Healthcare Insanity – Part II – How it really works

This is the second of a three part article which attempts to explain the complexities of the healthcare system which makes changing or fixing the system so difficult if not impossible.  This article looks at the roles of the patient, the physician, the institutions (clinic or hospital) and the ancillary services (laboratory, x-ray, cardiology, etc).  The role of the payor will be addressed in the final article.

Healthcare works more like this.

The Patient and the Physician.  If a person (patient) is sick, really sick, the only real decision they make is to seek medical care.Once the person presents themselves to a physician.  The physician is then the one who calls the shots.  The physician decides what tests to run, what procedures to be performed, whether to admit the person to an inpatient facility or treat as an outpatient, whether a specialist is needed, etc.  What is the person (patient) going to say, “Hay doc, isn’t there a cheaper way to ____?”  If person’s life is on the line, it’s as good as saying it’s a blank check.

So what are the incentives at this point.  The person is sick and wants to get well.  As far as they are concerned, nothing is too good for them – cost is not object (as we shall see later).  (Ok, I realize there are copays and deductibles that have to be met, but that’s a fraction of the cost of care and certainly not a disincentive.)  The physician wants for the person to get well and given this nations quickness to sue, will order any and all tests and procedures that will cover every possibility.  The physician also wants to avoid a law suit.  Cost is no object to the physician, as they know the patient is not paying.

The Institution and Ancillary Services.  Whether the patient is treated at a clinic or an inpatient facility, it is simply the provider of services. Everything from the tests, medications, bed position, to the type of diet is ordered by the physician.  If tests are ordered, they are often performed by a ancillary facility (laboratory, radiology, etc.) separate from the clinic or hospital.

What are the incentives?  Again, cost is not a concern to the physician – the patient is not paying.  Costs are of no concern to the the clinic or hospital except for the awareness that they will not be reimbursed 100% of what they bill.  Also, payment further decreases or stops after the patient has been in the hospital for a length of time depending on the diagnosis related group (a topic for another day).  What does health care “cost” will be addressed in another post.  Cost is not a concern to the ancillary service provider, except like the clinic or hospital, they are aware they will not be reimbursed 100% for the services billed.

This second article looked at the roles of the patient, the physician, the institution (clinic or hospital) and the ancillary services provider (laboratory, x-ray, cardiology, etc)  We noted that about the only decision the patient makes to seek out healthcare.  Once the patient sees the physician, the physician essentially becomes the decision maker.  The institution (clinic or hospital) simply provides the care the the physician orders.  The ancillary services provide (laboratory, x-ray, cardiology, etc, also essentially provides services in response to a physician’s order.  Cost is NOT a factor of concern for any of these players.  Part III of this article with address  the one player concerned with cost and the implications for the patient’s health.


photo credit: Check-up via photopin (license)


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