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  • Healthcare: The Supply Side

    Posted by David Foster on September 5th, 2009 (All posts by )

    Here’s a thought experiment. Suppose the year is 1902. Automobiles exist, but they are rare and expensive. The assembly line has not yet been invented, and car manufacturing, such as it is, is done entirely by craft methods.

    Now imagine that our politicians decide that every American family, as a matter of national policy, should have its own automobile. (Let’s also stipulate that the trades involved in automobile-building–machining, welding, carpentry, etc–are tightly controlled by guilds.)

    What would happen?

    I think the answer is pretty clear. If vast amounts of money were poured into the industry, with every family being entitled to a car at a fixed, low price–and if the quantity and productivity of car-building resources was not sharply increased–then people would be waiting 5 or 10 years, or more, to get their cars.

    Of course, this isn’t really a post about National Industrial Automotive Policy, circa 1902–it’s about healthcare. I observe that almost all of the national discussion and debate on this issue has centered around the question of who pays, who gets paid and how much, and what the restrictions on care should be. But if there are really tens of millions of Americans now receiving inadequate medical services, and if this problem is to be remedied, then where will we find the additional resources–and/or the additional productivity–to remedy it?

    It seems to me that we should be discussing questions like:

    *Do we need additional medical schools and/or nursing schools?
    *Are the divisions of labor within the medical profession optimal?..for example, do we need to place more reliance on nurse-practitioners or to create additional intermediate-level professional roles?
    *Are the selection criteria, curriculae, and teaching methods for the medical professions optimal, or we in some cases requiring more years of schooling than really necessary–or, perhaps, the wrong kind of schooling? (See comments by GTWMA at this post.) What about entry criteria?
    *What productivity improvements can realistically be expected from electronic medical records systems? (I expect that there are indeed some, but they are less overwhelming than sometimes assumed.)
    *What happens to the costs for expensive medical equipment–CAT scanners, MRI machines, etc–if the production volumes are sharply increased? It seems unlikely that these are the only manufactured products in history which do not have economies of scale. On the other hand, what happens to unit cost if constraints on the application of these systems result in reduced production volumes?

    I don’t know enough to have strong opinions on any of these issues, but I do believe that answering them needs to be part of any rational debate and policy on healthcare. And for those who argue that these are highly specialized topics, not for discussion by the general public–when you bring something under increased government funding and control, then public discussion is not only appropriate but essential.

    The lack of interest in these topics by politicians and media says a great deal, I think, about the disconnect of many of these people from the tangible aspects of society and the economy.

    As a general matter, throwing money at something to create additional demand will indeed create additional supply–in a completely free-market environment. Where the market is tightly restricted, this effect cannot automatically be counted upon.

     

    45 Responses to “Healthcare: The Supply Side”

    1. A. C. Says:

      The posting has an unstated assumption: that people without health insurance never see doctors, and that they will suddenly see doctors a lot more if they get health insurance. When you look at the details, a different picture emerges. Most people, with or without changes in the health insurance system, can’t change the rate at which they get sick or injured. For example, a big chunk of the uninsured are young healthy people who choose not to get health care, and almost never see doctors because they think they don’t need to. Even if they are forced to buy health insurance, these people will continue to not see doctors until they are suddenly very sick, or injured, as they do now.

      Many of the poor without health insurance already go to the E.R. and are seen and treated because the COBRA law requires it, and never pay anything. Some go to free health clinics which are often funded through a combination of Medicare and donations from various institutions. When you take these various factors into account, I don’t believe there will be a sudden, dramatic rise in requirements for doctors, nurses and medical equipment.

      If universal health care is implemented, there will be a dramatic rise in the government’s cost for health care. The need to control the one big number on the bottom line is what will lead to health care rationing, since the biggest single outlay is salaries and wages for people caring for the sick. Equipment and medicine, as large as those costs are, are small compared to the costs of doctors, nurses and various medical technicians who work to provide those health care services. So to significantly cut costs, the government will have to cut services. I think that, if the democratic health care bill actually went into effect, that within a few years there would be an excess of medical personnel as health care becomes more and more tightly rationed in order to control that bottom line.

    2. david foster Says:

      The auto industry analogy is admittedly an extreme one: we’re not going to see anything like a demand change from a few thousand cars a year to a few million. But it’s not unreasonable to assume that a massive increase in coverage will lead to some significant increase in demand. Consider another analogy: food. Everyone eats, already, obviously. But if the government put in place a program offering free groceries for all, we would certainly soon see severe shortages in the supply of certain foodstuffs.

      In the case of healthcare, it can be argued that many of the uninsured now frequently seek treatment at emergency rooms–this is not a very effective use of ER resources, and overall system productivity would surely increase if these visits were handled in a more regularized way. But is this productivity improvement sufficient to entirely compensate for the added demand? Seems unlikely.

      If the politicians & media mavens are actually interested in improving health care and controlling costs, they should be seriously looking at supply-side issues like the ones I mentioned./

    3. Robert Schwartz Says:

      You are correct Shannon. Add to your list laws that restrict supply of services such as certificate of need laws.

