0:36 Intro. Father's medical care at the end of his life. One thing to see statistics that suggest things are wrong with the American health care system, Hanson podcast, but quite another thing to see that up front. Father diagnosed with cancer of the esophagus late last year; political scientist, wouldn't live to the next election. But he probably died from an infection contracted in the hospital. Pain in ankle in early January, goes for x-ray; fell and broke hip. Emergency room; pin put in. Advised to walk around. History of cardiac problems, so put there, kept flat on his back and developed bed sores; died three months later. Sent to many different units in the interim. Incredible equipment, well-trained and caring people; but system failure and break-down.

5:13 Specialization; nature of health care system is that is not designed but it is tampered with. In the modern hospital, well-informed specialists, but lack of a generalist--someone in charge of the whole patient. Family members end up playing the role of general advocate. The specialization we observe is not particularly healthy and is not perhaps what we would observe in a less-interventionist system. Hammergren and Harkins' book quote: Doctors trained as individuals, rewarded for outcompeting classmates and colleagues, taught to be skeptical of others. Doesn't lend itself to team-oriented behaviors. Don't need team for broken leg or strep throat. Complex patients such as those with diabetes or late stage cancers do. Spontaneous order, corporate order, breakdown of order. Gas station example: lots of people, still no wait, got gas. Not a breakdown of order as in the late 1970s. Find order on Public Choice Theory, could go to Concise Encyclopedia of Economics, David Henderson, ed. planned that (corporate order). Wikipedia, Google, unplanned (spontaneous order). In health care, the complexities are overwhelming the spontaneous order. Body is a complex system. Hayek observation: by spontaneous order we don't mean a world with no planning--planning often takes place within corporate structure--the question is who does the planning. In the U.S. we've put up barriers that make it hard for the corporate order to work. Feedback mechanisms make it so that you don't get lemonade from the pump at the gas station--could sue them, they could go out of business. In hospital, no feedback if as a result of one specialist curing a heart attack he gives the patient an infection.

15:33 Simple business process level: people who have been in a business world. Freddie Mac--buys mortgages from lenders and issues securities. Regional staff would sign contracts. Years later it would turn out that Freddie Mac was supposed to receive a lot of money, but only the regional staff knew. Ordinary business fixes this or the company goes out of business. Felt by company though not the customers; if customers feel it, they go somewhere else. In health care, a business consultant would suggest all kinds of reorganizations, process changes, etc. that would produce better outcomes. Why doesn't this happen? This problem is relatively new. Patients are older and there are more often multiple causes. [Podcast taped June 18, Tim Russert passed away from a heart attack a few days ago.] Diabetes; chronic illness; more things people expect to be treated for--child doesn't sit still at school. Lone wolf or specialized doctor, though, hasn't changed. Need for more team-oriented approach with patient at center. Skyscraper has architect and project manager. That role is missing in health care. Could just be it's really hard. Making a car is a complex process; it's become a more team experience with a goal of preventing defects. Washington U., St. Louis, excellent, research hospital, Chuck Knight, head of Emerson, emergent not top-down corporate culture. Why is it that when you walk into a hospital today as an elderly person you don't get an advocate--a shepherd? Family member plays that role but is emotional and doesn't know the hospital structure. Maybe it's not productive or too expensive, patients won't pay for it. Tradition is that a doctor should be in charge. Would be very resource costly. Who pays for it? Hospital administration consists of people making sure the hospital gets paid: Medicare or private insurance. Customer is Medicare or the customer. Medicare, Washington, DC, has other goals, doesn't think. Pay for performance: define what's a good outcome and good procedures and reward hospitals and doctors for doing that. Reporting problem. Father's death certificate lists esophageal cancer. But he probably died of infections. Hospital didn't want to get dinged. Reports get manipulated when you try to manage from a long distance.

27:24 Political and economic interface: moral quandary. Want people to be taken care of but the political process, either via the electorate or by special interests, we've moved into an imperfect system. How do you get from there to, say, a second-best, more effective solution? Basic moral quandary of health care: we instinctively want it to be free but we understand that the providers need to be paid. Moral repugnance to charging someone money if he is in distress. Usury laws developed from this. Set up a layer of insulation. In industrialized world, health care spending paid for by other parties. Here about 40% government. Patient is not the customer for that portion. Goal: remove some of that insulation. Lasik surgery, typically not covered by insurance or welfare programs; Lasik has gotten cheaper and better, profit motive, self-paid, advertising. Doesn't seem to be a powerful model that people have noticed has worked. Also: doctors are kings in the current system; main focus politically is to make sure they get paid. One excuse people give for health care being different is that it is complex. Computers are also complex; there are devices that work--competition, brand names, review articles. Could work in health care but we don't use them, not paying for it. Neat to see how resistant people are to the notion of paying for health care. A lot of the health care services we buy, such as Lasik or colonoscopy screening, are not in moments of distress. Elective. Even in distress you have more choices about how it can be dealt with. Temptation to say health care demand curve is vertical. People put off colonoscopy screenings because they are unpleasant; turned out for Russ to not be so horrible, took pills not liquid. Is it imaginable to get to a different world? Bootlegger and Baptist problem. A lot of general propaganda saying that good health insurance covers more. Economist would say it should cover less, just catastrophic insurance.

39:54 The uninsured. You hear that they are at risk. Employer-provided health insurance is unraveling, huge wage differentials, people who are healthy leave to become consultants and have more take-home pay. Medicare, bankrupt. Enormous structural deficits forecast as population ages. Not much of a crisis in the sense that we'll do something different--lower benefits, raise tax rates. The problem that looms is the political fight. Stein's Law: something can't go on forever. Health care spending rising relative to GDP has to stop eventually if only on arithmetical impossibility. Longevity is going up. Most tempting way to resolve it is to keep clamping down on reimbursements to doctors under Medicare. Net result is doctors are leaving the system. Headed toward a two-tier system. Question of how we get there. People who use the government funds get poorer choices, fewer doctors; others pay more and more and have more choices. Medicare is government program deals with the elderly; Medicaid deals with the non-poor elderly.

46:02 Most doctors don't feel like kings. Disillusioned, angry, bitter. Medicare bureaucrat or lawyer suing them is the king. Hammergren and Harkins' book quote: Average physician statistics, burdensome system for doctors. Why is it that we don't have this shepherd or project manager in charge? Doctor doesn't want to give up control. Have to reconcile their desire to have a more sensible workload with the need to be in control, allow others to be in charge of, say, prescriptions. Could have a doctor who is more of a generalist. Everyone is within his own silo, his own unit. Atul Gawande, a doctor, article: patient goes to doctor, has tumor, but instead gerontologist's first question is for patient to take off her shoes and look at her toenails. Can't clip her toenails, so at risk of falling down and being unable to get up. Need more gerontologists. In fact the number is decreasing. Shannon Brownlee's book, Overtreated. Take off your socks is not a procedure, so doctor's can't bill for it as a procedure. We are treating doctors based on what they do rather than the outcomes. We pay them by the code, by filling out the forms properly. We've created a breakdown.