Cheescake Medicine

Eli,

I greatly enjoyed Atul Gawande's "Big Med". It is the most eloquent and damning indictment of Obamacare I have read to date.

Gawande never asks what drives The Cheesecake Factory. Why is it so relentless about quality and cost? The answer is simple: If they aren't relentless, customers will go somewhere else. It is subject to the discipline of the market.

Gawande marvels at the cost control at the Cheesecake Factory and says, "as a doctor, I found such control alien--possibly from a hostile planet. We don't have patient forecasting in my office, push-button waste monitoring, or such stringent, hour-by-hour oversight of the work we do, and we don't want to." But why not? Isn't that the most relevant question when we are having this discussion about price for value? Why haven't doctors implemented these systems but the Cheesecake Factory has?

When I go to dinner, I don't consult my insurance company for approved restaurants. And if I don't like the service, or the food, I leave, or I don't come back. I walk across the street to Red Robin or California Pizza Kitchen or a dozen other places. There is no American Restaurant Association restricting supply and the only enforcer of quality is the consumer.

Why do doctors lack a cost control and customer service mentality? Isn't it obvious? Because they are not subject to market forces. Supply is restricted by the AMA and consumers are restricted to even fewer doctors due to insurance and worse, we pay ridiculously low prices, like a $20 co-pay. We value the visit much more than that $20 co-pay, which is why we "pay" with time, like waiting 30 minutes beyond our appointment time. The doctor is insulated from the market by the AMA, and the upside down insurance payment system and the consumer has no incentive, and sometimes no power, to fire doctors, or reward the physicians he likes.

Gawande describes his mother's experience of waiting to see a doctor and comments, "it was as if the clinicians were the customers, and the patients job was to serve them." This would be funny if it weren't so tragic. Welcome to the twisted world of medicine Dr. Gawande. Why do the clinicians not care? Because they face no consequences for their poor customer service.

Gawande comments, "in medicine, good ideas still take an appallingly long time to trickle down." He points out in can take fifteen years for a discovery to reach even half of Americans, and compares this to the six month spin for a new menu at the Cheesecake Factory. But why? Why does it take so long? He is silent. But this isn't a mystery. The market for innovation has been stifled.

Certainly the FDA is partly to blame. (Please, no thalidomide pictures again). Consumers aren't incentivized to find the best care at the lowest price since they are shielded from the market. Doctors aren't incentivized to advertise the latest and greatest procedures, and (I think) are prevented from engaging in competitive behavior by the AMA and laws. And the AMA restricts supply. Gawande is confused why medicine lacks the discipline of the market when the answer is obvious: because we have removed medicine from the discipline of the market.

This is where people like Peter Orszag, Ezekial Emanuel and Jonathan Gruber claim the markets don't work on medicine and point to all of the above as proof. I point to all of the above and say there is no market in medicine. When there is a market, Lasik surgery and plastic surgery are good examples, we see the exact results I expect: lower prices and better service.

Obamacare will exacerbate all of the forces that result in high prices, un-responsive practitioners and the glacial pace of innovation. Instead of inserting the discipline of the market into health care it shields it further. It mandates free (FREE??!!??) services like my recent colonoscopy and Sandra Fluke's birth control. Why should I pay for Sandra Fluke's birth control? Why should she pay for my colonoscopy? If we happened to frequent the Cheesecake Factory it would be absurd if the waiter gave her bill to me and mine to her but for some reason we think this is a reasonable way to approach medicine? And it is already getting worse. In California acupuncture is now a required to be covered by insurance.

Obamacare recognizes lowering prices will result in greater demand and has no mechanism to increase supply so resorts to the only option it has: restricting services arbitrarily by what Romney/Ryan dub the "15 unelected, unaccountable bureaucrats," the IPAB, Independent Payment Advisory Board.

Orszag, Emanuel and Gruber's IPAB will stifle innovation. How can it not? What is the genesis for a new menu item at the Cheesecake Factory? The idea comes from the cooks, the CEO, customers. It looks at what the competition is doing and what consumers are demanding. Nothing like this will be allowed with the IPAB. Why would it. It faces no consequence if it suppreses innovation. Quite the opposite, it will have accomplished its mission of restricting services.

Why does Gawande admire the Cheesecake Factory? Good food, low prices, innovation. But these are the results of a robust competitive market. Free entry by suppliers. Customers free to seek out the best quality at the lowest price. Poor quality and service is punished. Good quality and service is rewarded. Lack of innovation results in loss of market share.

Why is medicine unlike the Cheesecake Factory? Because there isn't a free market in medicine. And Obamacare, by restricting the market even further, will make it worse.

Bill

Paint Your Wagon Joe Biden

Eli,

I caught a little bit of Joe Biden last night,

"Recovery is not yet complete.
But we are on our way.
The journey of hope is not yet finished
but we are on our way.
And the cause of change is not fully accomplished
but we are on our way."

I've heard that song!

Paint Your Wagon! Lee Marvin, Clint Eastwood!! Who would have thought Biden would channel an Eastwood movie?

Where am I goin'?
I don't know
Where am I headin?
I ain't certain
All I know
is I am on my way.

When will I be there?
I don't know
When will I get there?
I ain't certain
All that I know
is I am on my way.

Gotta dream boy
Gotta song
Paint your wagon
And come along.

