The Uneasy Case against Free Market Health Care

If you are new to health policy, here’s a warning. You won’t spend very much time in the field before you hear the claim that Stanford University economist Kenneth Arrow has shown that free markets can’t work in health care. Here is Paul Krugman making the claim and here is Arnold Kling taking me to task for not responding to Arrow’s critique and a more recent variation on it by economist Joe Stiglitz in my book Priceless.

Mea culpa. I did ignore these arguments in Priceless, mainly because I don’t take them very seriously. But if Arnold thinks they deserve a rebuttal, let’s have at it. I’ll deal with the Arrow critique in this post and turn to Stiglitz on another occasion. (See Avik Roy’s summary of the Arrow arguments here and here.)

Basically, it all has to do with “asymmetry of information.” The doctor knows more than the patient. Therefore the patient has no choice but to trust the doctor and rely on her advice. There are quite a few problems that flow from this fact, but here is a big one: since the doctor has a financial interest in persuading the patient to overconsume health care, this “market imperfection” will lead to too much spending on medical care (to say nothing of the wrong kind of spending) and too little spending on everything else.

The problem with the Arrow critique of health care markets is that it implies that government intervention can make us all better off. But government faces the exact same asymmetry of information that you and I as patients face. And, as it turns out, government attempts to deal with the problem are demonstrably inferior to private sector alternatives.

What’s the worst thing that asymmetry of information can lead to? Basically, it’s fraud. Potentially, doctors (and other providers) can induce us to get care we don’t need — even risking our lives in the process. They can claim they have skills they really don’t have. They can bill us for services we never received. And make other “billing mistakes” that line their pockets at our expense.

The largest single buyer of health care in the United States, however, is government. And, it too faces an asymmetry problem: the providers have information the bureaucrats don’t have.

How well does government handle this problem? Miserably. Credible estimates put the amount of fraud in Medicare and Medicaid at 10%, or one out of every ten dollars spent. This amounts to a staggering $100 billion every year. Nor can there be much doubt about government incompetence in this regard. 60 Minutes managed to take its cameras to Florida and demonstrate obvious fraud in front of millions of television viewers. The New York Times and the Chicago Tribune at different times have documented rampant fraud in the Medicaid programs in their respective cities.

All in all, “government failure” in this sphere is so well documented, the claim that it exists is not even controversial.

To consider how things might be different, consider the credit card industry. Think how often you hand a credit card to a waiter or waitress or store clerk. Think how often a credit card of yours completely disappears from your view. Think about all the times you give your credit card information to a vendor over the telephone. Every time these things happen there is an opportunity for someone to use your card in a fraudulent manner.

Yet how often do you think credit card fraud actually occurs? Less than 1% of all credit card transactions are fraudulent.

I don’t have the space here to go into all the things the credit card companies do to deter fraud. But I will tell you two things worth noting: (1) they all cooperate with each other (and are allowed to do so under anti-trust law) and (2) they use highly sophisticated computerized systems. Interested readers can learn more here.

If the government would just privatize fraud deterrence (say by contracting it out to the credit card companies), I suspect that billions of dollars could be saved almost overnight.

In addition to the problem of outright fraud, health care differs from other markets in other ways. In general, there is no price transparency — patients rarely know how much a service will cost until after it is delivered. Hence there is no price competition and, for that reason, providers do not compete to lower costs either. Further, as I pointed out here, here and here, when providers don’t compete on price, they generally don’t compete on quality as well.

But these are all problems of the third-party payer system and readers of this blog know that we regard that system as one shaped and molded by government policies rather than free market forces. That’s why there is very little difference between government insurance and private insurance. When BlueCross is managing its private plans it acts pretty much the same as when it manages Medicare.

These problems are also the result of the efforts of organized medicine over many decades to suppress price competition and quality competition in the market for doctor and hospital services and to suppress normal market forces in the market for health insurance as well.

But how best to deal with these problems? Government or competitive markets? The way Medicare tries to keep doctors and patients from acting in their own self-interest with taxpayer money is by imposing all kinds of rules and restrictions and challenging the bills it receives. In fact Medicare actually denies more than one of every ten claims submitted to it by the providers of hospital care.

