More Health Economics
This is a comment from the previous post, emailed to me by Tom Shimotake, since he had some trouble posting:
After some thought on your thought on your converstion with your Wall Street friend about the medical industry adapting poorly to new technologies. I have these thoughts. Rather than adapting poorly to new technologies, I think the medical industry is exactly the driving force ($$$) behind the development of many new technologies. Certainly the biotech and pharmaceutical industries are banking on that. Hence there is an economic incentive to spend a lot on new innovations, but not to develop efficient delivery of existing technologies.There is no Merck or Genentech vying for a share of the efficiency market.Whatever money is "made" is more accurately just "saved" by the hospitals and there it will stay. There is no passing on the savings to the customers. The paradigm that an item be priced at production cost plus profit is still true, in a way. But while there may be many cheese makers, there's clearly only one "Freinds", and supply and demand dictates that Joey can charge whatever the metrosexual market will bear. The same is true for the health care market. When you have a heart attack,or a premature baby, you don't go comaparison shopping. You go to thenearest place that can provide the level of care you require. You go to your"Friends" at your local tertiary care hospital. Many of these are University-based tertiary hospitals, who often carry ahigh percentage of uninsured/underinsured/medicaid patients, thus have a captive supply of privately insured patients. But, their insurance companies will pay the asking price, which the hospital "inflates" to compensate for their other patients. This is why intensive care units tend to carry the budget of most hospitals. In my mind, this isn't as unethical as it sounds. Often times, it is the only way a tertiary care hospital can stay solvent, and thus keep it's doors open for the next privately insured heart attack victim, while not turning away the indigent patient with a simmering wound infection. But instead of charging the viewers of Friends a little extra so that Joey just gets richer, the money is funneled to keep PBS. Of course, the less ethically palatable scenario is when a private hospital does the same thing just to increase their profits. I suppose this is the situation Sei is referring to. They will be the ones that ultimate lead to more government oversight, and thus threaten to undermine most University hospitals. As far as trimming production costs, I also agree that the outsourcing that many businesses are doing to lower their bottom lines, can't really be doneby the medical industry. UCSF recently got into trouble for hiring a thirdparty medical transciption service in Marin County, who subsequently sub-contracted the work to a transciptionist in India. The Indian sub-contractor wasn't satisfied with her payments and held the records hostage, threatening to release them on the internet if her demands were not met. This is something the 24 hour help line for Windows 2004 never has toworry about.
Keep on rambling...
p.s., nice looking condo Pete.
After some thought on your thought on your converstion with your Wall Street friend about the medical industry adapting poorly to new technologies. I have these thoughts. Rather than adapting poorly to new technologies, I think the medical industry is exactly the driving force ($$$) behind the development of many new technologies. Certainly the biotech and pharmaceutical industries are banking on that. Hence there is an economic incentive to spend a lot on new innovations, but not to develop efficient delivery of existing technologies.There is no Merck or Genentech vying for a share of the efficiency market.Whatever money is "made" is more accurately just "saved" by the hospitals and there it will stay. There is no passing on the savings to the customers. The paradigm that an item be priced at production cost plus profit is still true, in a way. But while there may be many cheese makers, there's clearly only one "Freinds", and supply and demand dictates that Joey can charge whatever the metrosexual market will bear. The same is true for the health care market. When you have a heart attack,or a premature baby, you don't go comaparison shopping. You go to thenearest place that can provide the level of care you require. You go to your"Friends" at your local tertiary care hospital. Many of these are University-based tertiary hospitals, who often carry ahigh percentage of uninsured/underinsured/medicaid patients, thus have a captive supply of privately insured patients. But, their insurance companies will pay the asking price, which the hospital "inflates" to compensate for their other patients. This is why intensive care units tend to carry the budget of most hospitals. In my mind, this isn't as unethical as it sounds. Often times, it is the only way a tertiary care hospital can stay solvent, and thus keep it's doors open for the next privately insured heart attack victim, while not turning away the indigent patient with a simmering wound infection. But instead of charging the viewers of Friends a little extra so that Joey just gets richer, the money is funneled to keep PBS. Of course, the less ethically palatable scenario is when a private hospital does the same thing just to increase their profits. I suppose this is the situation Sei is referring to. They will be the ones that ultimate lead to more government oversight, and thus threaten to undermine most University hospitals. As far as trimming production costs, I also agree that the outsourcing that many businesses are doing to lower their bottom lines, can't really be doneby the medical industry. UCSF recently got into trouble for hiring a thirdparty medical transciption service in Marin County, who subsequently sub-contracted the work to a transciptionist in India. The Indian sub-contractor wasn't satisfied with her payments and held the records hostage, threatening to release them on the internet if her demands were not met. This is something the 24 hour help line for Windows 2004 never has toworry about.
Keep on rambling...
p.s., nice looking condo Pete.
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