Tuesday, December 08, 2009

Economics 101

What happens when the government imposes price controls? You can find out for yourself by a little research or simply by reading "Basic Economics" by Thomas Sowell. Now I know he's a black conservative with the Hoover Institution, so half of you can quit reading here because you care more about that fact than you do about logic, but here's what happens in my little branch of the world, medicine.

When price controls are imposed in medicine, EMTALA is a good example, then particular medical procedures and services lose any meaningful relation to their actual worth. Price and cost cease to have any real relation and an example of this follows...

When I worked in the ER I would work a ten-hour shift in which I might perform life and death procedures such as endotracheal intubation, cardiac resuscitation, lumbar punctures, central line placement, conscious sedation for painful procedures, and pronouncement of death. I was paid a base salary and had bonus money added based on something called RVUs... relative value units. Theoretically then, the more difficult and dangerous the procedures I did on a particular shift, the more money I made.

How did this work out? Well, on a busy, dangerous shift, I might make up to $170 an hour or so. Life and death stuff, $170 an hour. Fair? Maybe.

Now I work in an acute care clinic and the only people we see are either insured or they pay their bill up front. There are some very interesting things I have discovered. I am paid now, for the sake or round numbers, $100 an hour. Doesn't matter what I do, that's my salary. Fair? Oh, and anyone who is sick goes right away to the ER.

I think it's ridiculous because here's what happens... First, ALL of my patients that I see now have skin in the game. They are paying something for my services and guess what? Not a single one of them yells at me or spits on me or has to be escorted off the property by security... No one threatens to kill me and no one comes in and demands oxycontin for their acute on chronic overwhelmosis. In other words, it's easy.

Along with this, I have time to sit with all my patients and discuss their cases and guess what else... it's very pleasant. I feel more like a doctor in the snotty nose clinic than I did in the ER. In fact, I'm often able to give the patients more than they expected when they came in by taking a good look at their medical histories and problems and suggesting things they might do to improve their overall health. It feels good.

So, to all of you ER docs who are still in 'the pit', losing sleep and running on pure adrenaline and frustration, there is another way. The only problem is, the more of you that discover what I have discovered the less docs there will be in 'the pit' doing the life and death stuff that actually matters that instant.

And this is the result of price fixing and socialism... Value has no meaning, people take advantage, and systems that were built under a capitalist model that work very well, are replaced with impersonal, ineffectual, and dangerous shadows.

I'm happy with my pay cut and have no plans to go back and use my unique skills in the ER. The ER is a circus of pain and silliness and the same kind of silliness is being debated right now in our nation's capital. You better pray it doesn't pass, and now I find myself in agreement with 'Cat who said, a few years ago, that they could pay him four times what he was making and it would not be enough to make working in the ER worth it. Good luck all.


  1. yeah, I saw this lame piece on PBS pushing government healthcare, highlighting several other nations amazing medical service and how cheap they are.

    One of the big examples they used was Japan. My inlaws have lived in Japan for over 20 years. They live in Tokyo now, and they've had ample experience with their healthcare system.

    The Japanese government sets the cost of everything from an office visit to an aspirin. What the piece didn't mention is that Japanese health care is based on rationing. It's not overt rationing, but that is exactly what it is.

    They depend on Eastern medicine first. No matter what you come in with, they give you a little purple powder to mix up and try first. If it doesn't work, you come back and get a crack at western medicine. Maybe you get sick and die, too bad. No one under the age of 12 can get an organ transplant. Hospitals do not accept ambulances. (Seriously.) You have a heart attack, you die in the bus. Japanese doctors strongly rely on the wait and see approach, even if current medical literature would stress prompt action.

    Health care in Japan is about 20 years behind where the US is. Yes, they make those those robots for your laproscopic surgery, but they don't use them (or they don't know how to.)

    My mother-in-law fell and had a blow out fracture of the orbit. She had a sagging eye ball, and sever double vision. Her Japanese surgeon insisted that she wait 1 month to see if it got better. If not they would do surgery by removing a piece of bone from her hip to plug the hole in her eye socket. This according to the US surgeon who did the surgery 2 weeks after she broke it is about 20 years behind what is currently done.

    My in-laws can buy the best that Tokyo can provide. The problem is that you just can't buy it there thanks to the government.

    The PBS piece bragged about how the government set the prices of things like MRI machines so Japanese people can get them everywhere for about 8 bucks per scan. The PBS guys conveniently forgot to mention that the Japanese people may be getting subsidised MRIs, but it is the citizens in other countries that are footing the bill. This is basic economics. Eventually somebody has to pay for the research and development and the cost to build the thing.

    The piece also bragged about how the Japanese get tons of MRI's for everything because, and I quote, "the Japanese like technology." I suppose they have already forgotten about Hiroshima and they like radiation poisoning too?

  2. I remember back in the 70's when the Carter administation tried the price fixing of a whole lot of things. The market responded by renaming everything and then charging what they wanted to.

    Funny as heck.

    H the IH

  3. Government has driven up the cost of education as well, because of similar issues. Open the doors to everyone,regardless of ability to pay; use goes up, prices go up.

    I think it may actually be easier for a student to get into college if he is poor and a minority than if he qualifies for no aid and subsidizes others.

  4. 911Doc

    Can you tell a little more about urgent care? (I am thinking of doing it -- perhaps opening one myself) Do you miss not seeing emergencies? Does it become a patient treadmill? How much crap do you see?
    Any sage wisdom would be appreciated

  5. It is a basic rule of economics. Every college student who took economics 101 has heard it:
    "If something is perceived to be free or low cost, the demand will go up"

    That has been true of health care for a long time. Some radical people have suggested that insurance itself is the cause of this. Insurance hides the full cost, so people use it more.

    I think the train left the station long ago for eliminating insurance from the health care industry, but as long as someone else is paying the bill, people will always tend to overuse the health care system. Artificial rationing is the only way to control this behavior.

    Maybe making everyone "have some skin in the game" is the way.

    Good post Doc.

  6. Urgent care can be a mill but there's something about people actually paying for their care that seems to make them better patients and makes it easier to be a better doctor in the traditional sense of the word. As I get farther away from the ER I am NOT missing it.

    Didn't know the Japanese were so non-commital in their medical care.