Contrast this approach with the behavior of competitors in markets dominated by people spending their own money out of pocket. Walk-in clinics not only post prices (thereby creating before-the-fact transparency), the nurses who run them, following computerized protocols, follow best practices more closely than traditional primary care doctors. If Medicare and Medicaid would simply pay the market price for the services offered by these clinics, the government could forget about denying claims and save money in the process.

Ironically, one of the goals of the Obama administration is to force the provider community to follow computerized protocols routinely. Doctors will understandably resist such “cookbook medicine,” especially where it is inappropriately encouraged. But the private sector seems to have no problem utilizing cookbook procedures where they are appropriate (e.g., in walk-in clinics) — without mandates or bureaucratic harassment.

For more serious surgical procedures, the market seems to outperform government as well. Both in the market for international medical tourism and domestic medical tourism, one finds price and quality transparency, package prices quoted in advance and competition on price, quality and amenities. Interestingly, Canadians who come to the United States for knee surgery (to avoid rationing by waiting in Canada) usually pay less than what Medicare pays!

I believe we are about to see an explosion of private sector services and products — all designed to deal with the so-called imperfections of the medical marketplace. The reason? There will be millions of consumers who will want it. Currently, there are about 27 million people who have a Health Saving Account (HSA) or a Health Reimbursement Arrangement (HRA) and employers are increasing the deductibles for just about everyone else. In addition, the Obama administration is about to announce a regulatory rule change allowing Flexible Spending Accounts to roll over year to year — thereby converting about 35 million use-it-or-lose-it accounts into use-it-or-save-it accounts.

As evidence of the need for heavy government involvement in the field of medicine, Arrow pointed to medical practice statutes that highly regulate who can deliver medical care. Yet as Milton Friedman pointed out in Capitalism and Freedom, these laws are mainly not protecting patients. They are instead protecting the providers. As Adam Smith observed of the medieval guild system, occupationally licensing is not guaranteeing that providers have the skills they claim they have. It is protecting the seller it the expense of the buyer. In medicine, it is propping up doctor incomes by restricting access to the medical marketplace.

In place of licensing, Friedman called for certification. Let government certify the skill levels of doctors, nurses, paramedics, etc. Then let patients make non-coerced choices among them based on their own preferences and needs.

The issue of occupational licensing brings into focus the most important fallacy in the Arrow critique of free market health care. There is also asymmetry of information in the political sector — politicians and bureaucrats have far more information than ordinary voters. In fact asymmetry of information in the political sphere is a far more serious problem than it is in almost any private market. This is one reason why occupational licensing almost always favors the producers and rather than the consumers. (See Monday’s post on Public Choice.)

What is needed is to combine an analysis of the “imperfections” of a free market for medical care with an analysis of the imperfections of government intervention in that market. In other words market failure must be weighed against government failure. When that is done, I am convinced the desired role for government will be one that is very small.

Comments (29)

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  1. Greg Scandlen says:

    Excellent, John. But there is also a more basic reply to Arrow. Information asymmetry is not a one-way street. Yes the doctor knows more about treatment than the patient does, but the patient knows more about what needs to be treated (his own health condition, medical history, life style, etc) than the doctor does. Doctors are groping in the dark unless the patient is forthcoming with his own information.

    Here is where the initial transaction takes place — I will tell you what my condition is if you will tell me how you are going to fix it. This transaction REQUIRES a level of trust and confidence that is lacking in Arrow’s world.

  2. Stefan Jovanovich says:

    Asymmetry of information is part of every fiduciary transaction. Trust is part of what the patient is buying. What Arrow fails utterly to consider is whether individual patients can get a better price for trust from “the government” – an entity about which they have no choice – or from individual doctors whose own wealth includes the value of their reputations.

  3. mdb says:

    I agree with Stefan. This happens with everything. Do you think a car buyer knows more than the dealer/sales person? No way. Any transaction the person selling will have more info than the buyer. If this is the standard for government intervention, than there is no transaction where the government should not be involved.

  4. Paul H. says:

    Good post. This was needed.

  5. Jordan says:

    +1 Stefan

  6. Al says:

    “If the government would just privatize fraud deterrence (say by contracting it out to the credit card companies), I suspect that billions of dollars could be saved almost overnight.”

