Author Topic: A Better Healthcare System  (Read 5607 times)

rukawa

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A Better Healthcare System
« on: May 08, 2017, 05:14:32 PM »
Thought I would start a discussion on healthcare. Buffet brought it up in the annual meeting:
https://www.fool.com/investing/2017/05/07/warren-buffett-healthcare-is-the-real-problem-for.aspx

I think the US healthcare system is pretty bad. I am not such a fan of the Canadian system either, although its far better than the US. I am a big fan of the Singapore system and its everyone pays principle. I thought Brad Delong, had a pretty sensible proposal:
http://delong.typepad.com/sdj/2007/06/dealing_with_th.html

« Last Edit: May 08, 2017, 05:20:36 PM by rukawa »


RichardGibbons

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Re: A Better Healthcare System
« Reply #1 on: May 08, 2017, 05:30:36 PM »
I think the US healthcare system is pretty bad. I am not such a fan of the Canadian system either, although its far better than the US. I am a big fan of the Singapore system and its everyone pays principle. I thought Brad Delong, had a pretty sensible proposal:
http://delong.typepad.com/sdj/2007/06/dealing_with_th.html

I'd be into trying it and seeing if it actually works.  That said, I suspect it wouldn't work because medicine is one of the markets where price signals to consumers don't actually work because consumers are incapable of understanding what medical treatment is required, nor judging the quality of the treatment that is delivered.  Combined with profit-maximization in medicine, the result is overly inflated costs. Munger's heart-surgery example from the Berkshire AGM is a good example of the problem.

Nevertheless, it seems worth trying because without experimentation, it's very hard to know what works.  I feel like you almost need 10 states to sign up for 10 different approaches, wait a decade, and see what worked and what didn't.

rukawa

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Re: A Better Healthcare System
« Reply #2 on: May 08, 2017, 05:53:32 PM »
Quote
That said, I suspect it wouldn't work because medicine is one of the markets where price signals to consumers don't actually work because consumers are incapable of understanding what medical treatment is required, nor judging the quality of the treatment that is delivered.  Combined with profit-maximization in medicine, the result is overly inflated costs. Munger's heart-surgery example from the Berkshire AGM is a good example of the problem.

Actually its not just consumers...doctors also are incapable of understanding what treatment is required or judging the quality of treatment delivered:
https://www.theatlantic.com/health/archive/2017/02/when-evidence-says-no-but-doctors-say-yes/517368/

The solution is two things:
1) A lot more research into what works and into increasing the operational effectiveness of medicine. Delong does argue for this in his proposal.
2) Strong physician and patient education

Anyways Delong was primarily motivated to have price signals because of the large quality increases and cost reductions he saw in laser eye surgery and similar other treatments that are not usually covered by insurance. Its pretty clear that with laser eye surgery price has gone down, quality has increased and productivity has increased.

I am also not sure what is casual here. You assume that healthcare is exceptional because of poor consumer information...but it could be exceptional because its covered by insurance and so consumers tend to spend less time researching. Most of the economy consists of products and services that consumers are not experts in.

For instance, I am not an expert on audio-visual technology but if I were to buy a tv I would do my research and there would be review sites telling me which products to buy. Same if  bought a car. Why isn't there anything like this for hospitals or for medicine?

Cigarbutt

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Re: A Better Healthcare System
« Reply #3 on: May 08, 2017, 06:21:51 PM »
Thank you rukawa  for the Singapore reference. They seem to combine various features that maximize the right incentives.
Why are you not fan of the Canadian system? difficult access? long waits in the emergency room?, long waits for primary and specialized care? others?
Most "successful" countries tend to have a hybrid system (private and public).
I would like to add that specialized care tends to become more expensive (at rates much above GDP/inflation) and my opinion is that this tendency overall, despite what is often mentioned in the mainstream media, has NOT brought proportional health benefits.

