Healthcare Insanity – Part I

We all are probable tired of hearing about healthcare.  Assertions from one side of all it will do and warnings from the other on all it won’t.  So what’s the rub?  Why is the system so hard to fix.  This is the first of a three part article that attempts to explain why fixing healthcare is such a monumental challenge.  This first part presents a refresher on the typical economics of the transactions we complete every day.  The second article will explain the roles of the patient, the physician, the institution (clinic or hospital), and the ancillary services provider.  The final part of this article will review the role and implications of the payor and then provide a summary of the three parts.

So you know about the economics of supply and demand.  You undoubtedly have experienced it as you have made purchases.  Very simply, it works like this:  There is a buyer (you) and a seller (some other guy).  The seller has a product you want so you negotiate with the seller to come to an agreement as to what you will pay for the product.  You pay the money to the seller and you take home possession of the product.  The keys to this transaction are as follows:

  • You want the product
  • You select the product
  • You pay the money, and
  • You get the product.

It’s YOUR money, your decision, you know the cost, !

  • The seller has the product
  • the seller provides the product
  • the seller collects the money, and
  • the seller takes the money to the bank
  • Healthcare doesn’t work like that!  Surprised?

In the above example that follows the typical law of supply and demand has essentially two parties – the buyer and the seller.  Healthcare is considerably different.  There are multiple parties to a healthcare “transaction”.   There is the person(patient); a physician (generalist, specialist or both); an institution (clinic or hospital); an ancillary provider (lab, xray, etc) and a third party payer.  There could be even more hands stirring the pot.  The second article will review the roles of the patient, the physician, the institution and the ancillary services provider.



photo credit: otoscope via photopin (license)


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