A couple of weeks ago, I presented a paper about health and medical care at the 2016 Austrian Economics Research Conference, which was held at the Mises Institute. I will be sharing the content of the talk in the next few posts, but given that I use some terms and concepts borrowed from that school of thought (e.g., “praxeology”), I thought that I would first take the opportunity to give a brief introduction to Austrian economics for those unfamiliar with it.
Austrian school economics refers to a school of economic thought whose adherents generally share similar views on methodology. The originators of that school were mid-to-late nineteenth century Austrian scholars whose economic ideas were in opposition to the ones dominant in Germany at that time. The term “Austrian school,” given in disparagement by members of the German Historical School, stuck. The German school has disappeared, but the Austrian school remains vibrant today.
This week’s post is by Dr. Marc Fouradoulas who is a board-certified internist with a subspecialty in psychosomatic medicine. Marc’s ten years of clinical experience include psychiatry and primary care, and he currently works at the University Clinic in Bern, Switzerland. For the past 3 years, Marc has been studying towards a Master’s degree of advanced studies in managed healthcare and health economics at the Winterthur Institute of Health Economics, School of Management and Law, in Zurich, Switzerland. You can send him email.
An alternative take on the Swiss health care system
In a recent New England Journal of Medicineeditorial, Nikola Biller-Adorno, a German ethicist now based in Switzerland, and Thomas Zeltner, a physician and former Secretary Director of the Swiss National Health Authority, painted a rosy picture of the Swiss health care system, which they qualified as a potential role model for the US.
Given the author’s backgrounds and positions, their viewpoint may not be the most objective. Here, I wish to give readers a more realistic glimpse into this highly complex system from the perspective of a practicing physician.
In this article, I wish to introduce the reader to the theory of entrepreneurship advanced by Frank Knight (1885-1972), and show that the common, everyday work of the physician could be considered a form of entrepreneurial activity in the Knightian sense.
Knight was an influential American economist. He is best known for his book Risk, Uncertainty, and Profit in which he proposed to distinguish risk and uncertainty as follows:
A couple of weeks ago I was interviewed by Kevin Price on his radio show “The Price of Business” which runs on Houston’s 1110 AM KTEK radio station. Also present was Dr. Geetinder Goyal. We talked healthcare economics, free markets, and direct patient care. I hope you enjoy it.
the following post is a slightly edited version of an article kindly commissioned by In-Training, a website run by and for medical students. The advice I give in the article is based on lessons I learned long after finishing medical school, so I hope you will find this piece of interest, even if you are well established in your healthcare profession.
Dear medical student,
I am honored by the opportunity to offer some advice on how to safeguard your professional career in a treacherous healthcare system.
I will not elaborate on why I think the healthcare system is “treacherous.” I will assume—and even hope—that you have at least some inkling that things are not so rosy in the world of medicine.
I am also not going to give any actual advice. I’m a fan of Socrates, so I believe that it is more constructive to challenge you with pointed questions. The real advice will come to you naturally as you proceed to answer these questions for yourself. I will, however, direct you to some resources to aid you in your reflections.
I have grouped the questions into three categories of knowledge which I am sure are not covered or barely covered in your curriculum: economics, ethics, and philosophy of medicine.
I have found that reflecting on these questions has been essential to give me a sense of control over my career. I hope that you, in turn, will find them intriguing and worth investigating.
André Picard, one of Canada’s foremost healthcare journalists, published an article today in which he analyzes the funding rationale for his country’s healthcare system.
Canada has the most singularly bizarre health-funding model in the world. It is, to use the technical term, bifurcated – meaning there are two distinct categories.
“Medically necessary” care, defined as hospital and physician services, is paid 100 per cent from the public purse. Selling these services privately is, with few exceptions, illegal or subject to punishing penalties…
The rest of health care is, by default, not deemed medically necessary, but still gets varying degrees of public funding. Only about 6 per cent of dental care is paid publicly, as are almost half of prescription drug costs, and about two-thirds of long-term care costs.
Given Canada’s perennial healthcare budget deficits and notorious waiting lines for medical care, Picard adds:
Getting the mix of public and private care right means ensuring everyone has access to essential care in a cost-effective manner, and still allowing patients a modicum of choice, and the ability to supplement their publicly funded care with other services.
At some point, we have to make some clear, coherent decisions to ensure that happens. Doing so begins with asking, and answering, the question: What is really “medically necessary”?
The final question Picard asks couldn’t come at a more opportune time.
During my recent podcast interview with Jeff Deist, president of the Ludwig von Mises Institute, I remarked that third-party payers are not, in fact, intermediaries between doctors and patients. In reality, it is the physician who has become a “middleman” in the healthcare transaction or, as I argued, a subcontractor to the insurer.
Important as it is, this reality is not well recognized—not even by physicians—because when doctors took on this “role” in the late 1980’s, the process by which healthcare business was conducted did not seem to change in any visible way.
The shaming campaign that followed the news of two generic drug prices somersaulting into the stratosphere after being acquired by private companies is not too surprising. The idea that a drug which cost $13.50 one day can cost $750 the next, seemingly on the whim of greedy Wall Street investors and pharma start-ups, is fodder for the outrage machine.
But what the outrage machine does not realize is the extent to which the generic healthcare supplies are constantly on the brink of shortage.
This is the wrap-up to the series on the economic history of the American healthcare system, the first installments of which can be found here and here.
The term “managed care” entered the common lexicon in the 1990’s, when contracted arrangements between physicians and hospitals on the one hand, and insurance entities on the other, became standard means to try to control healthcare expenditures. The origin of the concept is frequently credited to Dr. Paul Ellwood and his influential Jackson Hole Group, who introduced the idea in the early 1970’s.
But in our 2-part series on the economic history of American medicine, we saw that healthcare has been “managed” from its inception in the late 1910’s, when the Flexnerian reforms and the ensuing medical licensing laws began to influence (and limit) the type of medical care Americans could choose to receive.
Since that time, an ever-growing managerial class of academics, industry leaders, technocrats, and private foundation believers in “systems” and in a “scientific” approach to organizing society has been guiding the various government interventions which have shaped American healthcare as we know it today.(1)