Another major problem is information asymmetry as Richard Gibbons describes. There is what seems to be a paradigm shift coming with a tendency to focus on evidence-based care. There are now poor incentives built-in the system. The patients want the best care and the treating teams/MDs want to provide the best care but, somehow, the end result ends up often being VERY far from optimal care. In addition to evidence-based medicine and algorithmic based guidelines, perhaps a private/public intermediary could become an option in the future. Just think of the transport logistics providers (C.H. Robinson, Expeditors) and how they really optimized the use of transport ressources and ended up creating value along the way. In the US, there are already some of this in action in the workmans comp "business" space. I submit that this could become a nice opportunity in healthcare as well. There is a potential relative win-win with care obtained/provided being optimized and, at the same time resulting in a profit potential for an asset-light private model based on knowledge and technology acting within the restraints of basic regulations.
There are potential opportunities there.
For those interested, Corvel (CRVL) is worth looking at because it has already a long and profitable operating history (mainly workmans comp) and may be in a position to expand. Many large health insurers have subs that tend to reach similar objectives but these subs tend to be regarded as "cost control" tools and don't seem to be a priority for the parent company. For instance, for those who followed Zenith (before and after it has been acquired by FFH), a component of the business (claims management) deals indirectly with this aspect of "optimal care" but again here, that component is not seen as a dynamic tool to maximize efficiency but more like a cost control unit to keep costs along reserves.

rukawa

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Re: A Better Healthcare System
« Reply #4 on: May 08, 2017, 11:59:43 PM »
Quote
Why are you not fan of the Canadian system? difficult access? long waits in the emergency room?, long waits for primary and specialized care? others?

The Canadian system has absolutely no price signals and so tends to ration by controlling supply which leads to long wait lines, low productivity and waste.

Mostly the Canadian system suffers from the same problems as the US system except that because we ration our costs are a lot lower. But we still have poor focus on preventative health, physicians in Canada are badly incentivized, treatments often have little scientific basis etc. None of these issues though are as bad as in the US but that's not saying much. Lets provide some statistics:

Canada
average lifespan: 81.96 years
average age: 39.8
heatlh (% of GDP): 10.4%

US:
average lifespan: 79 years
median age: 37.8
heatlh (% of GDP): 17.1%

Singapore
avg lifespan: 82.6 years
median age: 40
heatlh (% GDP): 4.9%

Singapore basically spends less than half of what Canada spends and 1/3rd of the US but outcomes are similar. Canada looks good compared to the US but when you compare it to Singapore you realizes its actually pretty bad. Singapore wait times for instance are much much much much much much much much MUCH MUCH lower than in Canada. Singapore measures specialist wait times in minutes, Canada measures wait times in weeks or months. The only exception to this is emergency wait times where Canadian wait times would "only" be 3-4 times longer than Singapore.

And to give you some idea of how good Singapore's health system is. Singaporeans biggest complaint about their system are the wait times!! So they are basically complaining about something where they are 2 to 3 orders of magnitude better than Canada.

To be honest though given the immense stupidity of healthcare my suspicion is that even Singapore could cut their expenditures in half and improve health simultaneously.
« Last Edit: May 09, 2017, 12:10:04 AM by rukawa »

orthopa

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Re: A Better Healthcare System
« Reply #5 on: May 09, 2017, 06:14:02 AM »
I have a pretty intimate understanding about healthcare from a provider level in orthopedics. To add a couple points to the discussion that certainly add to healthcare costs.

1. Malpractice fears. I myself as well as many others who work in the healthcare field over order tests/admit more then we should, give more meds then we should etc because its not worth getting sued. Id much rather order a CT scan of the head on every patient that walks in the door at the ER that hits their head then have the pt end up with a "bad outcome" If it happens and I didnt do it Im fucked. I then have 2 options, settle for limits of my policy or go to a jury trial and be liable for any amount they see fit. Dont let the BS you hear from politicians fool you. EVERY PHYSICIAN/PA/NP/NURSING HOME/REHAB FACILITY/HOSPITAL over orders tests for this reason. Every day all day long.

2. Compliance. How do we make healthcare better if the pt doesn't comply? Very difficult to do. Sicker non compliant pts means more costs, and usually more expensive costs.


DooDiligence

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Re: A Better Healthcare System
« Reply #6 on: May 09, 2017, 08:33:49 AM »
GoodRX driving transparency in pharma pricing.

Are companies like this able to improve adherence & compliance?
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Desert_Rat

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Re: A Better Healthcare System
« Reply #7 on: May 09, 2017, 09:03:30 AM »
Quote
Why are you not fan of the Canadian system? difficult access? long waits in the emergency room?, long waits for primary and specialized care? others?

