Atul Gawande of The New Yorker has another breakthrough article, this time on improving quality and lowering costs through the standardization of care delivered through ever-more-concentrated hospital systems. Don’t miss it. For people like me with long memories, it provides a jarring reminder of the changes that the manufacturing sector went through a generation ago as it grappled with overseas competition, which in those days came primarily from Japan and Germany.
As you read it, remember that healthcare is different from manufacturing or retail restaurant chains (the Cheesecake Factory provides the external model that Gawande uses to analogize the changes that are coming). External competition, whether from abroad or from other chains, doesn’t exist in many healthcare markets. In fact, concentration in healthcare is growing. The social impact of the efficiencies wrought by standardization could have negative consequences, not so much for patients, but for the skilled and semi-skilled workers in a system whose single biggest cost is the wages and salaries of its personnel. Here’s Gawande’s take on the issue, which doesn’t appear until the very end of his story:
Yet it seems strange to pin our hopes on chains. We have no guarantee that Big Medicine will serve the social good. Whatever the industry, an increase in size and control creates the conditions for monopoly, which could do the opposite of what we want: Suppress innovation and drive up costs over time. In the past, certainly, health-care systems that pursued size and market power were better at raising prices than at lowering them.
A new generation of medical leaders and institutions professes to have a different aim. But a lesson of the past century is that government can influence the behavior of big corporations, by requiring transparency about their performance and costs, and by enacting rules and limitations to protect the ordinary citizen. The federal government has broken up monopolies like Standard Oil and A.T. & T.; in some parts of the country, similar concerns could develop in healthcare.
Mixed feelings about the transformation are unavoidable. There’s not just the worry about what Big Medicine will do; there’s also the worry about how society and government will respond. For the changes to live up to our hopes – lower costs and better care for everyone – liberals will have to accept the growth of Big Medicine, and conservatives will have to accept the growth of strong public oversight.
The vast savings of Big Medicine could be widely shared – or reserved for a few. The clinicians who are trying to reinvent medicine aren’t doing it to make hedge-fund managers and bondholders richer; they want to see that everyone benefits from the savings their work generates – and that won’t be automatic.
Our new models come from industries that have learned to increase the capabilities and efficiency of the human beings who work for them. Yet the same industries have also tended to devalue those employees. The frontline worker, whether he is making cars, solar panels, or wasabi-crusted ahi tuna, now generates unprecedented value but receives little of the wealth he is creating. Can we avoid this as we revolutionize healthcare?
In other words, big medicine requires big regulation and close oversight by the nation’s antitrust authorities. Given that the Tea Party-backed Republicans are being led in some states by former for-profit hospital chain executives like Gov. Rick Scott of Florida, there is a distinct possibility that after the next election we’ll the former without the latter.
