Friday, January 5, 2007

clinical innovation, not strictly a business, Twenty Clinical Innovations to Build Patient-Doctor Trust: Sixteenth in a Series

Health Care is Not a Business, or is It?

A doctor reader recently responded to one of my blogs, where I spoke of medicine as a market-driven enterprise that must respond to consumers. I used the success of retail-clinics as one example.

The reader commented,

“Health care is not a traditional market because the consumer feedbacks can take decades to emerge. A poor bypass operation looks like a good deal until it doesn't. How can a ‘consumer’ know that choice's value when the result isn't immediate? This is why treating health care as a free-market business isn't working. It's not a business. It's making people well and keeping them there. You can make money at it, but it is NOT a classic free market precisely because of the long lag in market information.”

I agree “health care” is NOT a “traditional market”, but I do not agree the reason is the “long lag in market information.” Sure, in some instances, health care can be a life and death matter where money is no object and the end is nowhere in sight.

On the other hand, in the case of retail clinic outlets, health care consumers are perfectly capable of judging value in terms of convenience, cost, and access. Consumers can judge waiting times, pain relief, symptom relief, and the ability to return to normal functioning in their job or in their life. These benefits can be immediate, and there is no “lag time.” My greatest fear is that nurse practitioners in these clinics will mistake a major emergency as a minor illness with tragic results.

The test of innovation in any business is: Do consumers want it, and are they willing to pay for it? That is true in health care, as well, and it is increasingly apparent consumers are willing to pay a $39 flat fee for treating minor conditions such as strept throat, pink eye, and urinary tract infections.
According to the 2007 predictions of Fierce Healthcare, a Washington, D.C. based newsletter:

“Though retail clinics may not become a household word among consumers this year, players in this niche will make dramatic progress in 2007. This year retail clinics will move from novelties to strategic business extensions of major health players. Specifically, integrated health systems will begin setting up retail clinics as a new form of satellite feeder site. Also, emergency departments building primary care diversion programs might consider it wise to set up on-site ‘retail’ style clinics. For simplicity, hospitals may still go to existing retail clinic providers like MinuteClinic with a strong connection to pharmacy dispensing and digital patient health records. If they don't, they still have the opportunity to avoid unneeded ED visits by situating a low-fee, physically attractive retail-inspired clinic which sees patients at rates EDs couldn't possibly match. What's more, the form of the retail clinic model should evolve, providing such additional services as laboratory testing, basic diagnostic imaging and small, integrated pharmacy inventories.”
Health care may not be a “traditional market” for major procedures such as coronary bypass, although increasing numbers of “medical tourists” are going abroad for heart bypass surgery. In the case of minor illnesses, consumers are responding like they are in a traditional market.

We doctors tend to use “business” in a pejorative sense and assume that businessmen are always “out for the buck.” I do not believe it, nor do I believe economics decisions do not occasionally influence physicians acting in their own economic best interest.

Indeed, newspapers have been running a recent spate of articles on the influence of economic incentives on doctors (“More Doctors Turning to the Business of Beauty,” New York Times, November 30, 2006, “Sales Pitch for Treatment,” New York Times, December 1, 2006; “Surgeon Kept Quiet about Stake in Company,” Cleveland Plain Dealer, December 10); “Spine as Profit Center: Surgeons Invest in Makers of Hardware,” New York Times, December 30, 2006).

These isolated examples do not reflect most physicians’ business behavior, but the stories highlight that doctors, to a greater degree than other professionals, must be perceived to purer than Caesar’s wife.

Like businessmen, physicians must make a certain amount of money to pay off debts, compensate staff, meet overhead, provide for family, and plan for a rainy day or retirement. As physicians and businessmen, doctors invest in ancillary technologies -- CT scans, MRIs, nuclear cameras, labs – and in health facilities – ambulatory surgical centers and specialty hospitals -- to increase economic efficiency – and to help keep people well and keep them there. These ends can sometimes only be efficiently achieved through superior technologies and specialized facilities managed by physicians.

Medicine is a business, albeit not a traditional free-market one, if the following authorities are to be believed.

First, J.K. Silver, MD, Physiatrist, Clinical Consultant in Physiatry at Massachusetts General Hospital, writing in The Business of Medicine, Hanley & Belfast, Philadelphia, 1998. She says,

“The field of medicine is drastically changing, and like it or not, business influences are dominating how we deliver health care services. While it is imperative to learn and maintain superb clinical skills, it is also important to learn the business of medicine. Without this knowledge, health care providers are unable to negotiate managed care and capitated care contracts, understand billing procedures in order to avoid government audits, advocate for patients negotiate with insurers, increase productivity an decrease expenses in the office and hospital environments, or decide which practice opportunism are financially viable, and the list goes on.”

Next, David Dranove, Professor of Management and Strategy at Northwestern School of Management, writing in The Economic Evolution of American Health Care, Princeton University Press, 2000. He says,

“Many physicians have embraced the business side of medicine. Nowhere is this more apparent than in ongoing educational programs. Not so long ago, a physician’s ongoing education consisted of attending seminars on the latest clinical developments and reading medical journals... Now it is not unusual for physicians to attend management seminars and read medical management journals. A small but growing number of young physicians have taken the need for management training seriously and are pursuing M.B.A degrees either concurrently or with or after their M.D. training. The ongoing business education of physicians is a rapidly growing industry.”

With the advent of HSA-driven consumer health care, development of smart cards containing HSA and personal health information, and entry of banks in the health care transaction arena, medicine may become even more like a retail business. Patients will swipe a card at the point of care, and doctors will be paid promptly – just like in any other retail business. Health care may not be a traditional market-driven business, but it will feel and act like one, and overhead and creditors will always be out there.


.... said...

As long as American physicians and the hospitals that use them care more about making money than they do about the patients, trust will be hard to come by. In 2004, the cardiologist I was sent to, told me I needed an immediate quintuple CABG or I could have a heart attack, stroke or worse within three months. Great marketing technique, right? Well instead of the surgery, I got a second opinion and my heart is still ticking almost three years later. Want to know more about medical terrorists? Check out my blog at

Richard L. Reece, MD said...

The fact that the cardiologist said you "could have a heart attack or stroke, or worse" within thre months does not mean he was wrong or that he was "marketing." Maybe you "could have" had a vascular catastrophe. I do not know your history, and I cannot comment with any certaintly about his recommendation. You still may have coronary artery disease and be at risk. Conservative therapy is sometimes works best, and the hearts keep on "ticking."

Richard L. Reece MD

Chris said...

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