The Law of Supply and Demand in Healthcare
University of Cincinnati Medical School "Match Day"
I fully understand the goal of providing healthcare to all Americans who need it. I also clearly understand that the cost of our healthcare system is one of the fast growing of all segments in our economy. And I see many politicians and lobbyists seeking to write or influence the coming healthcare reform activity now meandering through Washington.
What I don’t understand is how our policymakers make decisions without consideration of cause and effect.
We have a limited number of physicians, nurses and hospitals. Most are operating in the red. Some of the red ink can be avoided not so much by mandatory reform from Washington but by more efficient and effective process management by the leaders running our nation’s hospitals. These are complex organizations staffed with professionals who have agendas that do not always work for the good of the organization. That’s an area of reform that can bring about positive impact on our national cost of healthcare without the help of a single politician.
It does not address universal access which can happen most likely only with the support of some aspect of national healthcare reform. But it does run head into the notion that healthcare cost must be brought down. Most of the pay-go solutions to fund this are not going to be popular. Cutting back on healthcare services to those covered by Medicare or Medicaid (like withholding medication for macular degeneration until a patient is totally blind in one eye and then providing this medication to save the remaining eye) are brutal … who has the right to be so arbitrary?
And then there’s the issue of supply to meet demand. If universal access doubles the number of Americans seeking healthcare to a supply base that is fixed to meet the needs of the insured, who is going to provide care to all these new patients? With supply-demand issues, typically as supply is unable to meet demand, prices go up; not down.
So in our infinite wisdom, we also pass laws that limit the number of physicians coming through medical schools and academic (teaching) hospitals which exacerbates supply.
Medicare resident caps have been in place for more than 10 years while the nation is now facing a potential physician shortage. The caps have a chilling effect on the ability of teaching hospitals and medical schools to increase the nation’s physician workforce and meet the needs of local communities.
Given these times of increasing financial uncertainty for teaching hospitals, it is important that the Medicare program maintain its commitment made in 1965 to support the additional costs associated with the educating future physicians and beginning a move now to assure adequate numbers of providers as healthcare becomes the law.
If we are going to have healthcare reform, let’s hope the politicians consider carefully what they are doing. A failure to do this right will increase costs even faster than they are now. Politicians talk now about the expenditures in the current legislation (nearly $700 billion on some accounts and a trillion on some other accounts) as “spend now to save in the future.” Maybe instead, we have to accept the fact that healthcare will continue to be a costly and increasingly expanding segment of our national economy.
Perhaps, even broader, maybe we need a national referendum to give citizens of the U. S. a voice in what kind of healthcare system we want.
Filed Under: News & Careers
Case studies to learn more about ways in which Compass Clinical has worked to create better American hospitals.
Great article. What strikes me about what you describe is whether or not we will actually increase those seeking care? If indigent care is costing a public hospital like Grady Memorial Hospital in Atlanta where I live more than $250 Million per year and umpteen billions nationally , what happens if there is coverage? Is it possible that the result of universal coverage is increased employment of healthcare professionals, better preventive measures, and fewer complex procedures that are paid for through premiums of the insured and state and local government intervention? I am not saying that it is going to happen, but is it possible.
What kind of country do we want to live in? One where some are sick and cost those who are well and/or are getting care significant resources and perhaps resentment (like now)? or One where all can be taken care of, not at the expense or resentment of others?
Hello Amri,
You posed a big question in your comment to my posting: What kind of country do we want to live in?
That’s really the line in the sand, isn’t it.
I would hope there is compassion for anyone who is in need of healthcare. The country I want to live in is big enough to care for anyone who is sick. That sounds a lot like universal healthcare. There is another tricky question buried in this debate and that is how do we define what kind of care each person gets? Is it any care that a doctor prescribes regardless of the cost? That sounds expensive. And yet who else can make the determination of appropriate care than those trained as physicians to do just that? Do we want government regulators telling us what kind of care we should get. Do we want them telling us that at age 75 we can no longer get certain kinds of healthcare? From a societal point of view that might make some sense, but not if it is my 75 year old body, or my mother’s or my wife’s. But it seems that this is one line of discrimination that is being put into law. Gender discrimination or racial discrimination or any kind of discrimination is protected by law — except possibly for age discrimination when it comes to our health.
By the way, I joined Diversity Healthworks and look forward to learning more from the materials on your site.
– Dale Wolf, Compass Clinical Consulting