    Ex Fl. Senator George Lemieux introduced legislation to prevent Medicare fraud that was passed. It seems the job may have been given to the wrong companies basing the choice on political needs rather than those with the requisite knowledge.

    http://online.wsj.com/article/SB10001424052970204349404578099243454411484.html Nov 2012

  7. Diana E. Furchtgott-Roth says:

    I guess free markets can’t work in auto repair either–asymmetry of information occurs there too.

  8. Immoral Philosopher says:

    Many people in the medical and health policy community believe medicine should be government-funded and free at the point of service. One reason often cited is the information asymmetry mentioned earlier. Another is the notion that whether or not someone has access to medical care should not be decided in the cold-hearted marketplace where the profit motive determines which services are rendered.
    Although well-intended, these are short-sighted ideals. The policy community needs to have an uncomfortable discussion about what society can actually afford to give and when enough is enough. The ultimate goal should not be to extend life at all costs – with society paying the bills. I suggest medical care should have limits because consumers make these types of decisions all the time. In everyday life, people make trade-offs and take risks. People drink & drive, they smoke, they over-eat. People eat the wrong kinds of food. People sit in front of the television rather than going for a jog and numerous other things. People don’t always drive the safest car, they don’t wear seatbelts, they speed, they don’t replace brakes as soon as they should. All the while, Americans do other things that benefit their health, like take vitamins, drink diet soda rather than higher calorie soda, see the doctor, etc. These are lifestyle preferences not character flaws.
    Families choose how to spend their money through revealed preferences every day. Americans have a finite amount of money – as does society. As individuals, we cannot afford to spend half of our lifetime income, say, $1million dollars, on medical care without sacrificing other goods and services that we might otherwise consume. The difference in our standard of living would be huge. For example, having an extra $1 million to spend on consumption during our working lives could result in bigger homes, nicer cars, better clothing, more frequent vacations, and much more. By contrast, spending half or two thirds of our lifetime earnings on medical care may only extend out lifespans by (for the sake of argument) 1 to 2 years compared to spending only one-quarter of our income. Neither should we expect to foist the cost on employers, richer taxpayers or government. If something is not affordable to individuals, it cannot be affordable as a society.
    The notion that money should never be a limiting factor for the amount of health care received is a fallacy. Moreover, there is a huge difference between dying on the street from lack of health care and not receiving hugely expensive care once we’re terminally-ill that will make little difference at the margin. Should the indigent receive care for a heart attack that is easily treatable? The answer is a resounding yes. Should everyone expect $300,000 worth of cancer care that medical evidence shows is likely to extend life only by one month? Probably not – unless they’re willing to pay for it. This is a politically incorrect discussion in the policy community. But it’s a discussion that needs to take place before we bankrupt the country with unaffordable health insurance mandates and unsustainable elderly entitlements.

  9. IronmanAndrew says:

    I like the idea of outsourcing fraud detection to Credit Card Companies. I work in fraud detection at DMESupplyGroup and I can tell you that the CC Vendors are very sensitive to retailers of medical equipment. Great idea. Sadly like most great ideas it will likely go unnoticed.

  10. John Seater says:

    I’m no expert on the economics of health care, but my impression is the the asymmetric information problem is mostly a theoretical one, not a practical one. First, most physicians I have known were honest people who became physicians mostly because they are altruistic. Such people do not abuse their informational advantage in dealing with patients. Second, for any major medical procedure, one can obtain a second or even third opinion. Third, physicians are liable for malpractice suits if they misbehave. None of those points *guarantees* that on any given occasion an individual patient will not be bamboozled by a crooked physician, but they do suggest at least some and perhaps a great deal of safeguard against the theoretical problem.

    Does anyone know of actual evidence on the extent of harm arising from the information asymmetry in the medical marketplace? I’ve not seen any, but as I said I am not an expert in the field.

    As for the lack of price transparency, I wonder along with John how much of it is the *result* of government, in the form of laws and regulations interfering with competition in the medical industry. The remedy is free entry. Weren’t lawyers and stockbrokers once prevented from advertising their prices? Maybe it was just “professional ethics” rather than outright legal prohibition. I don’t remember. However, the cure in all cases is free entry. It works in other industries, so why not health care?

