Friday, May 20, 2005

Health care profits

On A Political Question, a comment was recently made about the current medical establishment being driven to revenue maximization. It was asked what the medical community could do to refute or change this?

I believe that most health care providers (doctors, nurses, etc.) genuinely have a patient's best interests at heart. The problem is the "health care industry" - the area where health care ceases to be about helping people and becomes about making a profit for stockholders. Obviously socialized health care has the opportunity to fix this by reducing the influence of or removing the profit motive from health care. Setting that aside for the moment and working within the USA's current private systemt, the first question that must be asked is why there is a conflict between revenue maximization and patient care.

A major contributing factor to this is that most health care is transactional. We pay per service regardless of the result. As a result, health care companies do not have an incentive for cost-effective treatment but for cost-ineffective treatment! If I have an illness and it could probably be fixed with a month of generic drugs, or it could be fixed with an expensive operation, the health care company would rather I opt for the operation because it is more profitable. This is an oversimplification, of course, but it does go to the root of the problem, the way we pay for health care.

What if the health care company was paid the same amount based on the illness remedied rather than the way in which it is remedied? This would equate revenue with recovery. Health care companies would then have two goals: increase revenue through helping more patients, or cutting costs by providing more efficient remedies. Obviously it would also be critical that treatments be successful because pay would be contingent upon recovery.

Any major change in the health care payment system must take insurers into account, and would be well served by beginning with them. Such a large percentage of health care payments pass through insurers that probably only they would have the ability to effect a fundamental change like this. As I understand, there are currently discussions underway about shifting Medicare and Medicaid in this direction. We just have to be careful that cost-effective doesn't turn into simple cost-control; health care must be centered around patient care!

1 comment:

Tim said...

Even when the health care provider has 'the patient's best interest' at heart, there is a question about what is really best...because health care providers and the current societal guideline seems to be 'longer is better'. At 84 years old my father opted against major thoracic surgery to repair an anyeurism of the aorta. The doctors were appalled that he would risk a life threatening rupture rather than have surgery with an estimated two year recovery time for a man his age. As it turned out, he died less than two years later, not from the anyeurism.