It's clear we have the best hospitals, doctors, and medical technology in the world and we spend more than any country on healthcare. The dichotomy is that we don’t deliver that quality to our citizens and we lag many countries in the key health metrics.
Recently, I was privileged to be invited to a talk sponsored by the Naples Community Hospital System Foundation in Naples, Florida. The guest speaker was Dr. Robert S. Galvin, who is Director of Global Healthcare for General Electric. Dr. Galvin oversees the design and performance of GE’s health programs, which totals over $3.0 billion annually, and he is responsible for medical services, encompassing over 220 medical clinics in more than 20 countries. Dr. Galvin had some interesting observations.
Despite the fact that healthcare represents 16.6% of our GDP and is expected to reach 19.5% by 2017, we lag many countries in life span, infant mortality, patient satisfaction, and many other measures of healthcare delivery. There are essentially four major factors that drive our spiraling health costs according to Dr. Galvin:
1 .There is a preponderance of unhealthy lifestyle practices.
2. Excessive doctor pay due to the trend towards specialization and away from family medicine.
3. Wasteful practices in the health administrative and delivery system.
4. Unnecessary, redundant, and expensive tests and treatments.
All of these contribute to our poor standing among nations who spend far less than we do.
There is no doubt that we excel at crisis medicine. Where we lag is in preventive medicine and chronic disease. Both these issues are a matter of consumer education and lifestyle modification. Most of the proposed healthcare reform legislation focuses on getting more people insured, whether they want it or not, and not enough on these issues.
Why is medicine unlike any business?
As a businessman, I could never understand why the medical profession follows none of the conventional economic principles. For example:
• Supply and demand has nothing to do with price or vice versa.
• Price is not set by value or quality (i.e. outcome) nor is the consumer able to readily measure quality.
• The consumer never asks about price nor is there a price list where he can choose alternative therapies or treatments.
• The supplier (provider) controls the sale and price process rather than the consumer.
This passive behavior of the consumer may be related to the fact that someone else pays the bill, thus, the consumer doesn’t pay attention to health issues until he is sick, and obviously, not when he is well. Good health is taken for granted or relegated to genetic “luck”. The truth is if the medical consumer was more like the conventional consumer and employers were more proactive about their employee’s wellness and disease prevention, the upward spiral of medical costs will be reversed.
You’ll read more about this in future postings.
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You're absolutely correct about the wastage in the US healthcare system due to "someone else" picking up the tab - usually a health care plan provided through one's employer. If consumers were footing most, if not all of the bill, then maybe things would be vastly different.
ReplyDeletePerhaps, with more and more Americans being either under or completely uninsured this may soon turn out to be the case.
Thanks for your comment. With more understanding of the market factors, consumers always force more competition and ultimately drive prices down. The key is getting them to ask more questions and when this happens insurance premiums will go down. I'll have more ideas on this in the future. Thanks for your interst in this important topic.
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