  11. Devon Herrick says:

    I have always thought medicine should regulated like accounting or engineering — with the professional associations certifying the credentials rather than having the power of law to erect barriers to competition. One problem with medical licensure is that the only people who are deemed knowledgeable enough to sit on governing boards are members of the association being governed. This opens the door to the laws being rather self-serving. Thus, medical doctors have the right to decide who can treat patients. Not surprisingly, they decided only medical doctors were capable of practicing medicine and, (begrudgingly), osteopaths in addition to advanced practice nurses working for doctors.

    I have nothing against doctors. But I realize there are alternative treatment mechanisms that might evolve if the regulatory environment were not structured as it is. These potential (alternative) treatment models would still include medical doctors. But the way the practice of medicine is structured might be very different than it is today – possible more efficient and more convenient. But we’ll never know because medical licensure prevents experimentation with other practice design that does not conform to the cottage industry that characterizes medical practice today.

  12. Earl Grinols says:

    Reference to Arrow when better analysis is needed and available today reminds me of academic references to Aristotle long after his false statements should have been replaced. Galileo, and others, eventually did, of course.

    Diana E. Furchtgott-Roth’s comment gets the message out in the quickest possible way, and Stefan Jovanovich reminds us that it is time to do better than mindless references to Aristotle/Arrow.

  13. David Hogberg says:

    Excellent post. One other thing: Government actually makes the problem of asymmetric information worse for the patient. When government gets involved in health care, it issues thousands of pages of regulations, and who is going to be more familiar with those regulations, the providers or the patients? So now the patient is not only at a disadvantage regarding medical information, he’s also at a disadvantage regarding the information on how government policy is effecting his care.

  14. Rob Tenery, MD says:

    Your blog addresses the issue of efficiency of cost controls between the free-market versus government regulations. It also discusses better control of Medicare and Medicaid fraud and the substitution of physician care with less trained practitioners as other options.

    We must be careful in relegating certification of skill sets of practitioners to federal control. This has been mostly under state licensure boards and national specialty society responsibility and should remain that way. The states are more familiar with community standards and the specialty societies with required skill sets.

    Also one, if not the primary way, is to reign in the runaway cost of health care is by making the patients responsible for their ‘first dollar’ coverage through high deductable insurance, HSAs, HRAs and some method of voucher system for those who can’t afford more.

    I’m not sure which has been worse for the ‘practice of medicine,’ the third-party payers or the government. Maybe it doesn’t matter! At least, we shouldn’t encourage them to take over more of that control.

    Rob Tenery, MD

  15. Herbert G. Grubel says:

    We all face asymmetric information when we take our car to a repair shop. We protect ourselves from unneeded repairs by getting a second opinion from another shop, selecting the shop on the recommendation of friends who have had good experience with it and staying with it if we get proper service. Health care is no different from car repair service and unless we have full insurance coverage so it does not cost us anything, or we don’t care about costs and risks, we should deal with asymmetric information the same in both instances.

    There is no need for government operated and financed car repair business than there is for the health care business.

    Keep up the fine work.

  16. Diana Furchtgott-Roth says:

    By the way, since we’re approaching tax filing season, we know that there’s a great deal of asymmetry of information between professional tax preparers and tax filers. Perhaps we should have the government take over the tax preparation business too.

  17. Milton Recht says:

    Potentially, in every commercial transaction, buying of goods or services, one party has different or more information than the other party. Even for relatively comparable items, such as a Vizio vs a Samsung HDTV, each company knows more about the quality of its manufacturing process and components than I know. Medicine’s difference is not informational asymmetry. It is regulatory and legal rigidity than prevents market solutions to informational problems.

    In most markets, supplemental information sources arise to offset any information advantage, e.g., Consumer Reports, product reviews, etc. Companies also know that informational disparities slow sales, decrease customer satisfaction and try to offset buyer or seller informational insecurities.

    In used cars, the response was certified pre-owned with new guarantees as to quality. For auto repair, computerized diagnostics is now available. For auto dealers, credit reports are available.

    In medicine, despite all the information available about doctors’ performance, very little, if any, is made available to the public. Public censuring or loss of medical license almost never occurs for poor medical performance. Names of users of the doctor, medicine or procedure is unavailable due to privacy laws. Off label uses and benefits of prescription medicines are not publicly known.

    Markets respond to information needs unless government steps into the process and creates barriers and excessive transaction costs to obtaining information.

    The regulation of medicine has created the continued existence of informational problems in medicine.

