Sorry, but our shareholders don’t think you need a second opinion.

There is an underlying premise in America that, in my opinion, needs to be examined:

We assume that just about anything can be done better if it’s done for profit.

We have this sense that if you want to make any service the best it can be, introduce competition and the profit motive will drive the competitors to fight and claw each other until the absolute best service possible rises to the top. The market’s invisible hand will lift the best up while smacking the worst down.

The market is like a pimp, according to my thorough research which included watching HBO and listening to hip hop.

Americans are indoctrinated from childhood to think that almost anything humans can do, humans competing and making a profit from it will do it better.

Now, we haven’t made everything profit- and competition-based, which tells us one major truth: there IS a line, somewhere. Even in America.

If someone is drowning, pretty much any human (and even most Americans!) would get pretty pissed to find out that the would-be rescuer wanted to negotiate payment for his services before helping the person out of the water.

In fact, think of any human-interest story about someone doing something heroic.

The reporter almost always makes a comment to the effect of, “Jim Bob didn’t consider himself a hero or expect any kind of reward. He said he was just doing what any person in that situation would have done.”

So yeah, there’s a line beyond which we consider a profit motive to be at a minimum an indication of bad character, and perhaps even criminal. But that line is blurry, and it’s been pushed farther and farther to the edge of human endeavors in the last 150 years.

It’s just us, kids.

At some point, and contrary to almost every country on the planet, we decided that health care in our country should be a for-profit enterprise. Hospitals, doctors, and insurers compete with one another for the best prices and best service. Shareholders own pieces of healthcare enterprises, have seats on the board, and push CEO’s for higher profits in order to drive the stock price higher.

All the while, hospitals have to compete against other hospitals, so they can’t cut too many corners to get those profits or they’ll get bad yelp reviews – which is really the driving force behind all positive behavior, if we’re being honest with ourselves. Oh, and cutting corners will absolutely kill someone, too. I guess that’s sort of relevant.

So let’s unpack this a bit. Health care is literally the administration of physical and mental healing through the application of medical arts and science.   So the United States has decided that the administration of healing should be a profit-centered business.

That means we’re happy with those who deliver health care (a) charging as much as they can get away with for their services, (b) cutting as many corners as they legally (and arguably, ethically) can, and (c) incentivizing shareholder value over just about every other metric.

Now, I already hear the free market folks saying, “yeah, but competition is a check on all of that! Stray too far from what’s best for the consumer, and your top line will suffer!”

That’s true, in theory. But what about when a rural county enters into a contract with 1 private hospital? What about when all of the hospitals in the area collude without technically colluding, to ensure no one low-balls anyone else? What if you’re in the hospital specifically for Lowballs Syndrome? What’s the market going to do for you then? It’s a tragic disease that affects 1 out of every 2 Americans at some point in their lives.

If this were a question of who can be the best at selling lawnmowers, I’d say have at it. No one is going to die if you charge too much for a lawnmower. No one is going to be permanently disabled if your lawnmower shop gives shitty service. And your consumers will keep you in check, because your competition just has to undercut you (that’s lawnmower humor gold, friends) and/or incentivize consumers with better service, cleaner facilities, better warranties, or something like that.

But health care recipients aren’t consumers. They are patients. They are human beings with situations that hamper their ability to freely choose among varying providers of service.

No one gets an appendectomy, decides that the sepsis they got from the dirty instruments wasn’t cool, writes a mean Yelp review, and goes to get their next appendectomy done at the hospital down the street. It just doesn’t work that way.

Let me put this in more academic language:

Industries are ill-suited for free competition where:

  • consumers lack significant choice, or
  • services are offered once at most, or
  • failure to successfully meet basic expectations of quality or service will result in harm or death to the consumer.

Now for less academic language: it’s a terrible idea to rely on capitalism when your “business” relies on the “purchases” of people in urgent, life-threatening situations as your revenue base, where the service rendered is stuff like surgery where you hope to God you don’t have to get it redone, or where if you screw up your delivery of the service, your customer is going to die or be maimed because of it.

It’s not just hospitals, of course. It’s the method in which we pay for medical services. Because of our system, we have countless insurers competing with one another, each beholden to their shareholders. And, up until 2010, the possibility of one of these insurers accepting a contract with you was contingent upon your prior health, your employment, your ability to pay premiums, and the like.

Again, it comes down to what profit motive and competition does to a “business.” The business has to charge as much as it can get away with, and spend as little as it can get away with. When your business is administering a risk pool, the profitable way to do that is to get as many healthy people in it as you can, and pay out for as few services as you can. The primary focus can’t be on what’s best for the people who are covered. That can be a focus, for sure, but that’s strictly from a competition standpoint. The primary focus of a for-profit enterprise has to be profitability.

If you ain’t gonna pay, I’m gonna charge you double.

And there’s another wrinkle to consider.

Go back to the example of the drowning person. In emergency situations, we have a societal interest in making sure we don’t stop to run the dying dude’s credit card before we save him.

