Beware the Battles of Health Care Giants
|By Patrick M. Barkey
June 5, 2006
Coming up with simple metaphors and images that can faithfully represent the issues involved in the way we pay for health care in our country is a challenge. But one keeps coming to my mind right away. It’s the kitsch Japanese sci-fi classic “Godzilla” versus “Rodan,” where two giant sized monsters duke it out breathing fire and smashing buildings as the residents of Tokyo quake in fear to see who will win.
There are some mighty big battles happening in the health care business these days. Health insurers are facing off against hospitals. Hospitals wrestle with doctors. Medicare and health care providers face each other down. And law firms do battle with just about everyone, with drug companies getting especial attention of late.
In the world of business, that’s not exactly news, of course. Goliaths go at each other for profits and market share everywhere you look. But what emerges in the wake of those battles is usually a better mousetrap. Who will win as Vonage faces off against Skype, the Blackberry goes head-to-head against the Treo, or when Google and Microsoft do battle? It will be customers, ultimately, that make that call, so we can all live with that uncertainty.
But since most of us don’t pay for the health care we consume – at least directly – the final shakeout from these battles between health care goliaths isn’t so benevolent. Consumers are like those terrorized Tokyo bystanders in the 1950’s movies – fearful because no matter which monster wins, there will still be a monster on the loose.
And in health care, we’re all afraid of the same thing – mind-boggling costs. Their growth has been built on things that we value – more utilization of new products and procedures that ultimately promises higher quality lives – but present a train wreck in the making nonetheless. And it’s not clear that the battles between the big players in the marketplace – within and between government agencies, health insurers, doctors, and hospitals – are making the situation better or worse.
Consider, for example, the rapid growth of specialized, suburban health care facilities in our state’s urbanized areas. These investor-owned, for-profit facilities are going up in the places where both the doctors and the paying customers increasingly live – in the suburbs. In a world where serving those with private insurance is profitable and where serving patients on Medicare or Medicaid is not, they make perfect business sense. And technology is helping to make it all happen.
But one of the supreme ironies of health care is that competition usually drives costs up, not down. Newer, well marketed, and conveniently located facilities increase the total consumption of health care for all facilities, especially for elective procedures. And the more frequent use of expensive technology in newer facilities – sometimes at the order of physicians who are also part-owners – tends to increase costs as well. And since we all pay for those costs, through private insurance premiums as well as tax support for publicly funded health care, its hard not to notice.
And that’s just one side of the equation. The older, general care, non-profit hospitals are heading into a world where their market will consist of the business that nobody else wants – indigent care, self-pay, and Medicare/Medicaid patients. All of those populations are growing, ironically, since health care costs are pushing premiums up to the point where it is no longer affordable to some employers. The better managed non-profits have been busy joining the game, setting up for-profit arms and their own new facilities to capture part of the business they seem destined to lose anyway.
It’s a crazy world, clearly, but is it a better one? Perhaps. But a comparison of any of the objective measures of the output of the American health care system – from infant mortality to life expectancy – to what we collectively spend may surprise you. We spend at least 50 percent more per capita on health care than other industrialized countries, yet we rank no better than average, and often worse, among our developed world peers. Maybe it’s time for the giants to step aside and let the smaller voices of consumers be heard.
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