Sunday, July 31, 2011

Health Costs: Nothing Exceeds Like Success

July 31, 2011 - Everybody knows health costs exceed our ability, individually or as a nation, to pay for them. But nobody admits this inability stems from the overwhelming success of medicine to provide what people want.

As comedian Milton Berle cracked, “When it comes to my health, money is no object."

This morning , I was thinking of how well medicine has succeeded. As our Sunday morning coffee gathering, a bunch of old guys were whooping it up at the old salon when the subject of an 88 year friend came up. He was suffering from shortness of breath and periodic blackouts.

One said,”He needs an nuclear heart scan to see what’s wrong.” A second remarked,” He needs a pacemaker, like Cheney.” A third chimed in, “ Maybe he needs a new heart.”

I brought up the subject of cost and pointed out one of us had a pacemaker costing $150,000 – but, even though I was the only doctor in group, I was dismissed.

Thanks to people’s trust in modern technologies, costs have exceeded everybody’s expectations. Consequently, health costs are 17% of GDP, and with costs expected to grow 5.8% a year over the next ten years or so, health costs should reach 20% of GDP by 2020.

Economists agree that medical technologies account for 70% of health inflation, and that these technologies rarely save money, despite all the rhetoric about "disruptive technologies."

Why is this? A number of reasons. Since World War II, Americans have invested heavily in research. We are aging and require more life-saving and function-saving technologies. And the media is quick to seize upon new "breakthroughs" and to broadcast this news to world. There's a shortage of good news these days, and health advances fill the bill - and increase the bill.

Technologies work. Ask your friends, family, and neighbors, and everybody will have a story of how hip and knee replacements has stopped pain and restored function; cataract surgery has averted blindness; stents, pacemakers, and ventricular assist devices have forestalled death; and CT scans and MRIs have provided invaluable diagnostic information.

There is also the “self-interest”factor.

• Every patient wants to live another day, with the hope that the next day will be better than the last.

• Most doctors know that specialists deploying the latest technologies are the important key provider of longevity and improved function.

• Specialists know that patients, health plans, and government itself pay more for specialists performing procedures.

• Hospitals know that their largest profits reside in high tech fields – cancer, orthopedics, heart, and the new kid on the block, robotic surgeries in multiple fields.

Small wonder, then, that the health care system is often the biggest economic game in any community, region, or State, that hospitals, doctors, and various health care facilities are the biggest employers during this recession (Health care has added near one million jobs since the recession began), and that Medicare and organizations like AARP with 50 million members (and its partner UnitedHealth,which boasts its 70,000 employees cover 78 million Americans and supplies all of AARP’s Medicare supplemental policies, are among the most powerful economic and political players in America).

Nothing exceeds like success, which, unfortunately, breeds beneficial excess to those who depend on health care success.


HaynesBE said...

This is probably the biggest reason:

"I brought up the subject of cost and pointed out one of us had a pacemaker costing $150,000 – but, even though I was the only doctor in group, I was dismissed."

Our system allows demand to proceed while those who benefit can dismiss the costs---and still gain the benefit.

Richard L. Reece, MD said...

It's the old Russian negotiating technique - What's mine is mind, and what's yours is negotiable. said...

This cannot have effect as a matter of fact, that is what I suppose.