Another article, this one published in the Vancouver Business Journal on June 19, 2015, found here.

 

Healthcare in the U.S. is sick, bloated and ineffective. In some circles, investment in primary care infrastructure is prescribed as one of the important components in an effort to fix the U.S. healthcare system. My personal opinion is that primary care infrastructure is the single most important piece of the puzzle.

Healthcare is a $4 trillion industry that represents more than 1/6th of GDP. It is also growing at a rate that threatens to exceed the 20 percent threshold in the next few years. The Soviet Union’s economy collapsed when non-productive spending on defense exceeded 25 percent, and it has been argued that this level in healthcare expenditures would cause enormous misery for U.S. businesses. However, it is a mistake to examine healthcare as a monolith. The system is made up of various parts, each of which has varying interests to assure their survival within the system.

Hospitals, for instance, rely on flow-through of as many procedures as possible. Orthopedic, heart and urological procedures traditionally lead the way. Physicians in these specialties are especially prized by hospitals since they tend to refer the most valuable patients. Other physicians have professional and financial interests that are diametrically opposed. If primary care was enabled to do its job, it would keep interventions in community offices, where charges are at lower rates and the care, while some would argue is technically less precise, is often more personalized and therefore more prized by individual patients.

Even the insurance industry is not monolithic in the market conditions that maximize their bottom lines. Some insurers manage care very little, limiting the review of utilization and making their money from processing transactions. In some ways, these companies are aligned with the hospitals and specialty physicians. The managed care plans assume risk for their subscribers’ healthcare costs. They stand to make money if patients use fewer services and as such, are more closely aligned to the average primary physician rather than the average specialist.

Of course, this varies tremendously from person to person. A provider at Kaiser tends to think of fewer procedures, tests and consults as better care, whereas a for-profit primary care practice may gravitate to concierge care, and developing niche service lines like Botox, varicose vein treatments and selling nutraceuticals. Some of the more abusive niche products are narcotic pill mills, medical marijuana clinics and some of the new testosterone-centered men’s clinics.

Primary care has been marginalized in an overtly specializing society. The main driver of this phenomenon is that the financial incentives for a significant portion of the industry are aligned with generating more procedures, more testing and more specialty consultations. After all, that is where the best margins are.

On the other hand, managed care and primary care tend to have aligned interests in saving money for people and the health system in general. Primary care cannot stand on its own; there is no point to having preventive services and first line care if curative care and specialized care is not available. But not every person with high blood pressure or heart failure needs a cardiologist. In fact, specialists would spend more time treating and caring for conditions more suited to their degree of specialization if front line medicine was better built up than it is today.

The trend toward healthcare purchasers utilizing narrow networks of high value providers is related to effective primary care and an appropriate specialty network. Trouble is that the infrastructure for primary care has been neglected for so long that competition for primary care services is likely to raise prices to the extent that, in the near future, it will compete with current health plan offerings. For now however, high-value primary care holds the promise of reducing employer costs and putting enough money into primary care to attract medical students and resident graduates into areas of healthcare that have been spurned for so long.