the primary role in healthcare. Before the changes, 3rd party payers (insurance companies), would have had that position but now we've put comsumers in the front seat and its working. The rate of adoptation has been over 300% over this past year, and sooner or later 90% of the country will probably be covered with health insurance, and the best part about it is we didn't expand the roll of government one bit, we've put consumers in the front seat, and indirectly, through huge direct deposits, have increased liquidity in the financial markets lowering interest rates for all americans. Give the markets time, especially now because of changes, and see how they work. Socialize systems have lowered costs, no doubt, but before we start making judgements lets see how it ranks up against a competitive consumer model which we finally have. And for that, only time will tell. As far as those who are below the poverty line and still can't afford medical coverage, I'm willing to throw in the towel- put them under medicare, which they probably already are.

rgarg

Originally Posted by flindophile

I live in a country with socialized medicine -- and I am pretty impressed. Australia manages to provide universal coverage at much less cost (about 8% of GDP) than the US. Further, outcome measures are comparable (if not better) than the US.

Australia has a dual system - a well funded public system and private hospitals for those with private health insurance. When I ask which is better, most of my colleagues say that the public hospitals are generally better (but the decor is not as nice).

As a U of Chicago grad, I share your proclivity for market solutions; however, health care is different. For example, the incentives are for treatment vs. prevention, suppliers (physicians) create their own demand, consumers don't pay for their care. etc, etc, etc. While govt (mis)regulation has done much to create the current mess, I think the US could learn much from the Australian model.


flindophile-
MBA (University of Chicago 1985)
PhD, Operations Management (UVA, 1989)
MBBS (University of Sydney 2005)

[mward04]

Originally Posted by rgarg3

Healthcare is a resource (finite in terms of doctors, hospitals, and medications), and like any resource, the free and open markets are the best way to allocate resources to the public. Either we can have the big bad government do it or allow competive businesses to take charge. To be quite honest, I can't get the government to deliver my mail correctly (United States Postal Service is a government mail provider) , I can't imagine how they'll deal with delivering healthcare to the American public. Although, my heart truely goes out to those countries with successful socialized models, I honestly do not believe this is the solution. I've done a lot of work with healthcare models and I firmly believe the Americans, finally, are on the right track. Thanks to some great regulatory changes passed by this administration last year, consumers, through health savings accounts, are beginning to take the primary role in healthcare. Before the changes, 3rd party payers (insurance companies), would have had that position but now we've put comsumers in the front seat and its working. The rate of adoptation has been over 300% over this past year, and sooner or later 90% of the country will probably be covered with health insurance, and the best part about it is we didn't expand the roll of government one bit, we've put consumers in the front seat, and indirectly, through huge direct deposits, have increased liquidity in the financial markets lowering interest rates for all americans. Give the markets time, especially now because of changes, and see how they work. Socialize systems have lowered costs, no doubt, but before we start making judgements lets see how it ranks up against a competitive consumer model which we finally have. And for that, only time will tell. As far as those who are below the poverty line and still can't afford medical coverage, I'm willing to throw in the towel- put them under medicare, which they probably already are.

rgarg

90% of the country covered? I'm sorry but that number is ridiculous. Especially considering HSAs are more likely to increase the uninsured, rather than decrease them:
http://www.cbpp.org/5-10-04health.htm

Furthermore, of course the utilization of the HSAs has increased. They just signed the Medicare Modernization Act last year! Additionally, employers are going to use these to push healthcare costs onto their employees while increasing their deductibles. Can you say uninsured?
http://www.usatoday.com/money/indust...-25-hsas_x.htm

[rgarg3]

