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When American Healthcare is Deadly September 21, 2009

Posted by Dreamhealer in Big Pharma, Iatrogenics.
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The Atlantic’s “How American Health Care Killed My Father,” written by a business executive whose 83-year-old father went into the hospital with pneumonia and died 5 weeks later of sepsis and other iatrogenic causes, harnesses personal outrage to financial expertise to produce an absorbing analysis of the healthcare system. Starting with the puzzle of why hospitals are having difficulty installing simple precautions to protect against the spread of infections (shades of Semmelweis), author David Goldhill examines the perverse incentive structures that turn skill and dedication into inefficient and over-priced institutions and outcomes.

The big lesson: The financial problems, like the spread of sepsis, are iatrogenic, starting with the fact that the customers to be kept happy are not the patients but the payers and the hospitals, and the result is “a wasteful insurance system; distorted incentives; a bias toward treatment; moral hazard; hidden costs and lack of transparency; curbed competition; service to the wrong customer. These are the problems of our health-care system, resulting in a slow rot and requiring more and more money just to keep the system from collapsing.” Goldhill notes that his father’s stay was actually highly profitable for the hospital, which billed Medicare $636,687.75, and “even the most casual effort to compare these prices to marginal costs or to costs of off-the-shelf components demonstrates the absurdity of these [itemized] numbers.”

The bigger lesson: Current proposals bear little relationship to real problems, and will do little except add a few more special-interest-generated tiers to the house of cards, and further dysfunctions to the incentive structures. The right course is to move to a system driven by the patient-as-customer, combined with catastrophe insurance.

James V. DeLong

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