I had lunch with a pediatric specialist in a field that doesn't have a lot of procedures, and so like those of us in primary care, is relatively poorly paid. She is currently employed by the Sutter Health Foundation.
She makes pretty good money there. Sutter is rolling in cash, being a corporation based on a hospital system that has a very powerful position, little reason to economize, and is a price giver rather than a price taker with insurance companies. This specialist bills an unholy amount for office appointments and gets paid accordingly, because the contracts that Sutter extracts from payers are, well, rich. So she makes money.
But, are the patients well served, and is she well served? As in many corporations, the staff are not directly responsible to the doctors. She can still be seeing patients and if it's lunch time, adios! A patient became unresponsive in the waiting room and luckily someone brought this to the doctor's attention and she could administer to him, because the staff had vacated the premises for lunch.
If she wants a chair to sit in - a chair! - it has to go through innumerable levels for authorization, if the site administrator deigns to send the request in. Administrators tell her where her office will be without asking her first. They just tell her, they don't care about her. Administrators come and go, no one caring very much. It's corporate and it's large.
I am currently looking for an Administrator at Bayside and our headhunter has told me several times that she understands, I started this practice and it's my baby. Well, sure, I thought. But now it really hits me what she meant. When she searches for a corporate client, it's much less serious business. The level of performance matches the level of caring. Good enough is really good enough. Me, I really care.
In capitalism, the theory is that competitors with superior efficiency and customer satisfaction should rule the roost. But look how that isn't true here. The market really isn't working. Sutter gets big contracts and makes big money, pays the doctor probably more than I can - I'm hopeful that maybe I can match, but it will be hard - and it sure ain't because of efficiency or customer service. It's market power, pure and simple.
And why market power? It's partly because of size - Blue Cross needs to contract with Sutter or close up shop in Northern California. But I'm wondering if it's also because of like liking like. Big corporations seem to like each other. The minions get together and they are in it together. So they scratch each others back? Is corporate medicine what they are both most comfortable with?
Corporations, administrators. It reminds me when I worked for government. People would talk about "government," and said that it was inherently unresponsive and rather evil. When I was on the inside, I looked around and saw what people did, and I thought they weren't capable of much, and/or they didn't care. The few who got something done took themselves off in a corner with a few other good people and actually got good things done. Management to good effect was scarce. I always thought, yes, the structure allows them to do this, but then, they are the ones who did it. If they were more ethical and less immature and self-indulgent, they could do the right thing. If they cared. I guess I still feel the same way. But now I also think, that's the way people are. It's really a shame.
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One of the lessons I learned from graduate school microeconomics is that "friction" or inefficiencies in the market allow for the accumulation of profits. In classical economics free entry and exit from a market eliminates all profits. The fact that there is profit anywhere in the system to me does not reflect that the system isn't working, but that there is not free entry or exit from markets and / or that there is significant delay in entry or exit owing to the fact that information, human capital, physical capital, and financial capital do not flow freely or instantaneously.ReplyDelete
There is always "friction" in the the free flow of resources and information some of which is deliberately engineered by interested parties (professional barriers to entry and lobbyists come to mind).
When any company or industry makes persistent profits it is fair to say that the market is not working, but at any given point we will always see above average profits at various places in the market place, as well as its opposite -- higher than normal rates of failure.
Corporations may prefer to do business with other corporations, but they also benefit from the asymmetry of larger entities (e.g., insurance companies) dealing with smaller entities (e.g., physician groups) who are prevented from negotiating collectively. (I learned this from your subsequent post on this blog.)
Not trying to be critical at all, I love the exploration of these topics that your blog encourages, but I don't quite understand how these two points reconcile.