Mechanism Design has demonstrated that the most efficient systems are created when everyone’s vested interests are aligned.
“An example is defense contracting. If you agree to pay on a cost plus basis you have created incentive for the contractor to be inefficient.
The defense contractor will build enough extra into a fixed price system to account for cost overruns. The cost overrun would be permitted in the rules if the price was transparent. If there were no cost overruns the contractor’s profit would be increased. It would provide incentive to be efficient.
“If you agree to pay a fixed price, you can come close to an efficient price if you have all the truthful information.”
A reader wrote,
History has proven over and over again that only the market mechanism of willing sellers and willing buyers is the optimal way to allocate economic resources. This presumes an informed buyer, and a willingness of sellers to compete for buyers. Adam Smith was clear on this in the Wealth of Nations.
If incentives are aligned and truthful price information is available an efficient system is created. Most stakeholders think they can do better by not sharing truthful information. If the rules of the game require truthful information the system can become an efficient market driven solution.
The healthcare system must become market driven. At present Read more »
*This blog post was originally published at Repairing the Healthcare System*
I know what you’re thinking. “Did he fire six shots or only five?” Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you’ve got to ask yourself one question: Do I feel lucky?
Well, do ya, punk?
Harry Callihan, from the movie Dirty Harry
It was a small article in the Wall Street Journal on 8 August 2011: “Zoll Medical Falls As LifeVest May Face Reimbursement Revisions.” No doubt most doctors missed this, but the implications of this article for our patients discovered to have weak heart muscles and considered at high risk for sudden cardiac death could be profound.
That’s because Medicare (CMS) is considering the requirement for the same waiting period after diagnosis of a cardiomyopathy or myocardial infarction as that for permanent implantable cardiac defibrillators (ICDs). To this end, they issued a draft document that contains the new proposal for their use. Read more »
*This blog post was originally published at Dr. Wes*
I must confess that I have a weakness for medical tourism. Patients have always been ready to go on a pilgrimage to find the world’s leading expert (we call it ‘key opinon leader’ now) hoping to find a cure. As long as traditional leaders in the field of Medicine have been the Germans, the French and the English -with some occasional Austrian and Spanish name in the mix- traffic of wealthy patients across Europe is nothing new.
Since we entered the antibiotics era, these leaders started to be located mainly in the United States, the cradle of modern, technology-driven Medicine. Thus hi-tech centers got ready to welcome foreign patients, building strong International Customer Support departments. A random example -by no means the only one- would be the Mayo Clinic. On their website you can see that their wealthy patients speak Arabic or come from Latin America. These healthcare services have a long tradition of client-oriented work because they work for private clients that pay for their treatment (sometimes the client is not the patient himself but his family). The important thing was never the price, but the patient. Read more »
*This blog post was originally published at Diario Medico*
The essence of the moral hazard experience through a nice neighborly conversation:
Neighbor: These allergies are killing me.
Happy: That’s terrible. I hope you feel better.
Neighbor: I tried Zyrtec but it wasn’t doing anything for me, so my doctor prescribed ‘x.’ (inaudible drug name )
Happy: Does it start with an ‘x?’ (The drugs name is Xyzal.)
Neighbor: Yes, it does.
Happy: Oh, that drug (Xyzal) is nothing more than Zyrtec, which the company slightly changed the formula of and now they get to sell it as a patented medication at 10 times the price for the next 10 years.
Neighbor: Oh, I didn’t know that. But you’re right. It was $110.
Happy: Did it help you with your allergies?
Happy: I guess you just wasted $100.
Neighbor. I didn’t waste anything. My insurance company paid for it.
Happy: Actually, we all paid for it with higher premiums.
Neighbor: (Walks away.)
The doctor doesn’t care — he’s not paying for it. The patient doesn’t care — she’s not paying for it. But everyone complains that their insurance rates are out of control. It’s not insurance company profits that are making healthcare too expensive, it’s patients and doctors who don’t care.
Bundled care solves this problem because the doctor won’t prescribe a $110 medication and offer therapies with no proven benefit over less-expensive options.
*This blog post was originally published at The Happy Hospitalist*
I’m sure you’ve read through “top doctor” rankings and online physician ratings. It is only human to seek perceived leaders. But as sometimes seen in politics, those who have reached the pinnacles are often motivated by ambition, charisma, and gamesmanship instead of altruism, sincerity, and merit.
Beware the top doctors issues found in magazines and newspapers. Some of these doctors are excellent, but many are simply “notable.” They may be well-connected, in leadership positions, or presidents of this or that society. Many are excellent self-promoters, branding themselves through the name brand institutions they work for and the billboards that increasingly advertise their faces. Many are simply well-known or popular among their peers. Read more »
*This blog post was originally published at The Examining Room of Dr. Charles*