    4. Whitehall Says:

      Somewhere I read (maybe here?) that the uninsured get health care but we spend only about half as much per capita as is spent on people with insurance or pay themselves.

      If we bring the 15% of the population up to the current per capita expenditure we will raise overall spending by about 8%. However, if we constrain overall spending per Obama’s announced policy and levelize per capita expense, then the 85% of the population will see a 8% drop in the money spent on their health care.

      The 15% without health insurance will see their per capita expenditure almost double.

      From each according to their ability and to each according to their needs seems to be the Obama policy

    5. GTWMA Says:

      The full-year uninsured person’s spending on health care is just 36% of what the full-year insured person spends, so A.C.’s assumption isn’t even close to the truth. The law requiring treatment in the ER is EMTALA (Emergency Medical Treatment and Active Labor Act), and as the title suggests only requires treatment for emergency care.

      Even if there is not a sudden dramatic rise, the issue is that there is already a significant shortage.

    6. Mitch Says:

      There might be a better analogy: suppose that the government had decided that we all should be able to own a home, regardless of means or credit history. To that end, we require banks to lend a certain portion of the loans they make to people who would not otherwise qualify. When the banks object, the government sets up mortgage guarantors and immense mortgage portfolio-holding agencies. The private sector, seeing that they can make loans without keeping the risk of default, responds appropriately.

      The remainder is left as an exercise for the student.

    7. orthodoc Says:

      Couple responses, from someone who is an academic orthopaedic surgeon.

      *Do we need additional medical schools and/or nursing schools?

      The AAMC (American Association of Medical Colleges) has projected the following: “Under any set of plausible assumptions, the United States is likely to face a growing shortage of physicians. Due to population growth, aging and other factors, demand will outpace supply through at least 2025. Simply educating and training more physicians will not be enough to address these shortages. Complex changes such as improving efficiency, reconfiguring the way some services are delivered and making better use of our physicians will also be needed. In June 2006, the AAMC recommended a 30% increase in U.S. medical school enrollment and an expansion of Graduate Medical Education (GME) positions to accommodate this growth.”

      So short answer: yes. A big problem will be finding the faculty for these. Academia is less remunerative, involves bureaucracy of byzantine proportions, and is frankly not terribly attractive. Very easy to demand more medical schools – not so easy to create them!

      *Are the divisions of labor within the medical profession optimal?..for example, do we need to place more reliance on nurse-practitioners or to create additional intermediate-level professional roles?

      No – but since patients often want the physician/surgeon/specialist to see them, you will get significant pushback from patients – this is what doomed the HMO scheme, which you may remember as the solution to all ills back in the late 80s/early 90s. More varieties of intermediate providers are not the answer; we already have PAs, NPs, as so forth. In my practice, we depend heavily on PAs.

      *Are the selection criteria, curriculae, and teaching methods for the medical professions optimal, or we in some cases requiring more years of schooling than really necessary–or, perhaps, the wrong kind of schooling? (See comments by GTWMA at this post.) What about entry criteria?

      Good question – the curricula at most schools have gone away from heavy exposure to basic science in the first two years, with the unpleasant result that most medical students are clueless when it comes to knowledge of basic anatomy and physiology. But they’re very good at bio-psycho-social stuff. I assume that entry criteria should stay high.

      *What productivity improvements can realistically be expected from electronic medical records systems? (I expect that there are indeed some, but they are less overwhelming than sometimes assumed.)

      This has been extensively studied. There is little or no benefit in terms of productivity, as defined by seeing more patients in a given time, which would be my definition. The typical scenario is that documentation becomes bulkier, because it’s easier to do, but any mistakes in history/meds/allergies become enshrined forever. Essentially, the work per patient increases, so at the end of clinic, you’ve done more work, but it hasn’t translated into a higher patient volume, and thus isn’t terribly useful for the practitioner. What EMRs do is make billing easier, and allows for “proof” to payers that a patient was treated at a certain level of service.

      *What happens to the costs for expensive medical equipment–CAT scanners, MRI machines, etc–if the production volumes are sharply increased? It seems unlikely that these are the only manufactured products in history which do not have economies of scale. On the other hand, what happens to unit cost if constraints on the application of these systems result in reduced production volumes?

      They do have economy of scale – but because of how reimbursements are set, courtesy of CMS, there is no earthly reason for a high-volume provider to cut charges.

    8. GTWMA Says:

      “I assume that entry criteria should stay high.”

      As high as they are now? How is that possible given the AAMC position. Expanding admissions 30% without changing admission criteria? I don’t think that’s going to happen. I really don’t worry about it though. I don’t think there’s much of a strong link between marginal changes in admission criteria and relevant outcomes. The current education of all health professionals ought to be fundamentally changed from the baccalaureate through continuing education. Almost all of it should be conducted in collaborative ways, rather than silos of medicine, nursing, public health, health administration, etc. that we have now. Only with that change will we effectively train people who know how to work together to solve problems for patients.

    9. david foster Says:

      Orthdoc..thanks for comprehensive response.

      Re the CAT scanners, etc, were you referring to economies of scale in the use of the equipment, or in its manufacturing (or both)?