The Canadian system has absolutely no price signals and so tends to ration by controlling supply which leads to long wait lines, low productivity and waste.

Mostly the Canadian system suffers from the same problems as the US system except that because we ration our costs are a lot lower. But we still have poor focus on preventative health, physicians in Canada are badly incentivized, treatments often have little scientific basis etc. None of these issues though are as bad as in the US but that's not saying much. Lets provide some statistics:

Canada
average lifespan: 81.96 years
average age: 39.8
heatlh (% of GDP): 10.4%

US:
average lifespan: 79 years
median age: 37.8
heatlh (% of GDP): 17.1%

Singapore
avg lifespan: 82.6 years
median age: 40
heatlh (% GDP): 4.9%

Singapore basically spends less than half of what Canada spends and 1/3rd of the US but outcomes are similar. Canada looks good compared to the US but when you compare it to Singapore you realizes its actually pretty bad. Singapore wait times for instance are much much much much much much much much MUCH MUCH lower than in Canada. Singapore measures specialist wait times in minutes, Canada measures wait times in weeks or months. The only exception to this is emergency wait times where Canadian wait times would "only" be 3-4 times longer than Singapore.

And to give you some idea of how good Singapore's health system is. Singaporeans biggest complaint about their system are the wait times!! So they are basically complaining about something where they are 2 to 3 orders of magnitude better than Canada.

To be honest though given the immense stupidity of healthcare my suspicion is that even Singapore could cut their expenditures in half and improve health simultaneously.

There are as many MRI machines in New Jersey than all of Canada.
 
Every universal healthcare system I've read of, even those countries whose military budget is almost zero because it leaches its neighbors or NATO's protections, is a healthcare system far worse than what I had available to me 8 years ago. I understand the dilemma with the poor and pre-existing with job loss but I think that should be resolved with Medicaid or SS, even as busted as the two are. What we once had was fine though.

MAGA

rukawa

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Re: A Better Healthcare System
« Reply #8 on: May 09, 2017, 09:24:13 AM »
Every universal healthcare system I've read of, even those countries whose military budget is almost zero because it leaches its neighbors or NATO's protections, is a healthcare system far worse than what I had available to me 8 years ago. I understand the dilemma with the poor and pre-existing with job loss but I think that should be resolved with Medicaid or SS, even as busted as the two are. What we once had was fine though.
MAGA

Singaporeans live 3 years longer than Americans, spend less than 1/3rd of what Americans spend on healthcare and express very high levels of satisfaction with their healthcare. Wait times in Singapore are also vastly superior to the US. BTW, Singaporeans spend as much on their military in proportion to GDP as the US and also force their young into mandatory service where some of them actually die in training (they run themselves to death).

Healthcare is an input. HEALTH IS AN OUTPUT. You are confusing the two. You can have a space age healthcare system and yet because you order needless tests, over treat, over medicate and don't wash your hands (poor operational effectiveness)...actually make peoples health worse.


rb

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Re: A Better Healthcare System
« Reply #9 on: May 09, 2017, 09:30:19 AM »
I don't think there's a bad healthcare system in the US. It's just really expensive. But I don't think there's much hope of improving it because of economic and political reasons.

Firstly economic. Healthcare cost is at 17.1% of GDP. But your cost is someone's income. At 17% it's pretty much the biggest sector of the economy and makes a lot of money. This gives it a lot of money and influence. In turn it will use this influence in order to defeat cost controls so it/they can keep making the money.

Secondly political. This is where the public/private ideologies come into play. Because of this when you try to pass something like Obamacare or any other reform it will be heavily flawed from the start because they have to make a lot of compromises just to get it passed. Then the other side will will try its best to make it even crappier so they can get up on a soap box and say "see it doesn't work". Basically healthcare reform fails because nobody wants it to work.

Think about it for a second how messed up the ideologies are. Basically from a pure self interest perspective poor states like Alabama and Mississippi should be all in for cheap gov't healthcare and rich states like New Jersey, California, and Maryland should prefer fancy, expensive private care. However in reality their preferences are completely opposite from their self interest.