Monday, March 05, 2007

Ideologically Limiting Health Care Reform

In the Journal Sentinel on Sunday, CEO and business columnist John Torinus wrote about the growing consolidation of health care providers in the Milwaukee area.

With ProHealth Care getting set to buy Medical Associates and the other major players looking to buy Advanced Healthcare, the trend toward consolidation on the provider side is unmistakable.

What's interesting about the column by Torinus is that he frames these mergers as anti-capitalist. He writes that to defend such a trend "[defies] classic economic theory that extols competition, not consolidation."

But what this ignores is that the mergers themselves are a direct result of competition on the supply side of the market, which isn't aimed at preserving consumer choice, but rather is an attempt by each supplier to ensure that it's the one consumers choose. If that ends up happening because it's the only choice consumers can choose, then all the better.

Unwilling to propose government intervention that would either break up the developing provider monopolies or, better yet, consolidate the payer side to match the providers in size and power, Torinus is left to recommend that consumers tinker around the edges of the provider giants like individual pesky gnats.

These recommendations center on the idea of backing retail health care endeavors that offer a limited array of pre-packaged and routine services that are paid in cash, not through insurance. This type of health care, while important, isn't the type that's going to make the major providers take notice.

For starters, many of the big providers also own many of the retail health care centers that are popping up around the Milwaukee area and elsewhere. In fact, Aurora Health Care -- the biggest and most profitable provider in the state...and counting -- already operates almost twenty cash-based "QuickCare" centers around the metro area in places like Piggly Wiggly, Brookfield Square Mall, Southridge Mall, and a number of Wal-Marts. And after your ailment is diagnosed at the QuickCare center, you can head off to one of Aurora's growing number of retail pharmacies to fill your prescription. Now that's some synergy.

Secondly, even if some independent provider groups can carve out a niche in areas like standalone MRIs or vaccinations, the impact they will have on giants like Aurora will hardly amount to a lone paper cut at best.

There is certainly nothing wrong with retail health care, assuming it remains linked to routine services that it can handle responsibly, nor is there anything inherently wrong with using individualized consumerism to keep providers in check.

But the fact is that by themselves, these measures will never match up to the massive consolidation that's taking place on the provider side, nor will they satisfy the growing need and desire for signficant health care reform across the state and country.

In a recent NY Times/CBS poll, for instance, more people pointed to health care as the most important domestic issue than immigration, traditional values, and reducing taxes combined, and 9 out of 10 respondents said that the American health system needs either fundamental reform or complete rebuilding; minor changes was the choice of only 8 percent.

Now is clearly not the time to let our options for solving the growing health care crisis become limited by ideology.

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Blogger Russ said...

Allowing health care providers to "monopolize" is wrong. Stopping it is governments job. It is obvious, paticularly in SE Wisconsin, that we need more competition not less competition.
For 230 years capitalism has provided Americans a standard of living that is the envy of the world. Concerning health care we have slowly increased govenments involement and reduced the roll of free market capitalism for the last 50 years. The result is pathetic, costs are out of control technology is held in check. Medical technology offers the potential to substatially reduce health care costs but government regulation, mandated coverage, and allowance of endless lawsuits suits prevents it.

March 06, 2007  
Blogger Seth Zlotocha said...


I'd like to see one speck of actual evidence -- that is, something beyond your perceptions -- that government involvement in the US health care market is the reason for our current cost and access crisis. Just one speck.

The US may be great at making people wealthy -- in the last few decades, albeit, an increasingly smaller number of people -- but when it comes to our health care system, we are hardly the envy of the industrialized world. We absolutely should be, but we're not.

By the way, have you checked out the Wisconsin Health Plan, yet? There's quite a bit of competition built into the plan, including the use of HSAs. Considering two out of three Americans in the NY Times/CBS poll I cited in the post feel that the government should work to provide universal health care -- even if that means increased taxes -- now may be the time for conservatives to start contibuting to the solution by seeking out a middle ground rather than continuing to hide behind utopian free market slogans.

March 06, 2007  

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