    10. GTWMA Says:

      “No – but since patients often want the physician/surgeon/specialist to see them, you will get significant pushback from patients – this is what doomed the HMO scheme, which you may remember as the solution to all ills back in the late 80s/early 90s. More varieties of intermediate providers are not the answer; we already have PAs, NPs, as so forth. In my practice, we depend heavily on PAs.”

      More varieties may not be the answer, but more of them and greater freedom to practice independently may be part of it. Since physicians are abandoning primary care in droves, it may be the only real answer to that part of care. Frankly, I can’t remember the last time I saw my PCP, since I see the PA every time. Last time my wife called for a visit with her PCP, she was told the next visit was in February. You can see the NP today, though.

    11. Cancer doc Says:

      I agree with OrthoDoc about electronic medical records. The good thing about them is that the record is more easily available to multiple people at once – and you don’t have to search for a chart. The bad thing is that it tends to actually require more time to complete the record. I don’t see EMRs as providing any significant cost savings.

      As far as technology – the reason that MRI and CT scans cost so much is because the price is artificially set by CMS (Medicare). It doesn’t matter whether I perform one scan or a thousand – Medicare pays me exactly the same for each one. (Most insurers reimbursement rates are based on a multiple of Medicare, so the Medicare reimbursement really makes an impact on all procedures, regardless of whether the patient has private insurance or Medicare). The manufacturers also know exactly how much revenue a CT or MRI scanner can generate. The only real variables are payor mix and patient (scan) numbers. This allows the vendors to keep the equipment prices high.

      I think that the answer to “should we have more midlevel (intermediate) providers” is being answered in the market today. Many pharmacies (Walgreen’s, CVS, Wal-Mart) are offering discounted walk-in clinics where a patient can be seen by a nurse practitioner or physician assistant. This allows an accessible, lower-cost alternative to an ER or urgent care clinic, and may actually reduce the need for primary care physicians. Having the government make these decisions is probably not a good idea – the government rules are typically a decade behind the practice of medicine.

    12. orthodoc Says:

      Couple responses:

      To GTWMA:

      “As high as they are now? How is that possible given the AAMC position. Expanding admissions 30% without changing admission criteria? I don’t think that’s going to happen. I really don’t worry about it though. I don’t think there’s much of a strong link between marginal changes in admission criteria and relevant outcomes. The current education of all health professionals ought to be fundamentally changed from the baccalaureate through continuing education. Almost all of it should be conducted in collaborative ways, rather than silos of medicine, nursing, public health, health administration, etc. that we have now. Only with that change will we effectively train people who know how to work together to solve problems for patients.”

      No – the entry criteria will definitely drop off. And I would be very leery of assuming that outcomes will not also drop off – I use the experience of foreign medical graduates as a cautionary tale. Although many are very good, the schools and residencies outside the US (Anglosphere, France, Germany and so on excluded here) are often markedly inferior. As for non-silo training, our med school’s curriculum is chock full of collaborative learning – but collaboration is not always an ideal way to manage patients – a team approach is nice, but someone needs to be the quarterback. As a surgeon, I depend greatly on my team – but ultimately, I’m not going to ask for advice from them on how to operate. That’s what I do.

      And I would say that medical students are often markedly less well versed in basics of anatomy and physiology than they were 10-20 years ago; this may well be because we have emphasized the “fuzzy” aspects of care over the hard aspects. Soft and fuzzy works for some medical issues; on the other hand, if I need someone to root around in my personal abdomen, I don’t want a friend – I want a hard science geek.

      To David Foster:

      “Re the CAT scanners, etc, were you referring to economies of scale in the use of the equipment, or in its manufacturing (or both)?”

      I was thinking more at the provider end – the actual machines are markedly cheaper. Reimbursement has dropped as a consequence, so the exams are cheaper than they used to be – but a true economy of scale would occur when providers can set prices based on a market – you can get an MRI here for $500 in two weeks, or over there for $1000 tomorrow; this would be similar to what happened with LASIK. Essentially, the reason that economy of scale doesn’t occur is because of distortion in how reimbursement occurs.

      Again to GTWMA:

      “More varieties may not be the answer, but more of them and greater freedom to practice independently may be part of it. Since physicians are abandoning primary care in droves, it may be the only real answer to that part of care. Frankly, I can’t remember the last time I saw my PCP, since I see the PA every time. Last time my wife called for a visit with her PCP, she was told the next visit was in February. You can see the NP today, though.”

      No question. We depend on PAs for a lot of what we do. But the AAMC projections show that even with the most optimistic increase in PA/NP numbers, there will still be a shortfall. And not every PA or NP is wildly enthusiastic about doing primary care!

      Hope that helps. I don’t have a lot of answers, but one of the keys to addressing problems is knowing what the problem really is. I strongly agree with David’s comment that “…The lack of interest in these topics by politicians and media says a great deal, I think, about the disconnect of many of these people from the tangible aspects of society and the economy.” This is exacerbated when you put people in charge who’ve never run anything other than their mouths.