Jeez, mward simmer down. We're just having a discussion. Anyhoo, getting a 100% coverage through both public and private means isn't impossible. Although you cite an MIT economist who disagrees with HSA's, there's plenty of research from the Harvard Business Review and I've read alot from Barrons to support my argument. (WSJ 10-12-04, there's an article in there, but I can't really copy and paste it here) Also, Sally Philips, economist and director of health care policy, recently published her report on HSA's. Although I can't find a copy of her research right now (midterms), she cites a decrease of 15% in terms of medical costs for companies that have utilized MSA, which means more money in the pockets of employees. I understand and I do respect the research from MIT, but like with any topic there are always two sides to the story. There's a lot of research, including my own, which directly disagree's with the work from the guy from MIT. As far as rate of adoptations of MSA are concerned, the figure was taken directly from ehealthinsurance.com. They have a research division, and publish there reports yearly. Its pretty remarkable, but its true- 300% according to them and interestingly, contrary to the MIT guys, they suggest that most people who sign on to the program have incomes under 50 grand. Who's right in the end, I don't honestly know. But I do know that putting governemt in charge is not the solution. Sorry I can't site any concrete research right now, I'm getting swamped at school. As soon as we get a break, I'll get some links up. Keep an open mind, we're MBA and MD's. We're not out to screw the public..

rgarg

Originally Posted by mward04

90% of the country covered? I'm sorry but that number is ridiculous. Especially considering HSAs are more likely to increase the uninsured, rather than decrease them:
http://www.cbpp.org/5-10-04health.htm

Furthermore, of course the utilization of the HSAs has increased. They just signed the Medicare Modernization Act last year! Additionally, employers are going to use these to push healthcare costs onto their employees while increasing their deductibles. Can you say uninsured?
http://www.usatoday.com/money/indust...-25-hsas_x.htm

[ASDIC]

Laissez Faire

[mward04]

Originally Posted by rgarg3

Jeez, mward simmer down. We're just having a discussion. Anyhoo, getting a 100% coverage through both public and private means isn't impossible. Although you cite an MIT economist who disagrees with HSA's, there's plenty of research from the Harvard Business Review and I've read alot from Barrons to support my argument. (WSJ 10-12-04, there's an article in there, but I can't really copy and paste it here) Also, Sally Philips, economist and director of health care policy, recently published her report on HSA's. Although I can't find a copy of her research right now (midterms), she cites a decrease of 15% in terms of medical costs for companies that have utilized MSA, which means more money in the pockets of employees. I understand and I do respect the research from MIT, but like with any topic there are always two sides to the story. There's a lot of research, including my own, which directly disagree's with the work from the guy from MIT. As far as rate of adoptations of MSA are concerned, the figure was taken directly from ehealthinsurance.com. They have a research division, and publish there reports yearly. Its pretty remarkable, but its true- 300% according to them and interestingly, contrary to the MIT guys, they suggest that most people who sign on to the program have incomes under 50 grand. Who's right in the end, I don't honestly know. But I do know that putting governemt in charge is not the solution. Sorry I can't site any concrete research right now, I'm getting swamped at school. As soon as we get a break, I'll get some links up. Keep an open mind, we're MBA and MD's. We're not out to screw the public..

rgarg

I definitely did not mean to come across as harsh at all, I apologize if I did. I'll look for your posts.

BTW-a 300% rise in HSAs is not a surprise. They just passed major legislation supporting HSAs so of course their use would be up.

[DarkChild]

ROFL - at least admit that healthcare is a unique resource - i.e. there are ethical issues and significant negative and positive externalities that make healthcare VERY different from almost any other product. You're oversimplifying in blithely stating that like any resource the free market is the best way to allocate it. Econ 101: The free market is the most EFFICIENT way to allocate resources - and in most cases that might be optimal, but given the uniqueness of healthcare, that need not be.
Regardless, you simply cannot ignore the preponderance of evidence that shows the US healthcare system is facing crisis. We have the largest healthcare spending (absolutely and as a % of GNP) than any other country and our health indicators - for instance, life expectancy in which we rank 29th - significantly trail the rest of the world.
In spite of this, I agree with you that competition is still probably the best way (and most palatable to Americans) to distribute healthcare.
That being said, the actual nature of healthcare competition must change so that there is competition at the level of specific diseases and conditions - i.e. to create competition on a value basis (which hospital has the lowest mortality rates for triple bypass surgery) rather than on the basis of price.
This isnt my idea at all - see M.Porter's HBR article on healthcare published in June 04.

