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?


Atypical Albertan said...

This comment from @CommonSenseSoc:

Reminds me of some dear friends I have in Boise Idaho. They were on holidays "out east" Chicago way when the wife became sick. Urgent trip to the hospital, seen by a specialist, who said there wasn't much wrong and gave her some pills. They flew back home, she got worse, saw her local doctor who put her in for emergency surgery. The Chicago specialist was a quack, and they paid 5 grand for that visit. Surgery and hospital back home cost them another 15 grand but her home doctor saved her life. What we have HERE in Alberta, and in Canada, is special. Private health care will make us just like them. Say NO to private health care!

Feynman and Coulter's Love Child said...

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.

If you really believe this to be true, then you have nothing to worry about. They can bring in private health insurance but since "nobody wants it" nobody will get it and companies will have wasted time and energy and money developing policies "Albertans" won't pay for.

This is, of course, completely bunk. The reason you don't like private healthcare is because Albertans do want it, they are willing to pay for it, and all it takes is a government with enough horse-sense to actually bring it in. But you don't care what they want, you only care to give them what you think they want.

Unknown said...

The messaging the government is using is "publicly funded" health care. "Publicly funded" health care can be privately delivered and that brings up the business realities that you address in your post. Business realities that for whatever bizarre reason a government that prides itself on being businesslike refuses to address. Refusing to acknowledge the obvious only promotes peoples' distrust of their motives and judgement. There has been deliberate confusion created over this issue and as my grandmother use to say "the devil hides in confusion". It is time for the jailhouse lawyer tactics to stop and there be an honest and respectful discussion between the government and the governed on this issue which should include defining the terms of reference. What exactly is meant by "publicly funded". What is the vision of healthcare for Albertans? Is the healthcare system chronically underfunded? Are Albertans being realistic in their expectations? Hopefully this can happen.

Derrick Jacobson said...

While you make some reasonable points, not that I agree with them, this is the kind of thinking that has put our health care where it is today. Alberta spends an above average amount of $$ per capita for Health Care and recieves below average care.
I would be more interested in seeing how you fix it rather than shoot down any other ideas people have. The proof is in the pudding when you look at the best health care delivery in the world, they are open to competition. This fearmongering has kept Alberta from acheiving the best delivery it can provide. We have some of the highest paid employees, so I ask how your theory of retaining the best staff by paying them more shows any fact whatsoever.

Atypical Albertan said...

FACLC - I can't believe I'm saying this but I agree with you.

I agree that there are some Albertans that want private healthcare. I understand that when you are sick, you want to get better. When you are dying, money ceases to matter and you will pay whatever you can to extend your life. I get that.

I also understand the consequences of allowing that. I know what it's like to live month to month to struggle to make ends meet at the best of times. I know that Albertans believe EVERYONE should have access to quality healthcare.

I also know that two-tier care puts medicare in serious jeopardy. I just have to look south to see the results of that.

Atypical Albertan said...

Albertagirl46 - Bang on! There was severe mistrust in the Klein government over health reform because he never presented a business case for any of his reform models. In fact, we still aren't being presented with the business case for the Stelmach/Liepert/Zwozdesky reforms. We have no idea what change is coming next and we had no real idea why the last one was implemented. AHS has been a complete failure from a governance/management standpoint, but we didn't get to discuss whether amalgamation should occur or not.

When I look at the donors to the PC party, I also get suspicious of why there is a push for private.

Atypical Albertan said...


Your assertion that I am not providing a solution is valid, but that was not my thesis today. I will try to write about some proposals in the future.

Having said that, I am not fearmongering I am just trying to understand the business case for private delivery. I simply do not see it working in a way that benefits all Albertans. As a journal editorial pointed out earlier this week, it's quite simple, we either pay more or we get less.

On the matter of paying employees more, the fact is we have some world class people here in our system today! Look at the incredible world-class research that is being done at the U of A hospital. Our system is only as good as it is because of our incredibly competent medical professionals. Unfortunately, they are simply overworked and can't achieve to their full potential.

Do you feel that private providers will be cheaper because they will be able to hire non-unionized staff and pay them less?

Rerin said...

There is nothing good about health care in the US that pertains to "ordinary folks". I pay a lot of tax, and am proud to be able to, and I do not want one thin dime of it to go to private, for-profit health care providers. I do not want an HMO/Insurance company making decisions about my medical care, because they will make the decision that is best for their bottom line, rather than one that is best for me. I want my healthcare providers properly compensated for their education, and for the amazing job that they do. Thanks for keeping this in the public eye.