Wednesday, June 05, 2013

Has technology made healthcare more efficient?

Computers and other advanced technology have made nearly every industry more efficient and more cost effective, reducing costs for consumers in almost every sector of the economy. From manufacturing to farming to energy delivery to service industries, costs have come down, in real dollars. But there is one big red exception. Healthcare.

Despite continual improvements in technologies, procedures and knowledge, healthcare now takes more than 18% of GDP in the United States. That is almost $3 trillion and double or triple the share of GDP in many other nations. So while I see conservatives complain about federal spending being greater than 18% of GDP, they seem to have nothing to say about a health care industry devouring so much money.

Year after year, we see amazing advances and discoveries in health care. gene therapy, cancer vaccines, prosthetic limbs, fantastic new imaging devices, the list goes on. All of these great discoveries and inventions should reduce the cost of health care. They would certainly seem to make the industry more efficient, right?

On the administrative side, computers have only improved with time. We have amazing database technologies that make it easy to capture and collate information to discover trends. We can have a completely paperless solution for managing health care services. We can run analysis on outcomes to see which treatments are truly effective and find the treatments that are reasonably priced and effective. Doctors can dictation to voice recognition systems to generate their reports.

We should be in a technology utopia for health care, right? Wrong.

In recent months, we have learned of the "Chargemaster" an apparently arbitrary system used by hospitals to set prices. The department of Health and Human Services has, despite furious protests from hospitals, released a giant database showing pricing for the 100 most common treatments for every hospital in the nation. The database also allows a quick comparison of the prices paid by medicare, usually a fraction of chargemaster prices. This will remove part of the fog around pricing for many Americans. If you're a database admin, you're going to love this.

Our health care market lacks transparency. Transparency means, being able to determine the cost of a treatment plan and compare it to other service providers *before* you do it. Try it sometime. I did and just couldn't do it. I could get an approximation and that's it. My best hope was to check with insurance company to get a clear limit on my liability. Making this data easy to find and compare will make the industry more efficient. It will also increase competition since everyone will know the prices set by each hospital.

There is one more link that needs to be established: the relationship between the cost of health care and outcomes. At the moment, that remains unclear. Historical data shows that there isn't much difference between the most expensive hospital in the country and the lowest cost hospital. In fact, for some very expensive hospitals, the outcomes tend to be worse.

One final note about our health care system. It has become a sacred cow. The United States is a partner in many free trade agreements. They're pretty consistent. Expose the working class to international competition, but protect the doctors, lawyers and economists and other professions.

Exposing our health care system to international competition can bring down costs, just like with any other industry. Doctors have been very comfortable with so much protection from Congress in the form of "free trade" agreements. Noted economist Dean Baker has proposed that we relax trade rules and set international standards for practicing medicine so that doctors can study in foreign countries and come here to live and practice. A doctor from India used to incomes in India won't have any issues working for half of what an American doctor earns today.

Allowing foreign doctors to work here would relieve the shortage of doctors and ...wait a minute. There's a doctor shortage? Don't they go surfing on Wednesdays? Shouldn't they be working 70-80 hours a week? Why does my dermatologist only keep her office open 3 days a week?

As I was saying, foreign competition will get the attention of doctors here. Doctors here on average, earn twice the pay of of their counterparts in all other industrialized countries as a result of this protection. That is protection we cannot afford.

If we want better health care, we need to be willing to subject our health care system to scrutiny and competition. We have the technology to make this happen. When do we start?
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