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In Other Industries…

Wintercow’s post today brought this IOM poster to mind from Ezra Klein:



Hmm, it’s intriguing that best practices in health care would have so much to mimic from other (competitive!)  industries. There are good arguments a la Robin Hanson for cutting health spending in half, but they’re orthogonal to the boots-on-the-ground efficiencies that competition in health care provision could bring. If Robin is right, iatrogenic risks quickly converge with the benefits of the marginal treatment, and so most health care beyond the basics is a costly signal of loyalty and compassion***. Therefore health spending could be massively cut with only small marginal effects on health outcomes (as seen in the RAND HIE and contemporary regional variation in Medicare spending with little change in outcomes).

This is a cursory blog post on a much broader topic, but at least the IOM recognizes that health care has something to learn from competitive sectors for those services that are indeed useful.


***Of course we could argue about clinical trials and the cost effectiveness literature that seeks to tease out which procedures objectively work how well for what price, but the aggregate net benefits of medical interventions are still important to examine: interventions in a controlled lab setting might prove effective, yet still be ‘nightmares of iatrogeny’ (copyright pending on that phrase Wink) in real practice thanks to medical errors and unaccounted drug/device/morbidity interactions. That’s at least one of the hypotheses we have for the gap between the aggregate uselessness of the marginal health dollar vs. the often favorable results of specific clinical trials.

3 Responses to “In Other Industries…”

  1. wintercow20 says:

    It is probably the case that people want the ACA and other similar rules to tell the medical industry how to do exactly that. This is the danger of such comparisons. I venture (hesitantly) to guess that most of the processes on the other industries came about organically.

    The problems in medicine run so much deeper than this sort of thing too, however. I quite like the wonky stuff and I do believe that there can be a lot of bang for the buck here. But dare I say that there is a toxic culture in the medical profession that is not often talked about and that not enough of us are willing to have an honest discussion about what the end of our lives may look like.

  2. Harry says:

    “Best practises” is a word of art among the medical/insurance/government medicine community. I had first heard it when a cardiovascular surgeon, whom I know, happened to show up at a meeting a few years ago where our congressman was present.

    The idea is tempting. Why would one not one’s doctor not to do the best in his or her opinion, for you? Would it not be better, if your doctor were not under the threat of lawyers, who are eager to sue, and therefore require all the expensive testing for simple medical problems? Would it not be better if doctors did not have to employ an additional four people per doctor to deal with the insurance companies and the government, coding your twenty minute visit, and the other four people on the other side approving it?

    Every step along the way there is friction, which WC understands well as a physics major.

    Medicine advances exponentially, and the cost becomes greater, as we all live longer. If we do not pay the doctors and nurses, there will be fewer of them around — my economic observation of the day.

  3. Harry says:

    Alex, good post, and thanks for giving WC more time to brainwash his students.

    And thanks for getting things cleaned up for my being able to post to WC’s noble blog. I am in your debt.

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