    13. Michael Kennedy Says:

      I think the key to primary care is to stop the Medicare and insurance practice of limiting charges to what is allowed. Medicare pays about 20% of charges so the published “retail” prices are fiction. If a physician charges a cash patient the actual Medicare payment, Medicare may very well reset his/her fee profile to the new lower amount, then discount that 80%. This is why physicians, including many surgeons, are dropping out of Medicare and practicing for cash. The busiest hip replacement surgeon in Orange County, CA has dropped Medicare and now does total hips for $1200 cash. That is approximately the Medicare payment. The patient may use their Medicare for the hospital bill but the surgeon has nothing to do with them. This is a growing trend. The only fellowship trained geriatrician in central Iowa has dropped out of Medicare because she was being harassed by Medicare for seeing her elderly patients too frequently. She now practices for cash and sees many of her patients at home. Technology has now allowed an amazing amount of lab and x-ray to be done at home for reasonable cost.

      The French system reimburses the patient on a fixed fee schedule for doctor charges after the service is rendered. The patient pays first. There are two groups of physicians, sector I and sector II. Sector I accept the fee schedule as payment in full (less the copay). Sector II charges what they have agreed to with the patients. All physicians post their fees. The key, it seems to me, is the ability of doctors to charge more than the allowance. Patients will pay the difference and the market effect helps control spending. If the French system were used as a model, we might be able to arrange a system that would solve many of the moral hazard problems. When I began practice in 1972, there were still many indemnity style insurance polices. We need to go back to that principle. Let the doctor and patient arrange the price. Insurance or Medicare can pay a fixed amount but does not limit the private transaction.

    14. orthodoc Says:

      For anyone with a lot of extra time on their hands:

      “The Complexities of Physician Supply and Demand: Projections Through 2025” is at http://www.tht.org/education/resources/AAMC.pdf.

    15. GTWMA Says:

      Part of the reason why the wildly optimistic PA/NP numbers won’t fill the gap, is the lack of nursing to fulfill accreditation requirements. Rewind to the start.

      I think there’s a big difference between FMGs and the 4-5,000 additional students in the US. And a relevant question might be the importance of the tradeoff between having a slightly lower quality and the alternatives. As I noted in thread David linked to, the nursing shortage may lead to worse quality outcomes than a less restrictive admissions/training approach.

      I’ve met very few people who can avoid the “back in my day, kids were better syndrome”, so I take it with extra salt. I do the same with projections of physician shortages (and surpluses). If we were good at this stuff, we’d have solved it long ago. Back when Medicare was passed there were lots of concerns about shortages of hospital beds. That turned out quite different than we expected.

      I agree that Medicare has placed too strict a limitation on balance billing. That’s a very useful safety valve in a single-payer system.

    16. fred lapides Says:

      The “argument” that many people from other countries come here for health treatment is just plain silly. Those who come are usually wealthy enough to seek specialists here. Many from the US go to (incresingly) other counties because they can not affoed health care here.

      But my main point: the accepted basis for evaluating a health care system nation-wide is a very simple stat: average life expectancy of a nation’s citizens. The US ranks 30th nation or worse in every study done. And yet the US on average
      p;ays twice as much for health care as any other nation.

    17. david foster Says:

      Fred Lapides…IIRC, the life-expectancy calculations in many other countries turn out to handle infant mortality very differently from the way it is handled in the U.S. statistics, which of course biases the results.

    18. onparkstreet Says:

      “But my main point: the accepted basis for evaluating a health care system nation-wide is a very simple stat: average life expectancy of a nation’s citizens”

      That’s simply not true. Life expectancy is a complicated metric, and a metric that is affected by many things: genetics, lifestyle, accidents, crime, wars….I can go on and on, but I think you see my point. It’s actually not that easy to use one measurement to gauge the entire situation. Also, there is no proof in that sort of comparison that in this population, in this country, in this system, importing another system will automatically improve things. It can improve, it can worsen.

    19. onparkstreet Says:

      I’ve met very few people who can avoid the “back in my day, kids were better syndrome”, so I take it with extra salt.

      It’s fair to do so, but in this case, this feeling is so widespread in the medical education field that there it is actually a point of discussion, a formal point of discussion, among residency coordinators and medical educators, such that conferences (or, at least parts of conferences) are dedicated to the phenomenon. Part of it is seen as generational, but I think it is real based on my own experience (almost ten years as an attending in teaching hospitals in Boston and Chicago). This may have to do with the changes in work hour requirements, and the changes in medical education, the lack of young attendings in teaching hospitals to meet the teaching demands of students, and the explosion of medical knowledge. I haven’t time to go into it right now, but while I think your point is valid, there is very real data in opposition to your point.

    20. onparkstreet Says:

      One other quick thing: the second tier of students is harder to teach than the first tier, or at least harder to bring up to a certain level: I’ve had exposure to both. They can be taught, but it takes more time, more diligence, and frankly, you need to push them a little harder. They do not have the personality of go-getters (I am wildly generalizing from experience, and may be wrong, imagine that!) This is difficult to do given the busyness of attending physicians in teaching hospitals which are under stress these days, and it is also harder to do because of the nature of education. You, as an attending, may be reprimanded if you are ‘too hard’ on the students. Also, we are more likely to take non-science graduates in medical schools these days, to have a more ’rounded’ physician pool, but, all that does, imo, is mean you have farther to bring the student up to when reaching a certain basic level of competence.