Where am I goin'?
I don't know
When will I be there?
I ain't certain
What will I get?
I ain't equipped to say.

But who gives a damn?
Who gives a damn?
Who gives a damn?
We're on our way.

Bill

 

Posted with Blogsy

Bill Clinton: Then and Now

September 21, 2010

"[Tell them] ‘Give us two more years.  Don't go back to the policies that dug the hole…If we don't do better, you can vote against us all, and I'll be on the ballot, too. Vote against us all if it's not better,’” Clinton said."

September 5, 2012

“President Obama started with a much weaker economy than I did,” Mr. Clinton said. “No president, not me, not any of my predecessors, could have repaired all of the damage he found in just four years.”

A 12-year old's perspective on Sandra Fluke

Eli,

We had a discussion the other day about birth control, Obama, Romney and Sandra Fluke with my 12-year old. I put it this way. Obama wants us to pay for Sandra Fluke's birth control. Romney wants Sandra Fluke to pay for her birth control.

She looked at us, a little confused. "Wait, Obama wants us to pay for someone else's birth control? That's dumb."

Exactly.

I saw of bit of Fluke last night arguing again the Republicans were going to make the world void of fornication. Oy. I don't care who she knows. I just don't want to pay for it.

Bill

The Romney Reelection Campaign

Bill,

In the midst of the California redwoods I walked though the hollow of a grand old sequioa and entered a parallel universe

I emerged on the other side to find myself  in Sept 2016, with the next presidential campaign well underway. President Romney was hard at work after the Republican convention, where he gained the nomination despite a bruising primary fight with Senator Santorum. Once again he was taking a few days to prepare for the upcoming debates, a tactic, that had proven so effective against Barack Obama in his down-to-the-wire electoral college victory(Ohio had sealed his triumph by 85 votes after a mysterious fire in Cleveland's 2nd ward had destroyed  15,000 ballots the night of the election).   

Still the current polls found the President's chances mixed at best. It had been a bruising four years, with more than a few surprises and some difficult moments. Romney's economic record appeared to most observers to be mixed at best. The 25% across-the-board tax cut had not been matched by significant reform in any of the major deductions that Vice President Ryan had promised, since the housing lobby had successfully opposed elimination of the mortgage interest deduction, and the health care lobby had blocked elimination of the deduction for health insurance. As a result, the deficit had soared to 2.5 trillion a year, despite impressive cuts in social programs (Medicaid reduced by 60%, the NIH budget cut by 40% and so on). Despite record corporate earnings, the unemployment rate remained stubbornly high at 7.8%, and the number of Americans living in poverty had doubled. Civil disturbances such as the Detroit food riots in 2015 had increased the national sense of unease, and the 9% average tax rate for the President's tax returns in that same year had added to the growing sense that he was out of touch with the concerns of ordinary Americans.

The long expected American-Israel  assault on the Iranian nuclear facilities in February 2013 certainly did not help matters, as oil markets reacted by raising the price of crude to $210 a barrel, and the promise of American aid to rebuild the port of Haifa destroyed by the Hezbollah rocket barrage proved a tough sell, even to a Republican Congress. And of course, the Democratic takeover of both the House and Senate in the 2014 mid terms had stifled any further momentum for the Republicans' agenda.

Still, despite historically low approval ratings, the President and his campaign staff remained guardedly optimistic. "We've always had to make our own reality. We did it in 2012 and we can do it now" insisted chief of staff Donald Trump. "We know the American people are with us on the issues that matter most, like same sex marriage and guin control. We look forward to meeting Governor Cuomo to debate whether Americans want to return to failed policies of the Obama admininstation or move forward to complete to President's agenda of low taxes and increased personal liberty." 

Unfortunately, a sudden unexopected gust of wind catupulted me back through the opening in the big Sequoia once again into the present day.  So while I now have a pretty good idea of what a Romney administration will mean for us, we both have to wait till Novemeber 2016 to know what the country thinks of his performance.    

Eli

Medicine meets Capitalism

Bill,

I'm glad to hear you're going to the doctor, and I am appalled at your experience there. But as we both know, your account is indeed typical . Maybe I should find you a doctor who will listen to you.

On the broader front, medicine must change to meet the needs of its customers, regardless of how it is paid for. Atul Gawande, arguably the country's best writing doc, has written a brilliant article in this weeks New Yorker about bringing the efficiencies of large scale chain businesses to medicine. It's must reading, especially for health care providers.

Eli

The Second Great Depression?

Eli,

I'm intrigued by the claim Obama and his acolytes make that his bold actions saved us from another Great Depression. It's a curious claim.

This graph is from "The Job Impact of the American Recovery and Reinvestment Plan." I won't comment on the actual unemployment rate since the ARRA was passed, other than to mention it is much higher than expected with stimulus and, oddly enough, higher than it was predicted to be without stimulus as well.  I know I know, it's George Bush's fault the Obama economics team was so poor at forecasting.

Obama's claim to a second term (if he is actually making one) is he saved us from a Second Great Depression.  But tell me. Where was the Great Depression we avoided? His team certainly expected a recovery, even if they didn't spend close to $1 trillion, and certainly nothing even close to a Great Depression. Since his claim, by his own admission, is false, what is the case for Obama II?

Bill