Recently, I have been having a number of discussions with physician reviewers of my upcoming book, “The History and Evolution of Health Care in America.” Today, I was reading an excellent article, “Highlights from Doctors 2.0, ” published by Tim Lloyd and it has again driven home one of the points I make in my book.
I think one of the underlying issues facing doctors today, is that the solutions that are being offered to “cure” the failing business models most physicians face, do not affect the underlying issues in our current system. For these solutions to work – the application of technology in the areas of EMR, PHR and E-prescription chief among them – they would actually need to address the flow of money through the supply chain. They don’t!
I just don’t think we have a Health Care “System“. We have a disjointed, disconnected (even with today’s technology), disaffected, and intra-competitive series of care providers, care facilitators, and payers/sponsors of care. In every other industry the supply chain for goods and services has evolved to be surprisingly similar both in methods, number of steps in the chain, relative percentage of costing at each step etc… Health care, is one of the true anomalies. In every other chain, please pardon the analogy, each participant – from the raw materials producer, to the manufacturer, to the distributor, to the seller, to the servicer – prey on the price paid by the end consumer of the goods or services. In other words all participants’ margin flows backwards from the end point – the purchaser.
In our current health care mess, this is not the case. Each participant in the chain, prey on each other’s margin in a system where the relationship between invoice price (published billing rate) and reimbursement are specious and arbitrary and none in the chain can predict their income, nor most of their expenses. Users of the services (patients) can’t tell, nor do they care, what the cost of the service is. And, the long term effect of the massive inflation of the currency in circulation since 1971 (when we removed ourselves from the international gold standard) has led to a disproportionate subsidy and inflation of housing and health costs.

Later in another post, I will take a look at the issue of how and why the allocation of all the new currency created since 1971 has disproportionately affected housing and health care costs. Suffice to say that projections of the cost of care and housing based on the run rates prior to the elimination of the gold standard would have predicted a flatter curve than we have experienced. Further, the actual curves for these two industries are almost a point for point match to the Average M3 curve in the above chart while, other industries have little to no correlation.
There have been a number of issues that have affected health care costs, and insurance premium costs. None of them have to do with unfair profiteering. Looking at the relative profits across all the current crop of blamed suspects, none of them; pharma, insurance companies, hospitals, doctors, etc., are any more profitable today than they ever have been and in actuality many are no longer profitable at all. So where has the money gone? In another future article, I will be examining and attempting to explain this phenomenon. Is it perhaps that, we have simply inflated our economy and not really increased the value of our country’s assets 20 times since 1971?
Clearly, our health care non-system is broken and must be fixed. Until this is fixed, in my opinion – the rest of the discussions are moot.