Tuesday, April 27, 2010

The Transformation

"Everything changes." "We start dying the moment we're born." "The only constant in life is change." "The more things change, the more they stay the same."

All very trite, but mostly all very true. The changes that become more evident to me daily involve the gentle paradigm shift in medicine. An institution that once held the health of its constituents as its utmost goal, now looking more at profitability than personal responsibility.
It started out insidiously. In the early 70's and into the 80's the quiet voices began to whisper to physicians. "You're here to practice medicine, but you're also a business." "You should be fairly compensated for the work you do." As in any industry, there have always been those who practiced medicine "for the money," but it wasn't until the slow rise of the for-profit hospital and the night in shining armor, the HMO, that things took a system-wide turn away from people and toward dollar signs. While campaigning for the managed care paradigm, a gatekeeper model where a primary care physician would coordinate care and refer to the specialists that were also owned by the HMO, hospitals and large multi-specialty groups began to recruit patients, touting a one-stop shop, a strategy clearly effective at turning a profit, ala Walmart. A good idea in theory, but in practice, the overwhelming number of patients in the system caused long wait times, and accusations of monopolizing and self-referral flew like mad.
I'll be honest. I don't have concrete data to back this up, and there's no specific person, place or time that you can pinpoint as the tipping point. There's simply a slow paradigm shift toward money-centric medicine.

There's nothing wrong with appropriate compensation. I do, however, take issue with abusing new technology as a way to make more money. Don't get me wrong, businesses incur great expense purchasing and innovating new technology. Once it's paid for, though, prices should summarily begin an inexorable decrease. Take the PC industry. Please... (sorry, it just sounded funny in my head, so it stays). Manufacturing processes (equating to, say a CT scanner in this analogy) are discovered to create a hard drive. That process is refined and perfected at great cost, which is transmitted to the initial consumer, the early adopters, but over time the process becomes so well refined and frequently used that income far surpasses production costs and even pays for the R&D.
If we assume that a CT scanner represents that manufacturing process, in this analogy, as the process is perfected, costs decrease exponentially, especially with frequent use. While the cost for your average CT has dropped significantly over the years, it still far surpasses the costs incurred by the hospital for staffing and power, especially after it's paid for.

You'll have to trust me on the math, and this is definitely an oversimplification, but if the average CT Scanner costs 3.5 million dollars, that means only 1000 scans at $3500 each would pay for the machine. There were ~7 million scans performed in the US in 2007 alone. Assuming a hospital large enough to have a scanner does at least a thousand a year, that means the machine could theoretically be paid off in one year. But wait, you object. What about the radiologist and the technician and the energy cost? Won't that put the cost much higher? Calculating average costs for reading fees and tech salaries and power costs (and assuming a random but educated yearly number for insurance on the machine) the numbers may be surprising, just not to me. You need only do an extra 25 CT scans a year to cover those extra costs. So after 1 year of $3500 scans, totaling just 1025 scans, the machine is paid for. Ongoing costs amount to a mere 100 scans per year thereafter to pay the radiologist and the incidentals. The rest keeps the hospital administration and the janitor paid. This is all an average, an educated guess, but it points to a fundamental problem with healthcare and hospital systems... like all other businesses, they're run by people, and people run businesses to make money.

This isn't bad, just problematic. I'm not against a free-market economy, as long as the flow of information is free, as well. Publish the cost. Let people make informed decisions and shop around if they so desire. Don't assume that because you *can* do something, you should. The system isn't broken because we charge $1800-3500 for an average CT scan. It's broken because free market value is no longer determined by the market...

To Be Concluded...

-- Post From My iPad

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