Originally Posted by rgarg3

Healthcare is a resource (finite in terms of doctors, hospitals, and medications), and like any resource, the free and open markets are the best way to allocate resources to the public.

[rgarg3]

Agree 100%, EMR's are critical, but we need to do more. Excessive of 35 billion was spent last year on defensive medicine and unnecessary tort. We need tort reform badly (I've heard, don't know if this is true, that the amount of money spent on malpractice every year could feasible take care of all the uninsured people in the country, --will have to check on that--) Usually I'm pretty pro-free market, however, I have no qualms at all at crushing the tobacco companies. CDC reported last year that 46 million Americans still smoke. If you smoke, you're at a much higher risk for disease and that becomes a huge drain on the healthcare system. Too many americans still smoke. Also, interesting fact CDC reports 2/3 of Americans are classified as overweight. How we solve this, I have no idea, but there needs to be a change in lifestyle. Also I think its absolutely critical that we curb the monopolizing practices of pharmaceutical firms. Recently, big drug companies have been able to prevent generic brands from arriving on shelves up to several years. This becomes another unnecessary waste of money.

CDC Facts. Tobacco

http://www.cdc.gov/tobacco/factsheet..._FactSheet.htm

Obesity (99/00 report)

http://www.cdc.gov/nchs/products/pub...ese/obse99.htm

Originally Posted by flindophile

Porter's article was thought provoking. I believe that competition based on disease management can work for high volume diseases and particularly those where the timing of procedures is elective. Such a system gives up economies of scale in order to achieve economies of scope (like the focused factory concept). I suspect Porter's approach will not be economical to provide focused service for small volume diseases. Then, you are back to one stop shopping in a large hospital. On the other hand, you can apply the 80/20 rule -- the 20% of diseases control 80% of the cost so the impact could be huge.

In my view, electronic medical records are the key to improvement because you can't manage what you don't measure. EMRs will enhance operations (measurement, auditing, decision support, reduce practice variance) and facilitate research. I think EMRs will reduce the autonomy of physicians but will improve care and reduce costs. EMRs are critical for the success of Porter's approach as well because his approach relies heavily on outcome measures as a basis of competition.

[theduke]

Socialized medicine is absurd. Socialized anything is absurd. The medical business is very similar to the car-repair industry with more insurance complexity. A free-market and anit-bureaucracy mentaliy is the best bet for doctors. Furthermore, it guarantees the patient the best, most competitive care. If you don't understand why, take Economics 101.

Is it likely that 20% will be unable to afford good health care? Yes. But that's a sacrifice you make for giving the other 80% excellent care and freeing up the constraints on our profession. Just like fixing your car.

If you want to provide the BEST care for patients and look out for yourself professionally, take every step possible to prevent socialized medicine.

[IndyZX]

Originally Posted by theduke

Socialized medicine is absurd. Socialized anything is absurd. The medical business is very similar to the car-repair industry with more insurance complexity. A free-market and anit-bureaucracy mentaliy is the best bet for doctors. Furthermore, it guarantees the patient the best, most competitive care. If you don't understand why, take Economics 101.

If you are trying to convince people that a certain form of healthcare reimbursement is best based on principles learned in an intro economics class, I feel for you.

I have taken plenty of economics courses over the past few years, and one thing that I can tell you is that very little of that classical theory applies in any straightforward manner in the real world.

[rgarg3]

Yeah I kinda agree on your train of thought, but I would honestly actually prefer the status quo. Anytime the gov't gets into this business of negotiations to get lower prices, they end up doing something stupid and overpaying for the product...

Originally Posted by flindophile

I don't see a huge need for the government to make major changes in the structure of the pharmaceutical industry. In the past, there was much less competition in various drug categories than there is today.