      *In my job, I get specimens from a wide range of physicians, specialists, NP, podiatrists, etc. In general (and I haven’t formally studied this, so I may be wrong), the more training, the more likely the health care provider is to be correct in their initial assessment. Does it matter? They biopsied, I see the biopsy, I make the diagnosis. So, maybe the fact that those with more training are more likely to guess right doesn’t make a difference, but they aren’t sampling everything, so I wonder. I just honestly don’t know. I wouldn’t automatically make the assumption, though, that some of you have, that second tier students will do just as fine. I still think we should open things up, and use other mechanisms to ensure quality.

    21. Michael Kennedy Says:

      My medical school class, at the U of Southern California, had a number of atypical students accepted. Several were music majors. It was 1962. Half that “experimental” class went into psychiatry. The chair of the admissions committee was a psychologist.

      I teach first and second year students. Until I retired, I taught surgery residents. The students are getting a lot of sociology and a lot less anatomy although they are well prepared. I don’t know if that is good or bad and I emphasize the “hard stuff” like auscultation, nearly a lost art in medicine. They are eager for patient contact and USC has always been noted for early contact with patients, dating back to 1959 and a course called “The Doctor Patient Relationship.” It’s called something different now, of course. Anyway, they are highly motivated but I worry about the debt they are accumulating.

      A command economy model like Medicare will never work and more and more, at least in California and Arizona, where I have personal experience, physicians are just dropping Medicare. A significant number are surgeons. I see no sign this trend will end. With the growing geriatric population, market mechanisms like “retainer practices” are growing rapidly.

    22. Lexington Green Says:

      Auscultation.

    23. JeremyR Says:

      Part of the trouble with the medical system in the US is how heavily regulated is. So many drugs are prescription only. A lot of basic medical care is just to get simple prescriptions when sick from a cold or flu or the like.

      While in theory, yes, you want a doctor to give an exam to make sure it really is the flu or a cold, rather than something really serious. It also drives up the price of a doctor’s time. If nurses could prescribe drugs, or people could simply buy many drugs themselves.

      You also get recreational drugs like Viagra/Cialis sold through doctors. How many times a day do you see ads for these? Dozens, most likely. Yet every user is going to have to spend time with a doctor to buy it. Taking away time and resources from people who are generally sick.

    24. Michael Kennedy Says:

      Lexington Green Says:
      September 7th, 2009 at 4:33 pm
      Auscultation.

      I thought for a minute I’d misspelled it.

      Physical diagnosis is a lost art but crucial for the future where a lot of geriatric care will be at home. I think home care is going to be very, very important in geriatrics. Britain does a better job with it now than we do but it will be the way we care for the elderly. I mean over 85, the fastest growing demographic. They do not want expensive technology but they do need pacemakers and an occasional hip replacement for fracture. A fractured hip converts an ambulatory elder to a bed ridden patient. The cost, in Newport Beach anyway, of a total hip (the standard treatment for hip fracture in the elderly) is $1200.

      The key is to think outside the box (sorry for the old cliche) and home care is going to be it. I joined the AAHCP to see what is going on. I am involved in an assisted living facility in Tucson. It will be upscale but I am more and more convinced that this is a trend for almost all economic quintiles. Obama has got it almost exactly backwards. These people are not expensive to care for. In 1995, I had a grant application for a study of caring for assisted living residents prepared but it was torpedoed by a university medical center administrator. It is years later but this is where a lot of the future of medical care is. Medicare hasn’t a clue and neither does Obama. For that reason, it may become a model for market directed medicine.

      Someone should do a study of market medicine in Canada. It is the fastest growing sector of their system. Obama is marketing buggy whips.

    25. PCP Says:

      Extend the thought experiment: imagine you are trying to increase health care supply in a world where Obama has realized other elements of his agenda. Card check is law, so every hospital, clinic, nursing home is unionized. Marginal tax rates are dramatically higher, such that, at the margin, rich doctors decide not to work quite so hard or decide to retire early. A tropism toward increased regulation and bureaucracy generally stifles health care innovation and new efficiencies. Tort reform is derailed and defensive medicine escalates.

      There are lots of reasons why we are being readied to accept rationing and the eternal queue.

    26. liz Says:

      “The posting has an unstated assumption: that people without health insurance never see doctors, and that they will suddenly see doctors a lot more if they get health insurance.” — A.C.

      I just want to address what A.C. said in the first comment. My family does have health insurance, a high-deductible plan with a $5,000 deductible, which we pay for ourselves. We rarely go to the doctor as we are lucky to be healthy and have very few health problems. Two years ago, we met our deductible due to a one-night stay in the hospital by me and then, bam, we turned into a rabid doctor-going family. We went in for every little thing because, hey, we had met our deductible and out-of-pocket and didn’t have to pay for anything. We were in for things like acne and allergies, things we had taken care of ourselves with stuff we could buy at Walgreens. I couldn’t believe how much our attitude had changed. Now I have a nagging, hopefully minor, health problem but I’m holding out until next year because my husband turns 50 in January and will have a colonoscopy so we’re going to lump all of our health care expenses into that year in case we do meet our deductible. Based on our experience, I think people will suddenly see doctors a lot more if they get health insurance, or at least responsible people who pay their bills.

