Wednesday, August 30, 2006

The Cash Incentive

Have you ever really wanted a Coke? It's a hot day, you didn't sleep well the night before, and you're looking for a little caffeine. What do you do? I personally go to my local grocery store, buy a 2-liter for $0.80, and go home and enjoy. If I really want it badly, I'll pay a little more for a little less (paying for convenience), buy the 20 ounce out of that little fridge in the front of the store and have my desired beverage within minutes of my initial thirst.

The above is really an amazing process. Having visited the Coke Museam in Atlanta, GA as a child, I recall how fascinating everything was in the manufacture and distribution that made all of this possible. Even now, I can have Coke in almost any convenience store, vending machine, or restaurant in the country.

So, why is it that Coke is so omnipresent in my life, but healthcare is so hard to come by? Coke effectively supplies billions of people across the globe with a variety of products and with extreme accuracy. Healthcare, on the other hand, requires waiting, huge expenses, and a variety of other inconveniences that I don't deal with when I want a Coke. For those who think that Coke and Healthcare don't correlate, the above scenario plays out with all sorts of complex undertakings all over the globe, including cars, computers, building supplies, and even the manufacture of the machines used in the execution of healthcare.

Why is Coke so efficient? The answer, the cash incentive. Coke has to compete with Pepsi and hundreds of store brands around the country. If Coke were hard to come by, people would eventually just start purchasing other brands. If Coke didn't taste good, people would start buying other brands. Thus, in order to compete and make money, Coke has to be efficient and tasty. Increased efficiency and better service provide Coke, its stockholders, and its executives with a direct financial incentive to do a good job. The industry is relatively unregulated compared to other industries, and Coke operates with minimal intervention in its quest to provide the consumer with a tasty and efficient product, which correlates to wealthy owners of Coke.

So I can take in huge amounts of Coke for almost no money, but I cannot get treatment for simple medical problems. Why? There is a lack of cash incentive.

Medicine is funded almost entirely by the federal government, the state government, and a huge number of well regulated insurers. It operates under constant threat by a legal system that sets an arbitrary standard of care and spends billions of dollars chasing down those that don't meet that standard. Doctors, no matter how responsible, are still motivated by money like anyone else. As a doctor, the current system pays you to spend less time with patients (By not compensating for more time). Inefficiency is the norm, as every small office visit becomes a nightmare of paperwork and red tape. Worst of all, almost every decision is now made not to provide the best care at the lowest cost, but to prevent litigation. Preventing litigation is the medical profit motive, as the government money will be there for more and more tests, but the doctor pays if he/she is sued. Thus, excessive testing and slow inefficient care are the NORM.

Every new and profitable venture in medicine that actually provides basic care for a low price or excellent care for a high price is attacked constantly in the press. Think about the Walmart urgent care clinics that are the subject of such controversy, allowing people access to basic treatment with no waits and efficient resource utilization. Think about the concierge clinics that were berated for so long until they were repeatedly shown to have BETTER outcomes. If Coke took such a barrage, I doubt that I could have it whenever I wanted.

Worst of all, think about the poor, the usual trump card of the anti-capitalist medical proponents. Almost every poor person in the US has access to Coke. If you have ever spent any time around public housing, you would see that many of these people have access to TVs, Stereos, Cars, and many things that are more expensive than Coke. Why can't they afford Medical Care?

The answer is simple. Right now, there are no Walmarts or Cokes of Medical Care. It is all high priced. It is all highly regulated. Many companies have managed to make a LOT of money in high volume, low margin services to the poor. Usually, this is to the mutual benefit of both. In medicine, we let the government do it, and the number of underserved keep growing. Of course, the government has no profit margin.


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