Conflicts of Interest Explain the Mess of the Healthcare Industry

on Mar 14, 2010

The American healthcare system is messy, inefficient, and expensive. The problem lies  in the lack of the unified goal of providing good patient care. Rather, every party involved in our healthcare industry must act to allow themselves to survive, often to the detriment of this goal. This is apparent when we consider the interests of each party and compare them to that of the other parties:

Patients want to maintain their health and make it affordable

  • they are marketed to constantly by other players in the healthcare system
  • they often want quick fixes and to want to minimize effort (making them reluctant to adopt lifestyle changes)
  • their insurance policies put little importance on promoting healthy lifestyle
  • they must deal with the difficulty in getting insurance and have treatments covered

Doctors and other Medical Personalwant to deliver the best care and be properly reimbursed for their work

  • they had to work very hard for many years and pay a lot of money to get to where they are
  • they have to overtreat to avoid lawsuits
  • they have to use expensive ¬†medical equipment more often to cover those costs (more overtreatment)
  • they have to see more patients to cover their costs
  • they need to maintain good reputations (which means catering to reward systems that raise the cost of medicine yet don’t do the patient good; one example is not admitting mistakes; another is prescribing more drugs or procedures instead of suggesting lifestyle changes)

Insurance Companieswant to offer the best coverage and minimize their costs

  • they must avoid risky high-cost clients and maintain many low-cost clients, or business will be infeasible
  • they need to cover what their clients want to maintain their clientele
  • they need to deal with the high prices set my the medical industry in order to stay in business

Drug Companies and Medical Equipment Makerswant to offer the best medical advancements and minimize their costs

  • they must compete in a very aggressive industries
  • they have very high research costs
  • they must continually create new products
  • they must advertise heavily to remain in business
  • they lobby to create favorable government policy
  • by nature, they encourage overtreatment

Hospitalswant to offer the best care and cover their costs

  • they lose a lot of money when providing care in emergency departments (especially with patients without insurance)
  • they must cover this discrepancy by building and advertising high-yielding departments (such as cancer treatment and heart treatment)
  • they must heavily use expensive medical equipment to cover those costs
  • they must maintain good reputation

Government / Politicians / Policy Makerswant to create policies that better the health of people and they want to maintain their political power

  • they must please the patients and cater to what patients think is best for health (even if it isn’t)
  • they must deal with lobbying and funding from other players in the health care industry (critical to getting elected)

As you can see, every player involved in our healthcare system has well intentioned and even commendable goals (as indicated in italic). But at the same time, they’re working in a system that requires them to fulfill the second goal (survival) at the expense of the first goal (genuine health care). If we are to improve our healthcare system, and our lives, we must address the conflicting interests between these parties. We must align their interests and incentives with the greater unified goal of providing the good medical care. And this includes [potential] patients acting in kind.