One man's waste is another man's quality

A reader pointed me to an excellent piece in The New York Times Magazine on efforts to improve quality in the heath care system.  It’s quite good, and I recommend you read the whole thing.  But, like Ezra, I actually noted that the article picked up on an important point; improvements in quality are often not accompanied by improvements in revenue:

But in our current health care system, there is no virtuous cycle of innovation, success and expansion. When Intermountain standardized lung care for premature babies, it not only cut the number who went on a ventilator by more than 75 percent; it also reduced costs by hundreds of thousands of dollars a year. Perversely, Intermountain’s revenues were reduced by even more. Altogether, Intermountain lost $329,000. Thanks to the fee-for-service system, the hospital had been making money off substandard care. And by improving care — by reducing the number of babies on ventilators — it lost money.

See, when I say we’re spending $2.5 trillion in health care, much of that is going into other people’s pockets.  We can only reduce health care spending by reducing the amount of money going into other people’s pockets.  This will make many people unhappy.  This will make them scream and shout.  It will be unpopular and hard.

And that’s why no one is talking about it.  Even waste is viewed positively by many sectors in the health care market.

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