    27. TB Says:

      I think the flaw in the discussion is the assumption that government’s primary concern in taking over the health care industry is delivering health care.

    28. orthodoc Says:

      “I’ve met very few people who can avoid the “back in my day, kids were better syndrome”, so I take it with extra salt.”

      I’m not that old!

      Seriously, a fundamental problem with increasing the number of practitioners (MDs, NPs, PAs, whoever) is that there simply isn’t anywhere to train them. The infrastructure isn’t there. Making a physician takes 7-12 years – 4 in med school, and 3-8 in residency. So returning to the original post, we will almost certainly need more practitioners (presumably increasing the number of patients increases demand, though this isn’t necessarily certain; we do know that as the population average age increases, the utilization rises) but no way to get them.

      I would also point out that as reimbursement drops in the next ten years, the ability of academic departments and institutions to subsidize those who spend their time teaching (generally not compensated ) as opposed to seeing patients will disappear. I suspect that this will become obvious in about 10 to 15 years, after the current crop of academicians retire. So any consideration of the supply side has to take this into account.

    29. onparkstreet Says:

      @ orthodoc – thank you for putting so beautifully what I failed to do in my harried, mispelled and poorly grammatical run of comments! Heartache! Prizing speed over accuracy. Anyway, I have enjoyed reading your comments, and Michael Kennedy’s comments. Spot on.

      You are correct. There is always talk of expanding training programs, but it doesn’t seem to happen very quickly. And, the situation in training hospitals is acute: we cannot retain good people for very long. It’s a tough working environment because physicians are asked to generate as much revenue as possible by seeing patients, and, yet, still teach, some sort of research, etc. It’s basically an impossible situation.

      *One of the newest proposals in medical education is to do away with years of training, and go with competencies, essentially. In other words, if you can prove you have met the core competencies, you can graduate in less than four years. If it takes you one, you get out in one. I’m not sure how this would work….

    30. Kirk Says:

      A.C. said:

      “Many of the poor without health insurance already go to the E.R. and are seen and treated because the COBRA law requires it, and never pay anything. Some go to free health clinics which are often funded through a combination of Medicare and donations from various institutions. When you take these various factors into account, I don’t believe there will be a sudden, dramatic rise in requirements for doctors, nurses and medical equipment.”

      What you’re missing with this supposition is the fact that right now, there are a lot of uninsured who don’t want insurance, and who currently don’t seek care out for minor health issues. Wait until you force them to pay for health care they don’t feel the need for–you’d better believe they’re going to start making use of the system. After all, they’re being forced to pay for it. How much effect is this going to have? I don’t have a clue, and neither does anyone else. It’s not even factored in, from what I can ascertain. It will have an effect, however.

      I predict that this factor, along with others we can’t even begin to imagine, will render the costs of “Universal Health Care” to be exponentially higher than we even imagine in our worst-case projections, right now.

    31. PapayaSF Says:

      JeremyR: Up until about 1950 (IIRC), pharmacists had a great deal of leeway in dispensing many drugs. They are highly trained, after all.

    32. Buck Smith Says:

      I am surprised no one is talking about what information technology could do on the supply side. I believe I should be able to mandate that all my health care providers keep my medical records on a secure website that is paid for by advertisements of medical device, service and substance providers and cost me nothing. This should enable more accurate health care by lowering the cost of second opinions and review of diagnoses and prescriptions. More accurate health care means more supply. Outsourcing of some tasks to low-cost third world providers is also enabled. It is my gut feeling that the AMA and the government block this because each wants to preserve or enhance their control of the cash flow associated with my ( and everyone’s) health care.

    33. Tully Says:

      IIRC, the life-expectancy calculations in many other countries turn out to handle infant mortality very differently from the way it is handled in the U.S. statistics, which of course biases the results.

      You recall correctly — transnational comparisons of infant mortality are quite suspect. Onparkstreet is also correct. Life expectancy is not a direct metric for health care quality at all, but an indirect proxy measure, and a very poor one at that. (EX: Inner-city homicide numbers have little to do with quality of medical care, but lots to do with life expectancy figures.)

    34. Robert Schwartz Says:

      “Who Will Care for the Newly Insured?” by Michelle Andrews at Prescriptions Blog of NYTimes.com on September 5, 2009:

      … The Association of American Medical Colleges projects a shortage of 124,000 physicians by 2025. Universal health coverage would increase the shortfall by 25 percent, according to the organization.

      … At least 21 medical specialty organizations have projected physician shortages in the coming years, including specialists in allergy and immunology, dermatology, endocrinology, neurosurgery, rheumatology, emergency medicine and child and adult psychiatry, according to the A.A.M.C. Medical specialties that address the problems of aging — like cardiology and oncology — will be severely impacted.

