“It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” — Upton Sinclair
This post will get dark. Before it does, let’s talk about donuts.
My 5 year old son Boone loves donuts, and he’s bright. If I told him “You can have 20% of any donut at the bakery,” he’d walk to the counter and pick the biggest one he could find. And I wouldn’t blame him. He’d be playing by the rules I set.
Health insurance companies can keep up to 20 cents out of every premium dollar for administrative costs and profit: they make more money when costs go up.
If I told Boone “Your job is to keep people healthy. But they’ll give you donuts every time they come see you when they’re sick,” what would he be rooting for?
The fee-for-service model pays hospitals to do things to patients, not for them.
And if I told Boone “You can give people this pill which will make them feel better forever, or this one, which will keep them coming in with more donuts every week,” which would he prescribe?
Pharma analysts ask: “Is curing patients a sustainable business model?”
Boone would pick the donuts every time. Like any 4 year old, he’s a self-interest machine.
Why would we expect anything different from health insurance companies, hospitals, and pharma?
This is the dirty little secret of healthcare.
My dad worked for 30 years as a family practice doctor before becoming Chief Medical Executive of Group Health Cooperative, an award-winning 600,000 member integrated delivery system in the Pacific Northwest. He says if future anthropologists study the US healthcare system, they’ll conclude that its purpose was to create reimbursable events.
Many pretend that skyrocketing costs, massive price disparities, lack of transparency, and inability to agree on ROI of medical procedures are unavoidable symptoms of healthcare’s inherent complexity. That everyone in this business has noble intentions and is just doing their best.
The truth is simple enough for Boone to understand: we get these outcomes because they are the outcomes the system is designed to get.
“Show me the incentive, I will show you the outcome.” — Charlie Munger
The current healthcare system is working well — for health insurance companies, hospitals, and pharma.
What would the system look like if it was working for patients?
As a starting point, everyone involved would be in the same boat. Any businesses supporting your care would only be healthy when you are.
The system would reward healthy choices. It might use blockchain technology to remove unnecessary middlemen, boost transparency, and reduce waste.
We’d all have a financial stake in our own health, and perhaps in the system itself.
We’re building Decent to find out.
This one’s for you, buddy.