  18. Andrew O says:

    Price transparency is, indeed, a key component in addressing health policy that, honestly, is not afforded enough scrutiny and debate on the national scale. Consumers ought to know transparently what surgery x will cost and where the money is going. I think the grey area that needs to be further discussed is the cost transparency when it comes to medical emergencies, both short term emergencies and long-term terminal diseases. In this sense, health expenses are different from repairing a car because you know the car will be repairable or not–you don’t know if you will beat cancer and at what cost.

  19. Bob Hertz says:

    As Andrew suggests, there is a very large gulf between discretionary medical care and emergency life-threatening care.

    We do not have a problem letting homeowners choose between sprinkler systems and smoke detectors.

    We would have a problem if homeowners got to choose what fire engines to call when they actually have a fire.

    Dr. Goodman is correct about having more consumer choice in discretionary care, but the anti-market crowd is also correct about having more consumer protection in emergency care.

    My solution would be a binding national fee schedule for emergency care, and plenty of public funding for ER’s and urgent care clinic. We cannot count on people having enough savings or the right kind of insurance when they fall off a roof or have a heart attack. Nor do we want fire departments so short of money that they have to send enormous bills to fire victims.

    Bob Hertz, The Health Care Crusade

  20. Dr Josh says:

    Nicely written article. Thank you for defending the free market.

    Simply put, the free market [doesn't] work in health care b/c I would argue we haven’t tried it yet…outside of limited environments like urgent care.

    Direct primary care (ie concierge medicine) is proving that the free market is the most powerful tool in medicine.

    As evidence, I offer my clinic, http://www.Atlas.MD where we take no private/gov’t insurance and provide an unsurpassed value:

    -prices based on age only and not on pre-existing conditions = $10-$100/mo
    -unlimited 24/7 access to your physician by email/sms/sm/email/etc
    -unlimited home/work/office/technology visits
    -same day visits, appointments for 30 minutes to 2 hours
    -gourmet coffee and ipads in the waiting room
    -no copays for anything…ever…
    -all procedures in the office are free (see list below)
    -up to 95% discount on medications and labs by going wholesale (often saving more than the cost of the membership)
    -up to 50% savings on health ins

    list of free procedures: laceration repair, biopsies, joint injections, ultrasound, dexa, ekg, holter monitor, spirometry, urinalysis, audiometry, rapid strep testing, IV fluids, minor surgical procedures, medical laser treatments, home sleep apnea testing, and more…

    Now thats how the freemarket attacks “expensive” healthcare…by getting to the heart of the problem…redtape…

  21. Mark Pauly says:

    Just for the sake of history, and in response to Krugman: Arrow did not talk about moral hazard in his piece (that is why I wrote my note) and did not really talk about adverse selection in health insurance (which is what asymmetry of information usually suggests to economists). In fact, critics of private insurance markets in health care usually object that individual insurers can identify low and high risks and charge them different premiums, not that they cannot (which is what would lead to adverse selection). Arrow does have a point about doctors knowing more about patients about some things, which means the convention econ 1 fully informed consumer model cannot work. But there is little reason to think that the government knows what the doctor knows about me that I do not—so no obvious thing the government can do to solve this asymmetry. It is just a fact of life (as it is in other markets for repair services) and consumers deal with it by choosing across sellers of services based on reputations and the like. This raises the possibility of what health economists call “demand inducement” about which the charitable thing to say is that the evidence is inconclusive.

  22. Stefan Jovanovich says:

    I may have misunderstood his comment, but I believe Mr. Hertz is wrong when he writes that “we” “do not have a problem letting homeowners choose between sprinkler systems and smoke detectors. We would have a problem if homeowners got to choose what fire engines to call when they actually have a fire.”
    People are not, in fact, currently free to choose what to put in their homes; our building codes are as stupidly restrictive as our rules for health care. In the 19th century people did have the choice of which fire department to call; one of the terrible ironies of the “progress” of the late 19th century was that the choice was taken away. The result was an increase in catastrophic urban fires – the San Francisco and Baltimore fires being the worst examples.

    The current “common sense” about collective action does not fit the facts of American history. Public service bureaucracies cannot rationally justify their monopolies by arguing that liberty – whether in market transactions or in unpaid conduct or both – does not and cannot by itself solve “community” problems. When, in the midst of his struggles to free his countrymen, Gandhi was asked what he thought about “Western civilization”, his reply was “people really should give it a try”. They should.