      Primary care is expected to be one of the hardest-hit areas. … the American Academy of Family Physicians projects a shortage of 40,000 generalists by 2020, a group that includes family practitioners, general internists, geriatricians and general pediatricians.

    35. ameryx Says:

      I posed a supply-side question to Rep. Jim Himes (D-CT) at his Bridgeport town hall meeting last week. I had found a CNN story on the distribution of the uninsured by State, and a BLS report of doctors by State. Unsurprisingly, the distributions do not match. Three States have a significantly disproportionate concentration of uninsured and below-average numbers of doctors per capital: TX, FL & CA.
      Since there will be a disproportionate increase in demand in those States, and since we can assume that the idea will not be to cart the new patients across the map to see the existing doctors, we will have to see existing doctors redeploy to TX, FL & CA. How then, can the Congressman assure his District that they will continue to receive the same level of care they have today, if the per capital number of doctors in CT will decline?
      He had no good answer: something about encouraging people to go into the primary care field. That doesn’t address the problem of total doctors per capita by State; and it takes many years to turn out a new crop of doctors.
      Another way to ask the question: how can he promise that I will get to keep my doctor, if my doctor ends up 3,000 miles away?

    36. Dantes Says:

      I’m a physician, which does not grant me automatic pass with discussing these issues, but here is one perspective shared by many of my associates.

      Do we need additional medical schools and/or nursing schools?

      Last I read, a good third or more of primary care doctors these days are foreign medical graduates. (FMG,s) About half the enrollment in US medical schools are women.

      Nothing wrong with either, but the fact is that a good percentage of the women take considerable time out after they graduate to raise children, etc. So the statistics on number of medical school graduates vs workforce requirements are hard to pin down.

      There is a huge pool of FMG’s. Leaving aside the moral issues of second and third world countries plus Canada losing the people they pay a lot to train…after all, tuition is only a fraction of the cost of a medical education…do we keep importing physicians? Unfortunately, the government is not good at projecting needs.

      *Are the divisions of labor within the medical profession optimal?..for example, do we need to place more reliance on nurse-practitioners or to create additional intermediate-level professional roles?

      This comment may generate heat. One of the reasons medical school is 4 years, and residency for training an additional 9 years, is that medical diagnosis is complex. Nurse practitioners, PA’s and other physician extenders are helpful,but not ready for prime time. They tend to order a lot of examinations…expensive examinations, such as lab, xray, etc…and really cannot put it together. Put it another way…if nurse practitioners, PA’s and other intermediate professional roles can do the same thing as a doctor, then let’s start closing medical schools and expanding the training programs for intermediate professionals…I don’t think that’t the way to go. But this getss to the next point.

      *Are the selection criteria, curriculae, and teaching methods for the medical professions optimal, or we in some cases requiring more years of schooling than really necessary–or, perhaps, the wrong kind of schooling? (See comments by GTWMA at this post.) What about entry criteria?

      The first two years of medical school have been likened to drinking from a firehose. The information medical students memorize is prodigal, but there is another reason for it. It trains the mind…sort of like special forces training for soldiers. You have to be able to process huge amounts of information, and that’s really the purpose. The problem with many residencies now are too restrictive work hours, not too many. Managing patients takes a lot of experience, but it can be difficult to measure outcomes. Fact is, 90% of acute illnesses are probably self limited…so it doesn’t matter what you do, or do not do. It’s that 10% which doctors go to school for. I’m 52, board certified in two subspecialties, and I still learn something every day.

      *What productivity improvements can realistically be expected from electronic medical records systems? (I expect that there are indeed some, but they are less overwhelming than sometimes assumed.)

      You are correct. Medical record systems are not all that great for productivity. Besides, I don’t want my medical information on a national database. Period. If people want to use them in an office, fine. If people want to take a copy of their medical record with them to give to other people on a case by case basis, fine. But the advantages of EMR is really geared to the benefit of the payors and the government, not the doctor and the patient.

      *What happens to the costs for expensive medical equipment–CAT scanners, MRI machines, etc–if the production volumes are sharply increased? It seems unlikely that these are the only manufactured products in history which do not have economies of scale. On the other hand, what happens to unit cost if constraints on the application of these systems result in reduced production volumes?

      We won’t know, because there is not true competition for medical services. The payment is dictated by codes. A provider is paid the same for the 1st exam and the 100th exam. Frankly, this is the part of medical reform that deserves more attention. Let doctors own/run hospitals and make a profit. The byzantine rules of the government and insurance companies, which are modeled after government payers, pretty much freeze out innovation, and a lot is due to the attitude that doctors, for example, should not make a profit. So, we should work for free? It isn’t a dirty word, profit, but it is when it comes to medicine. Ironically the so called not for profit hospitals make more than anyone. Estimates are they have 2-4 TRILLION dollars in real money assets. See donoharmdoc.com

    37. Marty Says:

      HillaryCare tried to get at some of this by having a govt agency decide how many specialists in each discipline could be trained by setting up a certification requirement for med schools. They wanted to sharply reduce most specialties because the politically approved trope at the time was that expensive specialists were driving up costs… as usual, there was no serious analysis behind the political position and it would have been a big mistake.

