Friday, February 26, 2010

Health Care Cartel

Watching the President’s Health Care Summit on television on February 25th, I was struck by how little progress has been made tackling health care issues. Of course, politics rather than real action and partisanship rather than facts appeared to be what the participants had to offer. It is no wonder we have accomplished absolutely nothing to bring health care costs back out of the stratosphere.

I was considering a sharply worded weblog post about the insurance industry oligopoly and the physician cartel. However, the idea that consumers have been harmed by the lack of competition and free trade in health care is not a revelation. Consider the comments of Zane Safrit or an individual who goes by the name PBI. Both lay out quite neatly how insurers and the physician community have protected themselves from competition to the detriment of their customers/patients.

Until the President and Congress restore true competition to the health care industry, it will really not matter that much whether a health care reform bill gets passed or not.

My argument has been that Congress already took an important step in mandating electronic medical records. Of course, creating operating efficiency and eliminating errors were the primary motivations behind that Congressional action. However, we believe it also alters the structure of the health care industry.

The availability of electronic records makes it possible for the individual patient to better control his/her health care information. As in every other industry, the constituent who is the most informed, i.e. has the greatest visibility up and down the supply chain, is the one who is in the greatest control and has the greatest competitive strength. Historically the physician has had the greatest power as it the doctor who is the primary point of intake for patients and the doctor retains the primary medical record.

A doctor is legally obligated to turn over medical records to patients within thirty days and then only at the patient’s expense. Thus the switching costs - moving to a new doctor or getting a second opinion - are high even under this rule. Your very life could be lost in thirty days.

Thus the key takeaway for investors from the President’s Health Care Summit is that companies offering electronic medical record systems remain the best bet for success. Look for a few suggestions in the coming weeks.

1 comment:

Anonymous said...

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The Health Dude