NY Times Op-Ed, and Pushing on everything

In this morning's New York Times four people wrote an Op-Ed. All are doctors. All are very familiar with the health care debate. They are Atul Gawande of New Yorker McAllen, Texas fame; Mark McClellan, Bush's FDA and CMS head as well as the brother of Bush's press secretary Scott; Elliot Fisher of Dartmouth Atlas; and Donald Berwick in Cambridge, MA at the Institute for Healthcare Improvement.

They point to something very important. They note that our health care system is designed to lead to overutlization that produces no benefit, and may create harm. The piece is worth reading in full, but two paragraphs are excepted here:

So how do they do that? Some have followed the Mayo model, with salaried doctors employed by a unified local system focused on quality of care: these include Temple, where the Scott and White clinic dominates the market, and Sayre, where the Guthrie Clinic does. Other regions, including Richmond and Everett, look more like most American communities, with several medical groups whose physicians are paid on a traditional fee-for-service basis. But they, too, have found ways to protect patients against the damaging incentives of a system that encourages fragmentation of care and the pursuit of revenues over patient needs.

[...]

In their own ways, each of these successful communities tells the same simple story: better, safer, lower-cost care is within reach. Many high-cost regions are just a few hours’ drive from a lower-cost, higher-quality region. And in the more efficient areas, neither the physicians nor the citizens reported feeling that care is “rationed.” Indeed, it’s rational.

The key here is that we want to make things more rational, not less.

And yet, there is another piece too. The market itself does not rationally price things. For example, Boston under the Dartmouth Atlas has high costs and high quality. However, its utilization is low.

A simple equation suffices.

Let C = Total Cost

Let U = Some complicated Utilization Function

Let P = Some complicated Price Function

Then as we all know

C = U x P

However, we always talk about U. What about P?

I am not saying that U is not important. It is pretty important. It is what is driving McAllen. But, P is pretty darn important too. Of course, it may also be thornier and more complicated too.