Healthcare

7/21 – Face Book Entry “Had a discussion about the health care industry over a couple of Land Sharks and Red Strips when I wondered what would be the state of our health care system if we let market forces and not regulation drive it? What if the health care system - doctors, clinics, hospitals, MRI Centers, pharmacies and the like do if they had to solicit business from the consumer?”

I wrote this on my Face Book page and I have not been able to get it out of my head since. What if the health care industry had to compete for business like everyone else? What would the effect be?
The whole idea, as I understand it and I am no expert, is to provide health care for all and to act as in conjunction with private, employer-supplied health care. Nothing that I have read nor heard suggests that it is to replace our existing healthcare system.

However, in addition to expanding the level of coverage, health care reform is also looking at reducing the overall cost. Basic economics leads one to believe that as demand increases and there is a readily available supply then the price per unit should drop. As supply becomes limited with no corresponding drop in demand, then the price per unit should increase. However, while healthcare is not that simple, the economic principle is and I think that the industry is waking up to this.

What would be the effect if companies like Wal-Mart, decided to invest in-store health clinics as they did with grocery and in-store pharmacies? Since good number of these cases are normally seen by either one’s local doctor or the Emergency room. If the clinic system were to expand (whether through a Wal-Mart, CVS, Walgreen’s, Costco, BJ’s or Sam’s Club) and go more mainstream than it already is would that, in effect drive down to overall cost since clinics operate more cheaply than hospitals and perhaps some doctors offices? It is my understanding that there are over 1,000 clinics already established in some of the places I mentioned above and young doctors and Nurse Practitioners operate them at a reduced operation cost.

Now, take that scenario and add capitalisms most valuable feature – competition and slowly add an insurance capping feature to the mix and after a while it would be possible to see “ads” and “specials” on healthcares most basic services – Would we go so far as to see a Wal-Mart flyer with a special on proctology exam at $39.97? Who knows?

I think we have already seen some of this in the form of the recent passing of legislation allowing us to purchase lower cost medicine from outside of the country – Canada in particular. We are seeing Wal-Mart's support for the health care initiative. We are seeing the Presidents success in convincing the Pharmaceutical industry to offer price cuts up to $80 bin over the next 10 years for drugs to retirees. In addition, this month I read where the American Hospital Association will accept a cut of $155 bin over the next decade. Perhaps hospitals can franchise clinics the way Marriot franchises hotels. My thinking is that hospitals do not like competition. Speaking of which, hospitals, which are not known as bastions of profit (that is reserved for the Pharmaceutical industry) can make up for the cuts by embracing a form of universal healthcare system since that will reduce the loss associated from treating the under insured, not insured, indigent who may be reluctant to seek medical care until it is too late or the minor progresses to the major ailment.
Anyway, as I said, I am no expert and this is a complicated topic but I cannot help thinking that the Rx for healthcare is a good dose of Vitamin E (for economics).