US Healthcare – the illegitimate child of Cronyism and Socialism, NOT Capitalism

Earlier this week at about 8:30 pm, one of my sons slipped in the bath tub, landed on the metal tub plug, and had a pretty deep cut on his bottom. If you’re a fan of Seinfeld, think Kramer’s Fusilli Jerry and Frank Costanza’s “one in a million shot”. I took D to the closest Urgent Care center less than a mile from our home. Within minutes, the RN took a look at the wound, called in the doctor, and he gave me his diagnosis.

(sorry if this part gets a little graphic)

The doctor said that the wound itself appears to be a simple laceration (fancy word for cut) of the buttock. It can be stitched up in a matter of minutes. However, because of the proximity to the anus, rectum and sphincter, there may be some more serious damage that would require sedating my son and doing a deeper dive. The problem is that if there is repair required to the sphincter or in the rectum, the Urgent Care physician would have to transfer us to a full-blown Emergency Room hospital equipped with a surgical team.

From the moment I walked in to getting to see the doctor and having the information I needed to make a decision – 30 minutes.

We discussed and I opted to transfer D to a hospital, to have the sedated examination done by a surgeon, in case there needs to be more than just a couple stitches to his buttock. They called around and finally contacted Children’s Medical Center of Dallas. It’s about 45 minutes away from my home, but they assured us that they had the equipment and staff on hand at that hour to treat my son.

I packed up D in the car, thanked the staff at the Urgent Care clinic, grabbed my transfer paperwork, and we were on our way. We arrived at Children’s around 10:00 pm.

When we got to the ER check in, the place was packed. Dozens of families, mostly non-English speaking minorities, cramming the waiting room. I don’t know for certain, but I’m going to guess that a good portion of the people there had either no health insurance or were on some kind of public assistance.

We waited in a pre-ER check in station. Then we got moved to the ER where they put us in a private room. Several RNs came by to look at the wound. Each time, someone new came. Each time, I had to answer the SAME questions.

  • What happened?
  • What time did it happen?
  • Did you give him any medication? Is he taking anything regularly?
  • When was the last time he ate / drank / went to the bathroom?
  • Is he allergic to anything?
  • Has he had any major health problems / surgeries prior to this?
  • Did he lose consciousness, start vomiting, complaining of any head injuries?
  • What are these bruises on his back? (they are called Mongolian spots and all my children have them.)

Each time, I’d go through all the questions and get this response:

Okay first, can you sign this form. And then, we’ll have to wait for the doctor to come take a look.

Over the next 4 HOURS, we saw probably 3-4 different nurses and went through the same routine.

Finally, at around 2 am, we saw our first doctor – a resident (which means someone in training). Went through all the same questions above again. Only to get:

I’ll have to ask my [mentor / teacher, not sure what they call them] to take a look.

So, we wait. Another hour.

Senior ER doctor comes in. Asks all the same questions. Her response?

The laceration can be stitched up here, but I’m going to ask the surgeon to take a look so that if there’s any internal injuries, they can treat him while he’s sedated.

Keep in mind, it took now 5 hours to come to the same conclusion I already had after 30 minutes in the Urgent Care center.

Next comes in the Surgery Resident. Asks all the same questions. Sign a couple more forms. His response?

I’ll have to ask my [mentor / teacher, not sure what they call them] to take a look.

Another hour later – we’re up to around 4 am – the teaching surgeon comes in. Asks all the same questions. Afterwards, we have this exchange:

  • We will schedule D for surgery in the morning.
  • What time?
  • We usually don’t schedule surgeries until after 8 am when everyone comes in unless it’s an emergency.
  • So we have to sit here and wait another 4 hours?
  • Probably.

I lost it. I went off on the 2 ER doctors and told them that I am exactly where I was 6 hours before coming in to Children’s Medical Center of Dallas. The reason we went there in the first place was because we were assured they could treat him. Had I known we would have been waiting till 8 am, I would have taken D home and we could come back in the morning.

Apparently, this lit a fire under someone’s butt (pun intended) because within minutes, a couple NEW nurses came down to prep D for surgery. They put in an IV and took us up to the OR.

Met with yet another surgeon upstairs to go over the risks / plan. Again, exactly where I was at 10 pm.

Put me in a Consultation room where I grabbed a quick nap. Surgery took less than an hour. Surgeon came by to tell me that there was no internal damage and that D only required a couple of stitches for the laceration. He’ll be fine, but they want to keep him in recovery for a couple hours to monitor him.

6 am. 8 HOURS from the time we had arrived for which probably 30 minutes was actual surgery / treatment.

Now, that’s the background and course of events. Here’s why our Healthcare is broken and to where this is leading our country.

Crowd / Line Management

In any business, if you have adequate Demand for your product, and it is profitable for you to increase your Supply, you staff up. Economists call this your Marginal Rate of Return (MRR), but it’s basically the benefit for you (the business owner) to see one more patient, sell one more unit, fulfill one more contract. It’s not always profitable to do more if you can’t cover your expenses.

The flip side to this is that hospitals don’t know if the next patient walking in the door will increase their MRR because they can’t turn anyone away for not being able to pay. So it’s a coin toss whether the next patient increase or decreases their bottom line. So how do they manage this? They keep their staff to a working minimum, guaranteeing they will always be overbooked, and customers (patients) will self-manage the waiting queue by either leaving out of frustration or they die before they can be seen.

