The profit motive is irrelevant

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In our most recent podcast episode (Privatizing the NHS: Who Profits?), my co-host Anish Koka reacted to our guest Bob Gill’s wish that the NHS insulated itself from the “profit motive” that is characteristic of the private sector.

Anish pointed out that, at least in the US, wait times for oncology or orthopedic appointments are measured in days instead of weeks or months. Part of the reason physician productivity is so high here is because of the profit incentives that are present in a fee-for-service system.  He then asked:

I wonder how we can harness both things:  We certainly don’t want patients waiting 18 weeks to be taken care of.  At the same time, we want to not have a system where you have profit being taken out.  That is of no value to the patient.  So, it’s a tough balance.

In health care debates, the profit-motive is often conceived of as a two-faced Janus of economics.  On the one hand, it increases productivity.  On the other, it causes physicians to do too much.  But this conception of the profit motive immediately invites an economic policy of carrots and sticks to get to “the right balance.” The right balance, of course, never materializes.  On the contrary, health policy only causes mis-allocations of care.

The whole question of profit motives is actually irrelevant and should be ignored altogether for the following reasons:

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