Thursday, July 23, 2009

What Is the Real Lesson of the Cleveland Clinic?

President Obama was at the Cleveland Clinic today, and planned to say that it should be a lesson for the rest of us on how to run the health-care "system." He apparently admires, in particular, the way the clinic has decoupled medical decisions from financial incentives. In his news conference last night, he indicated he wanted to eliminate the problem where the doctor chooses a tonsillectomy instead of a cheaper alternative course of treatment because "I make a lot more money if I take this kid's tonsils out."

Leaving aside the casual way the political leader insults the integrity of a huge proportion of his constituents, presumably in the belief that it is only they who block his grand plans, the Cleveland Clinic indeed merits thought. It is a lesson alright, but not in the way the president thinks. The primary lesson of the Cleveland Clinic is rather that it is there . According to the Wikipedia entry, the clinic was founded by four physicians as a group, back when that was an unusual practice, in an attempt to provide better patient care. Since then, it has evolved into a massive facility that treats patients from all over the world. Like the Mayo Clinic, the Texas Medical Center, and other facilities, it is a crown jewel of American medicine.

And it is a product, lest we forget, of the American medical system we keep hearing such bad things about. It is an economic/medical life form of sorts, that has evolved in response to the environment, both on the cost side and the demand side, it faces. It is not something a central planner could have concocted. Indeed, the centrally planned version of the Cleveland clinic would presumably look like the big state-owned hospitals in single-payer countries, with their crowded conditions, long waiting periods, and ghastly hygiene.

When the allocation of scarce health-care resources is a matter for politics, cost containment looms extremely large. In theory, democratic competition is supposed to lead to the best health care system, in the same way that competition among restaurants leads to the best ones staying in business and the worst ones closing. In fact, political competition privileges those who speak loudly and those who lobby effectively. Given that the pressure groups seeking to stake claims to public funds are hardly confined to health care but include individuals from every arena of social activity, those claims always exceed the resources available, so that cost-cutting becomes an overpowering concern. The market system requires self-interested producers to incorporate cost into their decision-making, but also the value they are providing to patients. There is little evidence that this is true in politics. Indeed, it is more than discouraging to read about the extent to which cost control has dominated the discussion of why we need more government control over health-care decisions. In general, costs go up when more resources are claimed, and for them to come down usually requires that the service be provided. Only the arrogant politician supposes that there is some giant pot of "waste" waiting for him to discover it and fund more for less, confident, in the teeth of all the evidence, that such efficiency is the hallmark of every other type of government activity.

In a properly functioning market, the aforementioned interplay among health providers and health consumers leads, as it does in every other economic endeavor, to experimentation, and that experimentation culminates in institutions like the Cleveland Clinic. Health-care providers try, and if necessary abandon, new medicines and new surgical techniques, and more importantly they try, and if necessary abandon, new forms of social organization. They operate clinics that require payment in cash; they try group practices based on incredible degrees of specialization (the orthopedics group that has the hand specialist, the knee specialist, etc.), or they select comprehensive clinics that contain under the same roof every specialty imaginable. Those experiments that succeed stay; those that fail go. The things that don't work are purged quickly, although it is for precisely that reason that we do not observe them, and therefore cannot tally them as a success of the market system, even though they are. In a centrally planned system, in contrast, those experiments that might succeed are never born, and those that fail lobby to stay forever. This is the biggest tragedy of the looming massacre of our already wounded health system; the Cleveland Clinics of the future that we will never hear of.

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