Better Heath Care Through Consumer Choice

The left loves the idea of greater government control over health care in the United States. The right hates that idea. This ancient conflict (relatively speaking) drove the legislative process that produced ObamaCare. It effectively prevented any rational analysis of the real problems that plague health care and so made it certain that we would not spend our time and money looking for effective solutions. I thought it appalling, as this was playing out in the first two years of Obama's presidency, that neither Congress nor the press bothered to examine health care systems around the world in order to find out what worked and what does not.

One thing that the left seemed to believe beyond any possible doubt is that consumers of health care can't make rational decisions. They just don't know enough to tell the difference between good health care providers and bad ones and so consumer choice cannot be a force in encouraging better care. That would be very bad if it were true, since consumer choice is nearly always the most effective driver of improved services. But is it true?

Walter Russell Meade at Via Meadia directs our attention to this fascinating piece in the Wall Street Journal by Marty Markary.

U.S. surgeons operate on the wrong body part as often as 40 times a week. Roughly a quarter of all hospitalized patients will be harmed by a medical error of some kind. If medical errors were a disease, they would be the sixth leading cause of death in America—just behind accidents and ahead of Alzheimer's. The human toll aside, medical errors cost the U.S. health-care system tens of billions a year. Some 20% to 30% of all medications, tests and procedures are unnecessary, according to research done by medical specialists, surveying their own fields. What other industry misses the mark this often?

Trying to fix this problem from above, either by professional organizations policing themselves or government watchdogs policing the doctors, is doomed to failure. Doctors and hospitals will do what government agencies do: they will band together to protect themselves from unpleasant scrutiny.

Markary suggests an obvious solution:

Every hospital should have an online informational "dashboard" that includes its rates for infection, readmission (what we call "bounce back"), surgical complications and "never event" errors (mistakes that should never occur, like leaving a surgical sponge inside a patient). The dashboard should also list the hospital's annual volume for each type of surgery that it performs (including the percentage done in a minimally invasive way) and patient satisfaction scores.

A survey of New Yorkers found that approximately 60% look up a restaurant's "performance ratings" before going there. If you won't sit down for a meal before checking Zagat's or Yelp, why shouldn't you be able to do the same thing when your life is at stake?

Nothing makes hospitals shape up more quickly than this kind of public reporting. In 1989, the first year that New York's hospitals were required to report heart-surgery death rates, the death rate by hospital ranged from 1% to 18%—a huge gap. Consumers were finally armed with useful data. They could ask: "Why have a coronary artery bypass graft operation at a place where you have a 1-in-6 chance of dying compared with a hospital with a 1-in-100 chance of dying?"

Instantly, New York heart hospitals with high mortality rates scrambled to improve; death rates declined by 83% in six years. Management at these hospitals finally asked staff what they had to do to make care safer. At some hospitals, the surgeons said they needed anesthesiologists who specialized in heart surgery; at others, nurse practitioners were brought in. At one hospital, the staff reported that a particular surgeon simply wasn't fit to be operating. His mortality rate was so high that it was skewing the hospital's average. Administrators ordered him to stop doing heart surgery.

If consumers are provided with useful information then their choices will encourage better services. Of course, a lot of people needing care will not actively seek out such information. They will still hear people talk.  That's how lots of things work.  Some of us read the reviews before we go to a movie and some of us just ask people who have seen the darn thing. 

If enough people check out the hospital dashboards before checking in, that alone will scare hospital administrators into taking action. Unfortunately, the thrust of ObamaCare is to prefer uniform benefits and care over consumer choice. That is the wrong direction.

Comments

[Donald Pay]

Posting infection rates, med errors, etc., is already being done in Wisconsin, and many other states. It's the subject of news stories here every year.

The uniform payments to health care providers are actually an incentive to keep complications, like post-surgery infections down.

Providing useful information and competition is great, but that's really a big city solution, where your choice is to go to the hospital five miles down the road, rather than across the state. You really need to think about South Dakota when you are getting information about the situation in New York.

Uniform benefits are required only for those key diseases/syndromes that cost a lot to remedy. If someone who is prediabetic makes some modest changes, they can save a huge amount in medical bills/insurance payments.

[A.I.]

Silly me, I thought the thrust of Obamacare was to increase access to health care.

[Ken Blanchard]

A.I.: silly me, I thought the question above concerned quality rather than access.

[Donald Pay]

Competition may lead to higher prices. The article linked below indicates what has been going on in Madison, WI. This is a very competitive market for both health care and health insurance. There are three hospitals within two miles of each other, an ever increasing number of smaller clinics, and 7 or 8 insurance companies offering insurance through employers. Most medium to large employers here will give you a choice between 4 to 6 separate plans from 2-3 different carriers. Believe me, we have lots of choice, and lots of advertising on TV this time of year pointing to the advantages of each plan.

The problem is all this competition is leading to inefficiency as each medical group/insurance carrier seeks to enhance its individual interests. It used to be these medical groups cooperated, sending patients to a doctor outside the group if it didn't have that specialty. Now each medical group is duplicating specialties, driving up costs.

There is probably a way for economists to figure out what is an optimum amount of competition versus cooperation in each market. Let's not get on the bandwagon for "more choice" if that leads to further inefficiency in the health care market.

http://host.madison.com/business/biz_beat/healthy-competition-critics-say-consumers-lose-as-providers-build-bicker/article_46adbc46-01c9-11e2-821c-0019bb2963f4.html