  23. Kenneth A. Fisher, M.D. says:

    Asymmetry of information is present in almost all purchases. When we buy a car, do we know how to fix an automatic transmission, can we fix a lap top computer,etc.? Yet we know what works for us as an individual consumer, medicine is no different. To me this asymmetry of information argument is a straw horse put up by those who need the rest of us to believe it.

  24. James Wootton says:

    John—

    Agree the goal should be to minimize the role of government and per the Coase Theorem, let the market work. However, it is worth pointing out that all of these left-leaning economists, by virtue of the Democratic coalition in which they operate, are in bed with the personal injury bar. These lawyers effectively block reform of the medical liability system which significantly contributes to an asymmetry of information between providers and patients.
    The medical liability system is notoriously inaccurate and this inaccuracy means it is unlikely to drive reductions in errors or provide consumers useful information on the safety of providers or medical products.

    A Harvard study of 1452 malpractice claims that appeared in the May 11, 2006 issue of The New England Journal of Medicine found that:

    * 27% of the time there was a medical error but no payment.
    * 28% of the time there no medical error but a payment was made.
    * 16% of the time there was no injury but a payment was made.

    While patient groups clamor for improvements in patient literacy which would be facilitated by simplified labels, the FDA labeling regime doesn’t produce true assumption of risk by patients because the manufacturers cannot afford to be exposed to an irrational liability system from which personal injury lawyers profit handsomely. That system keeps life-saving products off of the market and casts a shadow over the promise of targeted therapies made possible by advances in pharmacogenomics.

    Study after study shows that this record of inaccuracy and failure to improve safety and quality comes at a cost of 60 cents of every dollar paid to injured parties. Also, it is a well-known inhibition to the adoption of heath IT which could improve the quality and reduce the cost of patient care. Yet , because the discussion of the medical liability system is off limits in polite liberal society, liberal healthcare economists ignore its distorting effect.

    While the prospect of medical liability reform at the federal is dim in the current political environment, it is crucial for free-market healthcare economists to press their liberal counterparts to face up to their neglect of the issue. Hopefully, there will be a day when rational reforms in this area have a better chance.

  25. Stefan Jovanovich says:

    There is one immediate cure for the medical liability problem: have American courts adopt the common law system with regard to fees and costs. Under precedents that are now more than a millennium old, losing parties were – and still are in Britain – required to pay their opponents’ costs and fees. Malpractice litigation is, from the point of view of the plantiffs’ bar, a zero-sum game; for the accuser there are no financial risks in initiating litigation. The merits of the complaint do not have to assessed at all.

  26. Bob Hertz says:

    To Stefan:

    I realize that the fire department analogy is imperfect. Fire departments will put out the fires even of people who have not paid their taxes, because fires jump from property to property.

    Whereas almost all of American medical care is for self-contained diseases. If my neighbor has heart disease or cancer, I will not get heart disease or cancer even if he goes untreated.
    There is no public health argument for the expensive end of life care that Americans receive. If our average life expectancy fell by a few years due to letting people die, the nation would not be poorer (and given the enormous liabilities of Social Security and Medicare, we might become marginally richer.)

    Anyways, where I was going with the fire department analogy is that economic decision-making is grotesque in the throes of a lethal illness. I have counseled families in these situations (I am not a doctor), so I know whereof I speak.

    Just as decision making is grotesque when the fire is at your door. We must trust the professionals at that point.

    Paying for emergency care collectively strikes me as eminently sensible.

  27. NotMyUsualHandle says:

    Basically, it all has to do with “asymmetry of information.” The doctor knows more than the patient. Therefore the patient has no choice but to trust the doctor and rely or her advice.

    Healthcare has an advantage over other markets in that your GP does very little of the expensive stuff himself. Also you spend time with him and so if he knows that you are paying out of pocket he is inclined to help you get good value. Now if he is getting kick backs etc. that is where researching your Doctor is needed but that is needed with many products.

