Wednesday, December 19, 2007

Overtreatment or overdemand? 

I went to the St. Cloud Area Partnership annual meeting this morning, and while there heard a roundtable discussion by three local business leaders. One was president of the local hospital, a medical doctor by training who now administers a quite successful regional hospital. When asked what factors he would point to as holding down health costs in the future, he responded with a short, rather pointed lecture on how consumers were substituting professional health care for their own health choices. In fact, he said, we need to take better care of ourselves and use the health care system less.

I turned to someone after the meeting and commented on this. "How many other businesses are there where the seller tells the buyer she or he is buying too much of the seller's services?" We scratched our heads and walked on.

Mark Thoma ties some interesting articles on health care together this morning under the title "Overtreatment." This is the title of a book by Shannon Brownlee which argues that between 20-30% of the health care services we consume in America do not produce improved health. The issue turns on the organization of health care into a fee-for-service system that makes doctors into piece-rate employees of third-party payers (for the most part.) More aggressive care didn't result in better health.

So there's two arguments here -- one is that the doctors and hospitals have no incentive to hold down costs, and the second is that doctors are just responding to what the patients are asking, and the patients are substituting professional health services for good personal health choices (exercise, diet, etc.) And I was trying to think, how could we figure out which of these stories is true? I had thought of the Levitt exercise on real estate agents: Doctors themselves should consume less dubious health care if it's a problem of consumer knowledge and consumer demand. But, as John Lott argued against, you'd have to figure the doctors know where the best, most effective, and cheapest procedures are. That test is unlikely to be persuasive.

So as I hear politicians begin to ramp up a debate in Minnesota next year over health care, I see more good questions than answers.

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