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Saturday, March 07, 2015

Healthcare, Degrees, and Creative Destruction

Health care is expensive, as Steven Brill sometimes writes, because scans, labs, doctors, pills, etc cost too much. As simple as that sounds, it is surprisingly akin to what ails university training in today’s America. Kevin Carey writes in his new book, “The End of College,” that we have astronomical projections of future college costs due to the place that university training occupies in today’s market, that of a monopoly. Want a degree in Bioengineering so that you can get an entry level job at the NIH? Well, you’re likely--very likely--to need a degree at some university, and the more elite (more expensive) the university the better, in order to make yourself stand out from your peers. There is only one place to get a degree: a college. Likewise, in our health care system, there are only certain providers that are able to provide a diagnosis (apart from Google and WebMD). It is likely--highly likely--that a hospital will be involved. Just like in our university model, there is but one provider for a given desire/need, that of universities for degrees/jobs, that of hospitals for illnesses/treatments.

Creative destruction is an economic idea that has been described as a "process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one." (Schumpeter) Carey believes that now is a ripe time for creatively exploding the monopoly of colleges over degree programs. As more universities are participating in e-learning (EdX, Coursera) programs which Carey calls the University of Everywhere, degrees can now become obsolete. There would need to be a certificate program of some sort that qualifies a person for a given job, but one can easily envision companies and governments posting the necessary qualifications for positions. One would then merely need to meet those expectations (or alternatively, bargain for the future completion of some necessary component). Alternatively, one can also envision new consulting businesses offering their services to simplify and verify the course offerings necessary for a given goal.

The point here is that within our university system we have extreme costs, much as in health care, and that these costs are due to monopoly systems (and transparency issues). I am wondering if health care costs can be similarly treated by a revolution such as that which Carey calls for in the university degree area.

One can see a further parallel: Health care suffers from a lack of transparency. This is well documented. Anyone who has ever needed to find out the ultimate costs for an illness or procedure, well knows they trod through a Slough of Despond. Similarly, if you have offered your expertise to your children, filling out FAFSA forms, university entrance papers and so forth, comparing college A to college B can be a very much a non-transparent process. We know that the retail pricing of colleges is a fiction. You have to do a lot of work to end up with a final price. And by the time you know the final price it is too late to apply to others (kind of like that knee replacement you just got). You have to send out multiple offers to colleges (with multiple fees) and in the end so much is guesswork. What will the experience of your Jonny or Jane be? No one knows. And to a point this is merely pointing out that life contains a surprise or two. Much like the treatment of your asthma or diabetes or your knee replacement. What if there was a way to decrease the un-knowability?

Carey’s University of Everywhere does this by giving the user/learner ultimate responsibility for the classes taken. He might take a class (likely to be free, by the by) at MIT, one at Harvard, another at Stanford. He might take another at his local public university. The choice is his. Costs go down as knowability go up. He decides what classes to take, not some mid-level administrator at some particular college.

In health care what if we constructed a parallel model, one that explodes the current model of insurance company constructed “degrees” at local hospitals? Right now a company approves, or more likely denies, a mode of treatment. It selects the pricing but also the allowed method of treatment, the devices, the doctors, the pills. The hospital. It will allow this hospital, not that one. It is somewhat like if we said that our college president and board were the insurance company, and the campus of our university system were the various hospitals and providers that the company permitted within it. At the end of our pilgrim’s progress it is hoped he ends up with a degree/cure; it is likely he ends up in bankruptcy/morgue.

The parallel, I have to immediately say, falls apart in that we will always need our hospitals; they are not going to vanish into the electronic ether. But then, neither will all colleges. Though we certainly don’t need the numbers of campuses that we currently have, there will always be a version of Harvard and MIT and Stanford. We can however construct something akin to this individual-oriented scheme.

Exploding the insurance-governed model that currently exists, and replacing it with a government-centered model would simplify billing, saving costs at both the provider level and the overall administration of health, allowing for transparency. To give more power to the consumer of health care, what if we also had a central clearinghouse for scientifically proven health models of illnesses? Well, we actually have one: the NGC, the National Guideline Clearinghouse (initiated by the Dept. of Health and Human Services). This would allow a patient--much as in our student model--to put him/her-self at the center of the process, giving themselves more control; the patient can then access a central, and therefore simplified, site in order to inform themselves to possible treatments, even local specialists who have availed themselves of similar procedures in the past. Links could be set up showing experience and a rating system for a given specialist and hospital system. Hospitals could be arranged by district, districts by regions. Within a given region their might be dozens of choices, districts might have but a few.

The model would work as follows: Someone has an illness. Their doctor provides a diagnosis (perhaps the person also gets a second, confirming, opinion). The patient or their caregiver researches the clearinghouse and sees that certain specialists must be involved in their treatment (the primary provider most likely has already mentioned this), sees the specialists available in their region and also sees what that treatment will likely entail. (This is a simplification: medical terminology as well as medical knowledge requires advanced learning; what needs to emphasized is transparency and the promotion of the possibility of further explanation at the primary provider level.) What then might appear is an algorithm of choices. Given certain parameters (sex, age, illness, lab results) the algorithm would narrow the choices to certain areas, certain doctors, certain treatments. The experience of Peter Drier had, when confronted with a six-figure bill for a surgical procedure, would not happen if within that algorithm all consults would have appeared, all participating surgeons (not necessarily by name, but by position and allowable billing), all extraneous fees including operating room fees, and if anything would be considered out-of-network (cf. .

The patient then takes their electronic record (yes, now readily available) and sends requests via the Internet to several specialists (they might be anywhere in the world, might be only those available within a district) who then make remarks which the patient reads, with costs verified via the clearinghouse or the government agency involved (Medicare, say). A treatment selection is made with the help of the primary provider. Once the treatment is selected, the specialists necessary for the actual procedure(s) are then selected. It is the treatment that is selected, then the provider, just as in the university model we selected the desired certificate, the classes necessary for that certificate, then the specific university, which, again might be in multiple places, just as our doctors might be in multiple districts.

Costs and confusion in both models decrease, I would guess by quite a substantial amount. But here I’d like to further pose that this would also allow for equitable treatment, as the e-University would be open up not just to wealthy white alumnae anymore but to a general gathering of mixed ethnic groups (from around the world), our health care would be more open to everyone, rich and poor, employed and unemployed (though the Internet would have to be treated as much as a right as electricity). The wealthy would be competing alongside the poor at the MIT courses online; the guy who was just fired but now needs back surgery can have the same opportunity for the procedures that are scientifically proven at that point in time. Fair. Just. And much easier.

There are a few points along the “algorithm of care” (my name for this network of health care) which can produce cost savings. First, having a Medicare For All plan would allow the government to force prices downward (as in all other industrial nations). Second, administration costs would be reduced (saving upwards of 31% of total current costs: according to the New England Journal of Medicine that is what we currently spend on administrative costs in the US). Thirdly, transparency would force downward pressures on similar treatments and providers. Fourthly, providers competing for patient services would create lower costs and greater attention to quality (providers will compete in areas of quality and costs).

The health care system can hardly be labeled as such in America. There is now pressure within it that is rapidly causing destruction of itself, through political divisiveness and spiraling costs. If and when the public becomes aware of the number of deaths caused by our insurance-focused system (upwards of 60,000 in the most recent Harvard study) citizens may well find the need not to tinker, but to blow up the existing structure. Out of that destruction can come a more efficient and fair system.