      As someone whose wife has 2 very severe chronic pain conditions, I appreciate the comments that life expectancy is NOT a good measure of health care quality, at least not if it is treated as the only one.

      It has been observed many times, that what we have in the USA is not health insurance as much as prepaid medical, and that coupled with defensive medicine practiced in the shadow of the tort lawyers is why aggregate health care costs seem so high. Drug price controls in other countries also play a part, of course.

      So many of the answers are just so obvious… HSA’a and hi-deductible plans, reasonable co-pays, purchase insurance across state lines, and reasonable hi-risk pools, equal tax treatment regardless of who pays. Some things are more difficult, but in the realm of what a good political process could deal with. Everything coming out of Washington is an impediment to true improvement because it is all in pursuit of other, sinister, agendas

    38. Marty Says:

      fwiw, a week or so ago I got a call from National Opinion Research Center (NORC) at U of Chicago, doing a poll on what people think about computerized medical record systems. Presumably they will be coming out with something on public perceptions of same, in a while…

    39. david foster Says:

      Strikes me that there are at least 3 sets of “customers” for electronic medical records: physicians, billing/payment entities, and epidemiologists…and that the userfulness of the system to each customer type will depend on the implementation chosen. For example, if a visit is described in full text, it will probably be less useful for analysis of disease patterns than if it is coded with this application in mind…OTOH, the coding most useful for disease-pattern analysis is probably quite different from that most useful for billing purposes.

      I’m also concerned about reliability issues with EMR…people had better be thinking about manual backups and making sure that they actually work when needed. Even systems engineered for high reliability do occasionally fail.

    40. Buck Smith Says:

      Strikes me that there are at least 3 sets of “customers” for electronic medical records: physicians, billing/payment entities, and epidemiologists

      Wat about the patient? He or Se can use EMRs to allow more people to efficiently cooperate in providing him or er health care services.

    41. GTWMA Says:

      To get back to the labor issue, the AANC for the last several years has reported the number of qualified applicants who did not receive admission to baccalaureate nursing programs, primarily because of faculty shortages (which in part are due to accreditation requirements in clinical training). Every year 30-40,000 students who meet qualification standards and want to be nurses get denied admission. Admitting them would increase the number of nurses graduating every year by 20-30 percent. Do that for the next 10 years and the nursing gap is close to zero in 2020. And I’ll repeat, those are standards that met the entry qualifications, so while they may be of lower quality than admitted students and the increase in student numbers could hurt training, these are students that meet the existing standards for admission.

      The situation with doctors is similar, but less dramatic problem. Our physician to population ratio is significant lower than the OECD average, yet every year we turn away many qualified applicants. Students with a 3.8 to 4.0 GPA and MCAT scores in the 27-29 range have a better than 25 percent chance of being denied admission. Again, I’m not saying those students may not be as good in terms in quality or that there may not be a reduction in quality of training. But, that’s a tradeoff we should discuss, because the shortage itself reduces access AND reduces quality AND drives up costs.

    42. GTWMA Says:

      Orthodoc and others. I hope this explains why I am skeptical…

      http://mcr.sagepub.com/cgi/pdf_extract/17/3/131

      A feeling and conferences aren’t data in my book. There isn’t a lot of hard data on this, but over the last 10 years MCAT scores have gone up (29.5 in 197 to 30.9 in 2008). Average USMLE scores have also been rising.

    43. onparkstreet Says:

      I agree with you that, GTWMA, that we should train more physicians. Somehow, translating from we should, to it actually happening, is quite different. I don’t know why. Bureaucratic inertia, lack of money, increasing costs for teaching students? I don’t actually know.

      As to your second point, yes, feelings and conferences are not data and I am familiar with the similar, or rising, MCAT scores. And. Yet. Taking a test and being an adult, who shows up on time, ‘owns’ their clinical cases, is responsible, and follows-up, with due diligence, on clinical matters, is not the same as scoring high on a test. I submit it is not the students, but attitudes toward work, that we ourselves foster, that may be part of the perception that ‘something is not quite right’ with medical education.

      How you provide data to test that hypothesis, I don’t know. Do you have any suggestions? I’d love to hear them :)

    44. onparkstreet Says:

      Hmmm, I seem to be in love with commas this am…..

    45. GTWMA Says:

      If one were a cynical economist, onparkstreet, one might suggest relaxing the control of the existing cartel on entry restrictions (of both schools and students) might be an effective approach. Many schools responded almost immediately to the statements by AAMC that enrollments should expand and expanded enrollments. But, there are many other factors, too.

      Yes, I want to be clear that I am not suggesting data from exams tell the whole story. Or that your impressions should not carry some weight. As the article from 1960 indicates, however, these exact same concerns were voiced about earlier generations. Somehow, we muddled through. We all have all sorts of biases built in, and generally remember ourselves and our peers as far better than we really were.

      I have kept some of my old undergraduate papers. Before grading my students, I sometimes pull a few out and read them to remind myself I wasn’t nearly as smart as I think I was.

      That’s my empirical test. :)