  28. Eric B. Mims, MD says:

    I’ve been practicing Internal Medicine now for 22 years. I also have 18 years of part-time and full-time ER experience. I am the son of a Neonatologist who was considered the physician’s physician…a consummate southern Gentleman and passionate practicioner of his trade. I learned more about caring for people from my father before I ever even entered medical school than all the years spent in training. What I learned foremost is that the prime directive we must apply is to serve the patient. This first entails learning your trade well enough that you do not mislead those future patients with poor information or lack of knowledge. This key ingredient does not exist in mid-level practitioners following cook-book protocols. It does not exist in online eMedicine articles on symptoms or disease descriptions. It lies in extensive experience coupled with an expansive knowledge base, something one simply cannot acquire with 1 or 2 years of mid-level training. This is the appropriate asymmetry of information mentioned.

    The current health care trend in the US will rapidly destroy this prime directive in the name of cost-savings. As more and more emphasis on “accountability” is now being implemented (ACO’s, Medical Homes, Meaningful Use, ect) the patient and his physician are being herded into an unavoidable situation where the practitioner’s knowledge and care decisions are being ousted in the name of efficiency, electronic medical record reporting and cost-control. Couple this with an ever-increasing elderly population and you most certainly are cooking a recipe of misery.

    How can a NP or PA possibly apply “best-practice” models solely on the premise of written text? There are no “best-practice” models for the typical 75 year old with 15 medications, 10 health conditions and more questions than meds and conditions combined. Yet this is the typical senior in America, growing at an exponential rate. While the push in this country is becoming “shove” to move people to less expensive care by telling them they should/must access mid-level care instead of the more “costly” physician, they are blindly ignoring the fact that as an aging country, the sickest of the sick are going to be mushrooming in the next 30 years.

    Concierge medicine, as mentioned by one physician on this response page, is a wonderful concept. The sad truth, however, is these models severely limit patient populations in practices to a fraction of conventional numbers. Most models limit these concierge practices to 500, or at most 1000 patients…for good reason…as higher numbers would quickly and easily overwhelm the physician who has “promised to be on call for you 24/7″. Concierge medicine, while it presents the concept that it is the best choice in serving patients, is actually much more accurately only the best choice for the physician. The truth behind the model is the sales pitch all these companies make to their prospective physicians (trust me, I’ve heard the pitch multiple times)….”We’ll raise your per-capita income and slice your patient population to 1/10th your current size, while simultaneously getting you out of the insurance rat-race.” As a physician, the appeal is immense. However, in an era where primary care is horribly under-served and preparing for a massive exodus due to upcoming HCA mandates, this is not a viable alternative for American health care.

    The Fed’s answer is that you, the patient, are just as adequately served by having a sea of assistants and mid-levels managing your care…even if you are severely ill with multiple medical problems that frequently lead to critical health deterioration. Their solution is that the hospitals will be there for you when you are at your worst. Sadly, those hospitals are under the same cost-saving mandates as primary care in the office. Additionally, another 20 million newly insured patients under the Affordable Care Act are about to discover there are no PCP’s out there to see them…and the ER’s are going to be swarmed by a sea of “unattached” insured patients. Good luck in 2015 getting timely ER care. Come 2014, those PCP numbers are going to plummet when primary care looks at the looming PENALTIES for not implementing Meaningful Use, NPQA, ACO and a host of other “management oversight entities”….all “experiments” yet all forcing us PCP’s to jump through their hoops.

    What is the solution? I don’t know. But the current attempt is certainly going to be ruinous before it is realized how devastating to the US health system it will be. Decisions for where health care in this country should turn certainly were not made by my father’s generation of physicians. Someone that took the reins either never learned the first mandate of patient care or ignored it due to pressure from lawmakers, economists and special interests.

    My advice is, seek that caring primary care physician in your town who leaves no doubt in your mind that your safety and well being are the most important part if his practice. The pretenders are easy to spot…the guys with their heads in the computer monitor, backing out of the room on your 2nd question. The guys you never see because you “always” only seem to get to see the mid-level practitioner. The offices that never seem to call you back with lab or x-ray results. The guys that herd cattle, seeing you for 5-7 minutes then moving on (NO, there is NO way you can serve an elderly patient properly with a 7 minute visit.)

    Good Luck, America. We’re going to need it.

    Eric B. Mims, MD

  29. Pete, MS1 says:

    No consumer could possibly navigate a business as COMPLICATED as travel…

    It’s a 2 year old vid, but still as applicable as ever. Enjoy!

    http://www.youtube.com/watch?v=5J67xJKpB6c