A life shaped by market forces

I’ve never understood how we made the leap from Adam Smith’s observation that we can sometimes serve the interests of others by serving our own interests, i.e. do well by doing good, to the idea that enlightened self-interest is sufficient to insure the best possible outcome for all involved, i.e. greed is good. Counterexamples are so easy to come by.

Here are a couple that cropped up in Andrew Sullivan’s series of reader-supplied stories of health care encounters. The first is from a surgeon [emphasis added]:

The story of $15,000 for a needle in a thigh touches a nerve with me. As a surgeon, I’d have tried to find it using local anesthetic, in my office, before escalating to an operating room. With luck — and since it was an insulin needle it couldn’t have been very deep and would have been near the entry hole — it’d have been a couple hundred bucks or so, including my fee and the use of a few sterile instruments. It’s possible, of course, that it would end up requiring xray guidance; even then, it’s hard to figure where the $15,000 went.

But here’s the thing: no one would have recognized the savings, or even cared, much less rewarded me for it in any way.

Likewise, when I did breast biopsies in my office, with local anesthesia and comfortable patients, happy at not having to go through the hassles of  surgery at a hospital or surgery center, I saved thousands of dollars each of the many hundreds of times I did it. Again: no recognition, no reward. I just did it because it seems right.

And then this from an emergency room physician:

I am a pediatric emergency room physician. I want to second what the surgeon said in his comments about saving the system money. In most health care situations, there is absolutely NO incentive for physicians to do so, and in many instances there are incentives to waste/spend as much money as possible.

For example:  when a young teenager comes into the emergency department with chest pain, there is something like a 1 in 10,000 chance that the pain comes from a serious cause in the heart or the lungs.  In almost every case these rare serious causes can be ruled out by talking to the patient and their family and by examining the patient. In the vast majority of cases no tests or specialists are needed. The visit can be brief, reassurance can be offered to the patient and their family, and the bill should be around $200. However, there is nothing to prevent me from ordering a whole battery of tests in this situation, and I have seen other physicians and emergency departments do just that.

EKG to rule out a heart attack, chest x-ray to look for pneumonia or a collapsed lung, chest CT scan to look for a pulmonary embolus, outpatient cardiac monitoring, referral to a cardiologist, lab work to look for infection or electrolyte abnormalities, etc., etc.  What started as a $200 visit is now closing in on $15,000.

I can tell you from experience this happens every day in ER’s around the country. Furthermore, if I order a lot of tests and give a lot of referrals to specialists, I make more money because I just made the visit more complicated and I bill based on how complicated the visit was, the hospital makes more money because they get to use all those expensive machines they invested in, and I generate business for my colleagues in cardiology. Often, the patients are happier with the "mega work-up" as well. There is absolutely no downside for me to ordering tons of unnecessary tests (the same is true for unnecessary and expensive medications). Rare exceptions to this are the best health care systems in the country (Kaiser, Mayo) that actually do give physicians feedback regarding their efficiency and outcomes. Not coincidentally, these systems spend less money per patient and deliver the best care in the country by pretty much any measure you can come up with.


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