In my view, pharmaceutical prices are best curbed by increasing the power of purchasers. Powerful purchasers (HMOs, govt, etc) have the leverage to bargain for good prices and also have the power to control purchasing decisions by physicians (nonindicated uses, non evidence based use, non costeffective use, etc). It is amazing to me that the govt is not using its purchasing power to get reasonable value for the new pharmaceutical benefits plan.

[banner]

Originally Posted by theduke

Socialized medicine is absurd. Socialized anything is absurd. The medical business is very similar to the car-repair industry with more insurance complexity. A free-market and anit-bureaucracy mentaliy is the best bet for doctors. Furthermore, it guarantees the patient the best, most competitive care. If you don't understand why, take Economics 101.

Is it likely that 20% will be unable to afford good health care? Yes. But that's a sacrifice you make for giving the other 80% excellent care and freeing up the constraints on our profession. Just like fixing your car.

If you want to provide the BEST care for patients and look out for yourself professionally, take every step possible to prevent socialized medicine.

Very interesting discussion. In the purest sense, healthcare is a product just like any other. However, in order to truly make it a product comparable with things like oil, electronics, and car repair, then people must be denied the service if they are unable to pay for it. This would mean that people would die. Unfortunately, many of your MD colleagues seem to have a problem with this and think that healthcare is not a product but a "right". (I disagree with them). Additionally, over the years, much of the public has become spoiled by this notion and now expects near free healthcare, regardless of their ability to pay.

As long as hospitals and physicians continue to practice accross the board altruism, then it is difficult to take healthcare as a serious and profitable product.

Ultimately, a dual tiered system will develop in the US. As a general rule, the "have-nots" will utilize the public health system and the haves will utilize a private and, likely, superior system. This is not necessarily a bad thing for promoting commerce in healthcare as those who cannot/refure to pay will be shunted to the public domain. The private healthcare industry can then be freed of these tethers and turn big profits.

[mshheaddoc]

Interesting perspectives on all of this ... I do have one thought though ... how will HSA's curb costs? I see them as an alternative with high deductibles and employer contributions, but that would mean restructuring the current biling system which obviously everyone will have to agree on and that will NEVER happen. Additionally I noted that they wanted "lifelong" MSA/HSA's ... which I commented on, why do we need to have a surplus (which was noted in the Singapore cases and touted by up-and-coming policy makers) if all we have to do is pay up to our deductible each year? I brought these points up in my healthcare policy class and my professor (who is active in policy worldwide) looked at me and said ... good point, I have no idea how this would work. Granted, we didn't go indepth into how these MSA/HSA's work, but the example we were working off of is based off of the presentation down in DC a few weeks ago to the committee. Another supporting point were the articles on Singapore's MSA's medical foundation (which coincidentally enough is falling apart) and how a private system has forcefully formed. How can all these people applaud MSA's/HSA's with out revamping costs? Lassiez Faire it is my friend ASDIC.

Unfortunately, I do not forsee socialized medicine or any type of change in healthcare policy over the next few years, except more tax credits from the Bush Admin. Hence the reason I would like to work more on policy ... even though I hate politicans, someone has to do something, so why not me? This type of stuff intrigues me and now that my semester is over I intend on examining this issue more indepth. Any good readings suggested?

[mward04]

Everyone's been talking about competition. I thought that people might enjoy an article on the front page of today's WSJ (12/27/04) about hospital pricing. Here is the abstract, but unfortunately, you need a subscription. Fortunately, most of us can get it through our respective schools.
http://www.healthleaders.com/news/ne...ontentid=61440

[mshheaddoc]

Originally Posted by mward04

Everyone's been talking about competition. I thought that people might enjoy an article on the front page of today's WSJ (12/27/04) about hospital pricing. Here is the abstract, but unfortunately, you need a subscription. Fortunately, most of us can get it through our respective schools.
http://www.healthleaders.com/news/ne...ontentid=61440

bah ... WSJ ... i will have to wait on campus to look it up ... but thanksfor the site. This is along some of the type of sites I was looking for. Do you happen to have a list of good news sites to share?

~M