Canadian Bacon In Health Care.

There is a crisis in Canada. In particular pig farmers. And it has nothing to do with the supply of pigs, or pig feed, or even the supply of pig farmers.  It is economics 101. Like so many other currencies in this world, the US dollar has caved. That is an entirely different blog. But this fact has far reaching consequences on how goods are bought and sold between countries.

The Canadian Dollar, known quaintly as the Looney has strengthened against the dollar to the tune of 20% since the start of this year. In January 2007, 1.17 Loonies bought 1.0 US dollars.  Eleven months later? 0.94 Loonies buys 1.0 US dollars.  If you are a Canadian exporter, you are in deep do do. Economics 101 says so.

Lets say you are Canadian pig farmer. You grow pigs. You sell your pigs to slaughter. Canadian slaughter houses sell bacon makers who prepare your pig and sell to me, Mr America.  One problem though. I'm not buying. Too expensive. Lets say in January 2007 Canadian Bacon International was selling their one pound of bacon to my grocery store for 1.17 Looneys, the equivalent of 1 USD.

Fast forward to today. November 2007. If I, Mr America are going to buy your bacon for 1 USD, like I did 11 months ago, you (Canadian Bacon International) will have to accept only 0.94 Looneys, instead of their 1.17 Lonneys you accepted 11 months ago.

That my friend is a 20% haircut in revenue. And guess what , either Canadian Bacon International accepts 20% less, or they raise their prices and I Mr. America must pay 20% more. But I'm not.  What's a Canadian pig farmer to do? Competition says they either find ways to decrease their cost structure, find new markets, or go bankrupt. It is pure and simple economics 101.  What amazes me is the cost of our health care seems far and above any rational explanation. It has completely bypassed economics 101.  Why?  Why?  Why?

I think our health care industry works on a premise of a false economies. It has lost the benefit of supply and demand. I see it every where.  Medicare functions in a system of unlimited supply and unlimited demand a utopia of unlimited resources. This is bankrupting our nation. And quickly.  In pig farmer economics 101 rising demand increases prices which raised prices, which decreases demand, which stalls prices or decreases prices.

I look at health care for a prescriber standpoint. I order health care to be delivered.  Ever where I look, the things that Medicare pays "well' for are exploding.

Imaging centers
Heart hospitals
Surgical Centers
Assisted devices
Home Health Service stores.
Scooters
Endoscopy centers
Out patient surgical centers.

There is no shortage of these places eying for a piece of the Medicare spigot, the unrelenting unlimited flow of cash for the "important" (and subsequently expensive), services.

What I fail to see exploding is basic health services.

Primary care offices
Diabetes centers
Health exercise centers
Patient education systems.
Organized centralized systems of delivering patient management that include education, nursing, pharmacy, and physician input for chronic disease intervention.

The things you can't touch, cut, poke or scrape are the most important aspects of health care and curbing the cost of health care. And the least reimbursed. It is misdirected funds courtesy of Medicare that creates less value for my tax money.

Primary care supply is down. In a market economy, when demand outstrips supply, cost of goods goes up AND you increase supply to meet that demand. Supply ain't goin' up. The supply is all going into specialties which generate incomes of 2-10 times higher than primary care. It is the fault of false economies. Socialist policies. Government policies. A fixed and market unfriendly Medicare policy followed by all other third party payers.

Economics 101 has left the system. Hospitals have consolidated and or closed. Super hospitals. Competition is limited. Hospital charges are up and up and up. Hospital costs are up and up and up and up. In a market economy, when prices rise demand falls. But there appears to be unlimited demand, propped up by false economies. I'm not paying. Insurance is. And that money has no competition. It is a set price. Who says a different payment system couldn't get more for my money. And cost less doing so, with better quality.

Medicare is government. It has ruined primary care. It has created unrestricted policies of demand as the percentage of personal financial responsibility has plummeted from 30% to less than 10% over the last several decades. Dr Government has also earned an apparent medical license to practice medicine.

Government has a track record of terrible personal finance. Deficits galore, $6000 toilet seats. Centralized system of passing the buck. No CEO per say. Nobody to take responsibility. Nobody to fire. My experience on the delivery side of VA medicine as a resident physician has convinced my that government has no business running a business. A private enterprise with a vision, a fundamental unwavering value system can do more for health care than any government run system ever could. Leave government to doing what they do best, making laws and up holding them for the greater good.

The current health care delivery system is proof of that. For our money spent, I am baffled at how little we get. $3000 for an ED visit. That's ridiculous. And that's at my practicing hospital. For our 2.2 trillion dollars, we get almost 50 million people without third party insurance.

For our 2.2 trillion dollars we get doctors walking out of a support system at a time when boomers are saying "Hello" to the system.  For our 2.2 trillion dollars we get hospitals suppressing competition, a force which always reduces costs. It is a byproduct of capitalism; better and cheaper.  For our 2.2 trillion dollars we have projections of ever widening deficits, projections of 100%GDP going to health care in 80 years. 100%. Astounding.

For 2.2 trillion dollars we get a $750 dollar hospital bill for my wife's single mother's ER visit, AFTER her insurance paid their part.  That's not value. That's a rip off. That's legalized pillaging.  This is government run health care. Here. Today. Now.  And the scary thing is, they are only running 1/2 of it.  Imagine running 100%.

The Canadian pig farmers are struggling because that's the way the system works. They need to figure out a way back to prosperity or they bankrupt. That means innovation. Find new markets. Ship to Asia. Create new pork products.  Figure it out.

Our current health care system lacks the motivation and innovation to figure it out, because the spigot of money continues to grow, free Medicare money being spent in all the wrong ways, and change prevented by the spigots of money courtesy of big lobby money.

Money being spent on everything but health care delivery. The quantifiable benefit of HIPAA compared to the costs to implement and sustain must be incredible to justify it, but interestingly, I notice no difference now than before.  This is government defined quality.

Unfortunately, Canadian bacon is not a right. As long as they can provide it at a reasonable cost, I will buy it. If they can't, they go bankrupt.  Medicare needs to take a clue from Canadian pig farmers and figure it out.