The quest has been for the medical care sector to be based upon a market model.
That would mean that patients ought to be treated as customers involved in a market-based transaction. However, society does not (as evidenced by the passage of the health care bill) think anyone should be denied the ability to obtain the product if they cannot afford it, i.e. the customers (i.e. patients) should be subsidized. Customer subsidies, in a market-model, cause an increase in demand which, against a fixed supply, will result in a rise in price.
In a market-based model, hospitals would compete for their customers. Now since the product is something like a successful surgery or recovery from a deadly virus, there is not really much product improvement that can occur. So how do hospitals compete? Hospitals increasingly compete by differentiating the environment in which the product is sold - differentiating that environment in ways that actually lead the customer to have to pay more for a product that is still the same: plasma TV’s in carpeted rooms, lobbies that rival the best hotels, gourmet foods, etc. But, if the customer cannot afford the product that is now more expensive because it is wrapped in a better package, society seems to think that the hospitals ought to provide it at a reduced rate.
In a free market system, providers offer to work for a price that they consider fair. If no one is willing to pay that price, the provider either changes jobs or lowers their price. The market-based solution for the medical care sector will work best only when doctors, nurses, techs, hospitals, pharmaceutical companies, and medical supply companies are allowed to charge what they think is right, not what society thinks is fair. I have heard PhD's complain that MD's have no more education that they have, so why should MD's get paid so much more than a PhD? A constant lament is that drug companies make too much money. Why is Apple praised when it earns large returns to its owners, why is McDonald’s criticized if profits are not larger than the previous quarter, but drug companies are acting unethically when they earn a positive return on invested capital?
If doctors cannot earn an income that they, not society, thinks is appropriate to the costs of becoming and the risks of remaining a doctor, then the number of doctors will decrease. If hospitals and drug companies cannot earn a return that satisfies their owners, those owners will pull their money out of the hospital and drug sectors, decrease the number of hospitals available and diminish the pipeline of new drugs, and open up something more profitable, like a McDonald's franchise or microbrewery.
Will we, as a society, in our efforts to force the healthcare sector into a market-model, be forced into requiring people to become doctors and refusing to let doctors retire?
Or will we wise up and realize that the market-model is not always the best for all industries?
In a free market system, providers offer to work for a price that they consider fair. If no one is willing to pay that price, the provider either changes jobs or lowers their price. The market-based solution for the medical care sector will work best only when doctors, nurses, techs, hospitals, pharmaceutical companies, and medical supply companies are allowed to charge what they think is right, not what society thinks is fair. I have heard PhD's complain that MD's have no more education that they have, so why should MD's get paid so much more than a PhD? A constant lament is that drug companies make too much money. Why is Apple praised when it earns large returns to its owners, why is McDonald’s criticized if profits are not larger than the previous quarter, but drug companies are acting unethically when they earn a positive return on invested capital?
If doctors cannot earn an income that they, not society, thinks is appropriate to the costs of becoming and the risks of remaining a doctor, then the number of doctors will decrease. If hospitals and drug companies cannot earn a return that satisfies their owners, those owners will pull their money out of the hospital and drug sectors, decrease the number of hospitals available and diminish the pipeline of new drugs, and open up something more profitable, like a McDonald's franchise or microbrewery.
Will we, as a society, in our efforts to force the healthcare sector into a market-model, be forced into requiring people to become doctors and refusing to let doctors retire?
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