Monday, September 12, 2011

Healthcare II - Innovation

Last time I discussed healthcare (August 25), I pointed out how unrealistic it is to expect to control the cost by working through the insurance system to make it affordable to all.  This may increase access, but it will do nothing to reduce costs.  In fact, the most likely outcome will be just the opposite.

A second obstacle to cost reduction is innovation.  Just yesterday a news item appeared about the use of the Stryker Navigation System to perform back surgery.  Not too many weeks earlier a television news item featured a similar medical success using computer-guided techniques to perform knee replacement.  It seems like every few weeks a story comes out about another medical breakthrough or new and more effective prescription drug.  We see these so often that we take them for granted and ask why the cost of medicine is rising so quickly.  We seem to want medical innovation to grow much faster than inflation but complain when costs do the same.

The problem is that we want 21st Century medicine at 1960s prices, but think about how many new techniques have saved how many thousands of lives over the past 50 years.  Some innovation should lead to lower costs, less time in recovery due to less invasive procedures, but much of this machinery (MRIs, lasers, computers, robots, etc.) is very expensive and not fully utilized.  It’s nice to have a fancy machine nearby, and all the hospitals want to advertise that they are a state-of-the-art facility, but this spreads the total cost across fewer patients.  (Note that the linked article is about a child in Merrillville, IN who preferred not to travel to Chicago, not 50 miles away!)  These dynamics, the ability to deliver top-notch care at our local hospital, come at a price, which is paid for by insurance or by the government, with no direct mechanism for consumers to make choices to get the innovators to slow down and figure out where the money is coming from.  They bill the hospitals or doctors who submit the bills to the insurance companies who inform us how much of it we owe.

With our seemingly insatiable appetite for better and better care and an insurance buffer between us and the provider, it’s no wonder the costs keep rising!  Healthcare cost is a complex problem and most of the aspects have never been adequately addressed.  Rather than leaving politicians to propose their one-dimensional solutions, we need a citizenry of Critical Thinkers to raise all these issues and push them toward resolution.  More on this later.

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