Crash Course outline

UPDATE: For whatever reason, using some versions of Firefox and Explorer cause the image below to flip upside down. Being technically limited, I have no idea what is causing this. If you are having this problem, try opening this page with Chrome or Safari, which seem to work better.



2 thoughts on “Crash Course outline

  1. Looking good! I’m looking at the Crash Cource outline map. I think I have a couple of comments you may or may not agree with. They’re based on my perspective as an economist mostly I think.
    1) Health System Consolidation – this should have both positive and negative effects. In some sectors of the economy scale is a positive both for purchasing and processes. I’d expect health care process improvement to be one of the outcomes of consolidation
    2) New Technology also has a price reducing effect in one dimension. In every sector of the economy new technology is saving loads of money all the time. Health also experiences that in many areas. However, of course, new expensive technology at the cutting edge is increasing costs. These two effects in combination of course are dominated by the increase side – at the moment. I do think that’s going to flip soon. But still – it sounds quite counter intuitive to see new technology and more expensive in that order…
    3) Administrative costs – do you mean regulation driven admin costs? Otherwise why would companies just invest in more admin?

    Really interesting though! Would be really fun to walk through this whole thing in detail when we have a free day together at some point 🙂


    1. In response:
      1) You are correct that economies of scale are probably a positive effect of consolidation. The health care economists I have talked to about this do think that this occurs to some degree. However, in every case where people have studied it, to whatever degree this occurs, it is outweighed by the effects of the monopoly power that consolidated health systems gain. Every study looking at this that I am aware of has shown that A) consolidated systems are more expensive, and B) consolidated systems do not have better patient outcomes. Remember that the profit incentives in health care often lead in different directions that in other sectors.

      2) I would challenge your prediction that the balance of the cost increasing vs decreasing forces stemming from new technologies is going to flip in the near future. It goes back to the fee-for-service incentives that health care providers are responding to. If, as I provider, I get to bill an insurance company (hypothetically) at a 10% markup from whatever a service costs me to provide (actually, markups can be closer to 1,000%), then why would I switch to a machine that can do this service for $100 from one that can do it for $1,000? From the provider’s perspective, it is the more expensive technology that is the winner. In the current market, health systems compete on reputation, not on price. And it will take a lot to change that.

      3) As I understand it, the administrative costs have to do with A) dealing with hundreds of different insurance companies (health providers have to invest this money in admin, otherwise they would not get paid for their services) and B) dealing with having to share information between multiple, siloed electronic medical record systems (and, old paper systems) that do not talk to each other, which no individual provider has the power to fix and hence no incentive to try to do so.

Leave a Reply

Your email address will not be published. Required fields are marked *