Tuesday, January 26, 2010

Time to put private health delivery to bed.

There seems to be one demon that lingers that Albertans have to fight off time and time again. At least this time it appears that our premier is actually standing up to the demon, instead of opening the door like our last premier did - and now the opposition is on board too. Somehow, whenever the issue of "wait times" arises, we must again exorcise the neo-con ideologies of competition and privatization in health care.

Albertans have been abundantly clear that they don't want private insurance and they don't want two tier healthcare, but this spectre of fee-for-services and private operators in the public system won't go away.

The general principle is this. The government sets a rate that they will pay for a given procedure, the customer (who cease to be patients in this model) chooses where they will get the procedure done and the single payer (government) pays for the service. The typical neo-con reasoning behind this concept is that the service providers will compete for the funding that patients bring and will strive for efficiencies in the system - bringing down costs and boosting innovation.

The flaw however is the exact thing that is supposed to make the system work - profit motive.

Let's start this discussion with a little formula: Profit = Revenue - Expenses. In order for private interests to want to be a part of the system (and don't kid yourself - they really, REALLY do) there has to be a profit available to them. And if the goal of reform is to bring down costs, then that profit has to be made within the current funds available. There are two ways that that profit can be realised while maintaining the cost of the system - increase revenue or decrease expenses. I will discuss the drawbacks of both of these situations independently.

Let's consider some ways that private health maintenance organizations (HMOs) can increase their shares of revenue within the system.

First, they can see more people in a shorter amount of time. The theory works well... in the delivery of cheeseburgers. McDonald's does great business by getting people in and out quickly, but is that how you want your healthcare delivered? Do you really want to be put in to the loving care of a company whose primary interest is making profit, desperately trying to get you in, diagnosed and treated as quickly as possible? The fast food model simply doesn't compute for health care. It is likely to result in missed diagnoses or haphazard care.

Alternately, GloboHealthCorp could increase their revenue stream by competing for your return business. Sure, they may strive for top-quality service and positive customer experiences, but the best way for them to ensure you come back to see them is to keep you sick. After all, planned obsolescence worked well to drive up profits for the big four car companies. This strategy would stand in direct opposition to real strategies that control costs, like preventative care.

Finally, revenue could be generated by making unnecessary referrals and ordering useless diagnostics. Imagine, a Quickicare(TM) general practitioner sends you to see a Quickicare(TM) specialist who orders you a Quickicare(TM) MRI, which determines that your hangnail is just untreatable and the technician asks you to go back to your GP next week for further tests.

But what about using the profit motive and competitive market forces to drive down costs?

Since the single largest expense in any service based industry will be related to people, the best way to minimize costs is to cut staffing. This can be done by cutting staffing levels or staff compensation. Once again these types of solutions simply do not fit when applied to healthcare. Decreased levels of staff will result in overworked doctors and nurses delivering lower quality care or increased wait times. And decreasing staff compensation will drive away the best employees and decrease quality of service. This would be akin to the dollar-store model of healthcare, selling cheap quality products at the cheapest possible price.

Of course, lowering costs not related to employees could mean lowering building, maintenance, technology or drug costs - but the effects would be the same with minimal gains. Finally, efficiencies could be found by minimizing administrative costs, but I would suggest that those types of savings can similarly be made in the public system through responsible reform.

Ultimately, it comes down to this. When you are at your sickest and needing help, do you want the agency providing your health care to be motivated by your health or motivated by their profit?