There is a mutual distrust among stakeholders.
This mutual distrust must be overcome and price transparency achieved before any progress can occur in Repairing The Healthcare System.
In order to achieve Pareto efficiency in the healthcare system all the stakeholders must agree to price transparency. The advantage of Pareto efficiency is that Read more »
*This blog post was originally published at Repairing the Healthcare System*
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,
Stanley:
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*
Patients are first. Patients are the reason for the existence of the healthcare system. Physicians are second. They are trained to understand the pathophysiology of illness and to treat patients for their disease. Everyone else is a secondary stakeholder (provider).
All the stakeholders create waste in the healthcare system. If an accurate analysis were performed, most of the waste and the resulting profits would be attributed to the secondary stakeholders. Patient and physicians drive this waste and profits into the hands of the secondary stakeholders. Neither patients nor physicians are aware of driving the waste and profit into these stakeholders’ coffers.
The patient-physician relationship should be a one on one transaction. Patients and physicians are frustrated and many have accepted the disappearance of this human-to-human interaction.
Healthcare insurance companies and hospital systems think they own the patients and the physicians. This will turnout to be a fatal misperception.
To many observers of the healthcare system Read more »
*This blog post was originally published at Repairing the Healthcare System*
If you read nothing else this morning, please read Margaret Polaneczky, MD’s (aka “TBTAM”) excellent post that vividly summarizes our current health care reform efforts underway while offering insights as to what real reform should look like:
Real reform won’t happen until the American people take their seat at the head of the table and invite doctors, ethicists and healthcare experts (not industry lobbyists) to bring their best knowledge about what interventions are most important, most effective and most cost efficient. Then we can sort out our priorities (you can call it rationing if you want) and create a budget.
Only then we can begin to negotiate with third parties (insurers, Big Pharma, etc) to sell us what we need at the best price. That’s called competition, and it’s what American capitalism is all about, right?
The problem is, the American healthcare consumer (and I include myself here) still thinks someone else is footing the bill. Who that someone is, I don’t know. Maybe the rich. Maybe our employers. Maybe the Federal Government.
What we have yet to get is that there is no “someone else”. The deep pockets are our own pockets, and they are empty. Our tax dollars. Our pensions. Our companies going bankrupt from paying employee health care costs.
Until the American people get it that it is our responsibility to get our spending in line, and until our representatives have the guts to turn away the industry lobbyists and represent their constituents instead of their campaign bankrollers, we will continue to have uncontrolled health care spending.
… and that’s just part of it. Read the whole thing.
*This blog post was originally published at Dr. Wes*
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