By definition, this means that our healthcare system provides services to people who cannot ever pay for them.   Depending on what you read, anywhere from 20% to 65% of patients fail to pay their medical bills.

If I am running a sandwich shop and I know that (a) I am legally bound to give people sandwiches, and (b) 65% of those people will not pay me for the food, a few things are going to happen.

First, I’m going to pick and choose to whom I give the best food, the best service, and all the little extras. I’m going to want those who do pay to come back over and over, and I’m going to want to mitigate my losses and disincentivize return visits from the guests who will not pay me. Walk in looking like you won’t pay? My staff is going to probably treat you like you won’t pay. What does someone who’s not going to pay look like?

Don’t answer that.

Second, I’m going to raise my prices to cover the guests who aren’t paying. And assuming this new world sandwich order is widespread and accepted, I’m not going to just raise prices to cover the 65% deadbeats.

I’m going to raise the price as high as I can get away with.

I’m not selling you bastards my sandwiches out of the goodness of my heart. This is a for-profit enterprise. I will charge you as much as I can get away with, and give you as little as I can give you without impacting your decision to buy from me. I owe my shareholders the highest profits I can deliver, and if that means charging 10x the normal price and profiling my customers, so be it.

Urgent, urgent.  Emergency.

Did you just sing that line?  You should have.  Here, this’ll help.

And then there’s yet another layer to consider.

Because our healthcare system charges 10x rates, an uninsured or underinsured person is economically disincentivized to utilize preventive care. They won’t get antibiotics to treat an illness at its onset, because they can’t afford it. They’ll roll the dice and hope they get better for free…and if they don’t, they’ll need emergency services that cost significantly more.

And if you were looking for a place where even more “customers” don’t pay the bill, look no farther than the emergency room.

So what do we get for tolerating this ridiculous system? We have the best health care system in the world, right?

While we are particularly good at radical interventionist treatments (we get a lot of practice, seeing as no one can afford to get preventive treatment!), we’re not even close to the best healthcare system. Try 70th in the world. And we have shorter life spans than people in 42 other countries.

But we spend the 3rd most healthcare dollars per person in the world, behind only Switzerland and Norway. And in rankings where countries are separated by tenths and hundredths of a year, the Norwegians live a full 2 years longer than us, and the Swiss live almost 3 years longer.

Our flawed belief that capitalism solves everything has caused us to administer healthcare in America in a completely illogical and inefficient way. The proof is in the results.

Because of our choice, hospitals and doctors have to charge unconscionable rates to bridge the gap between competing interests: professional ethics and responsibility to shareholders.

Because of our choice, we incentivize hospitals to profile patients based on perception of ability to pay.

Because of our choice, millions of people forego preventive and early action, and often wind up needing ridiculously expensive emergency intervention.

Because of our choice, the majority of bankruptcies in America are caused by an inability to pay medical bills. And the majority of those cases involve people who had some manner of health insurance.

They scare you with “socialized medicine” and “death panels” to keep you from noticing that the CEO’s of the healthcare providers and insurance companies are some of the richest people in the country.  The people that inefficiently administer an extremely complex and insanely expensive system of healing make millions and millions of dollars precisely because the system is inefficient, complex and expensive. 

This isn’t even legitimate capitalism. This is a rigged system that benefits a very few people at the expense of the health, fortunes, and lives of the vast majority of our society.

Meanwhile, we spend more than almost anyone, but we die sooner, and we live and die unhealthier, than the rest of the industrialized world.

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8 thoughts on “Sorry, but our shareholders don’t think you need a second opinion.

  1. As with all great civilizations it is the decay of those in power, political, financial and military that will bring any great nation down. Think it can’t happen to the USA? It is already underway.

    Scary isn’t it Ricky.

    • We are on a collision course with revolution, I fear. Think through history of all the examples where a few people at the top got richer and richer while the majority got poorer and poorer. What always happens (eventually)? It’s ended with czars being toppled, royalty on the guillotine, kaisers being dethroned, and the like. We’re not there yet, but we will get there if we don’t course-correct.

  2. From the outside, the American healthcare system is – well, bizarre particularly in a country that claims to lead the world morally as well as financially. And what’s with the ‘death panels’? Not something that happens here (Aus) despite us having universal healthcare. Sounds to me more like the workings of your health insurers.

    • It is bizarre, you’re right. It all stems from this underlying “you can be rich if you just put your mind to it and work hard” mentality. We’re trained from birth going back generations that what’s good for the rich is good for everyone, not only because they’ll create jobs and such, but because you might someday be rich, too. Everything is for profit. Pastors sell books they’ve written on TV while they collect revenue from commercials in between segments. We have for-profit universities now (though most are still not). Anything that someone thinks they can make a buck off of. Once you’ve got some bucks, you spend it lobbying congress to get preferential laws for you that keep others out of the market. If you haven’t read about it, look up Citizens United – supreme court case where our high court decided that companies “speak” using money, and thus are entitled to exercise their free speech by spending as much money as they see fit on whatever they want – including influencing elections and elected officials. Fun times!

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