Having their cake and eating it: Perverse incentives

A friend made an excellent point the other day, upon reading my post about Consumers Union's advocacy for warranties on orthopaedic devices.

"The thing about CU and the warranty struck me hard as a revelation. We in the health care field are brainwashed into thinking these normal business practices shouldn't apply to medicine, while embracing the idea that the money-making business ideas (like ROI) should apply. But basically it adds up to doctors, administrators, and equipment suppliers having their cake and eating it, too: Getting to apply the positives from business, while avoiding the negatives which apply in all other industries, like guarantees of your work."

The big costly examples are obvious:  An alliance among the three groups (doctors, administrators, and equipment suppliers) to install a surgical robot or a proton beam machine to gain market share, but take no responsibility for determining clinical efficacy or adverse impacts or overall inflation of medical costs.

But as my friend points out, the small, ongoing ones are equally obvious.  Orthopaedic devices that regularly fail after installation in human bodies, with no recourse to the suppliers, and no adverse consequences for the hospitals or doctors that have used them without insisting on warranties.  Ditto for minimally invasive surgical equipment, which is notorious for failing after normal cleaning and sterilization processes.

You would think that the payers--Medicare, Medicaid, and private insurers--would step in, but they are complicit or oblivious.  You would think that the group purchasing organizations would step in, but they, too, are complicit or oblivious.  Maybe they are motivated by the implicit or explicit kick-backs they get by favoring certain suppliers.

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