What Hospital Administrators need to understand is that this queuing plan ensures those that can’t pay are the ones that will be sticking around (since they have no other place to go) and only the desperate or stupid (read: me) that can actually afford to pay will sit through the line. You are incenting the wrong customers to fill up your lines, from a financial perspective. Their other tool is to give you as little information as possible. At some point, you might consider leaving, but you figured you’ve waited this long.

Price / Cost Management

In most businesses, the owners set the price for their goods, weighing out their costs and the market demand. When you walk into a restaurant, brake shop, Walmart, or CPA’s office, there’s a list of prices that are displayed for their goods and services. Some services require the owners to give you an estimate because they won’t know exactly what they need to do / charge until they start to work. But reputable businesses will usually have a pretty good idea of the range of your potential costs once they start.

The US Hospital never publishes their prices. Why? They don’t know what to charge you because they don’t know who is going to pay. If they see 10 patients and their costs (before any profit) is $1000, they might charge each patient $100. The problem is that 5 patients might not have any ability to pay. 2 may be on a public assistance healthcare plan that has negotiated a maximum benefit of $50. The remaining 3 patients may have a healthcare plan that pays up to $200.

So do the math. The hospital loses an average cost of $500 for the freeloaders, takes in $100 for the 2 public aid patients, and is forced to charge the last 3 patients $600. Net result? The hospital still can’t cover their costs – they end up losing $300 for the 10 patients seen.

Now think about how much control / influence patients have over their incurred costs. When you go into a brake shop, there may be 3 different options for you to repair your brakes. You have the low cost, mid-range, and premium package options. What’s the difference? Well, you might want the cheapest option that will last only for a couple years as your car is on its last leg anyway. Or maybe you plan to keep your car running for another decade, so you want a long-term solution. Or maybe the premium package has a better safety rating than the discount pads.

Do patients have any visibility to the costs associated with their decisions? Sure, doctors will present choices for you on your care — just like I was given the option to just go ahead and have stitches put in or take my son to surgery which now involves an entire surgical team including anesthesia. Let’s say the stitches option cost me $100 and the surgery option cost me $100,000. Don’t you think that should be part of the decision making process?

Risk / Liability Management

Most businesses have some kind of liability insurance coverage. If something goes wrong, your customers might try to sue you, and you run the risk of losing not just the business, but your personal assets as well unless you are properly protected. As a country, we’ve blow liability way out of proportion to the point where there are countless, frivolous lawsuits that are settled out of court because some shark lawyer smells blood in the water and an opportunity to cash in.

The Healthcare liability circus is killing us as a country. From a Cost Management perspective, doctors don’t have any incentive to keep costs down. They’re only interested in keeping their liability to a minimum. As a result, doctors are afraid of being sued, so they order countless precautionary procedures. The amount of paperwork that’s involved in Healthcare is ridiculously out of control. I can’t tell you how many forms I had to sign to give each doctor permission to treat my son, to share the results with his pediatrician, to bill my insurance company, and to assume responsibility for my bill.

ALL COMPLETELY USELESS.

But if the Hospital doesn’t go through all these hoops, some lawyer will end up suing for millions.

There’s something also that Healthcare Consumers need to get straight. There are no guarantees with medical care. 100% of people die. Some sooner than others. Quality of Life is a mirage / legal term that some parasite cooked up to argue for perfection. Arguing that a doctor should have done this or could have done that for a tasty pile of cash does not bring your loved one back.

Cronyism / Socialism mated and it was ugly

So how does this all tie into my title? Surely, we live in a Free Market society and Capitalism is to blame for our woes?

Not exactly. Think about who can practice medicine here. Doctors, RN’s, and staff are licensed by their own kind. They arbitrarily determine who can practice. So what does that do? It creates a bottleneck of supply, in this case medical practitioners. They can effectively create a monopoly of power. Less competition means higher prices for consumers. For example, many people are turning to midwifery and home births and birthing centers. But in the state of Georgia, midwives are illegal. The people of Georgia have less choice, and thus, higher prices.

This is textbook Cronyism. Those in power want to keep their positions by legislating out any competition. In a free market, consumers would be able to choose who could perform medical care services. Consumers could decide to choose traditional, alternative, homeopathic, or religiously-based care.

Now think about how patients pay for health care. You have a large portion of the population that have health insurance (despite the alarmist figures Obama used to scare everyone into the need for Obamacare). Then you have some (the young and healthy) that probably wouldn’t buy health insurance if it wasn’t required. They might pay out of pocket or purchase a la carte coverage for only the things they want.

Lastly, you have those that have coverage through public aid. They receive the same healthcare benefits, for most part, as those that carry their own insurance.

Anytime you mix in a partial socialized payment plan, the market is no longer based on Capitalism because costs are no longer a factor for a portion of the consumer base. There are no restraints to consumption when you don’t have to pay the bill.

When you mix restricted suppliers by licensing and crony controls with unlimited demand through free (to the user) coverage, the results are the dysfunctional cluster bomb know as US Healthcare.

So, how do we fix the problem with healthcare in the US?

Like anything else, I’ll turn to the Market.

We need to teach people that healthcare is like any other kind of commodity. It’s not some super, special God-given right that everyone should have, regardless of cost.

We need to open up competition by removing the restrictions licensing creates.

We need to insist that those that want services have to pay for them. If you can’t afford it, you either have to rely on charity from the willing (not taxation / theft) or make other arrangements with your provider such as financing or secured debt.

We need to insist on up-front pricing from our providers so that we can include the costs into our decision making.

We need to change the tort laws and drastically reduce medical malpractice liability.

Free Market Capitalism is the only rational, consistent, and long-term solution that will benefit the most people and encourage excellence of care.

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