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I’m going to purposely make some drastic simplifications – but in the simplification, we may actually be able to view "the truth".  In order to understand "cost" we have to understand what we mean by "productivity".

A workable definition of "PRODUCTIVITY" is a measure of how efficient you are at converting people’s "time" into "goods and services".  Outside of raw materials, all we really have is "time".  G-d gives us this gift one minute at a time and once it passes, it’s gone….it is a perishable asset – if you don’t use it … you loose it.

When organizations, industries or even countries become less productive, they require more of people’s time to produce the same goods and services as their competitors require.

When productivity falls, it means either that people who produce the goods or services get paid less OR the price for those goods and services increases.

If you are a monopoly or near-monopoly, usually the best course of action is to raise prices.

The cost of any good or service is determined by many things, primarily it is driven by the cost of raw materials (including energy) and the cost of labor….the cost of people’s "time".  The price of a good or service is determined by supply and demand…. and without getting into a seminar on economics, since medical care requires negligible raw materials, the only reason for costs to increase beyond the rate of inflation is that more and more of "people’s time" is being used to deliver the care…. we’re becoming less productive .

It’s that simple.

Before anyone starts accusing me of saying that doctors and nurses are not working hard…I am not saying that…I’m looking at the entire system… the providers, the insurance companies, the pharmaceutical companies, the medical device manufacturers – everyone… all together are requiring more and more "time" to produce the same "product".  Productivity goes down, costs go up.

What makes productivity go down?  Ask anyone in the healthcare industry and you’ll learn something.  When a doctor who has invested 20 years of his/her life to advanced education has to spend 15 minutes talking to a person with a high school education trying to get insurance to approve a medication – that is inefficiency….particularly when that high school educated worker is just entering data into a computer and allowing the computer to record the fact that questions X,Y or Z were asked of the doctor before approval was given….that is inefficiency.

When a doctor can’t use his/her "judgment" for fear of a law suit…and orders unnecessary tests or refers the patient to this or that "specialist" because he/she doesn’t have the time to take a good patient history – this is inefficiency …. its a waste of time .

When lawyers get involved in frivolous law suits and waste the time of doctors, medical device manufacturers, hospitals and courts…and even other lawyers…its a waste of time .

Time is consumed but nothing is produced.

Yes, the lawyers, the clerks, the administrators, the form submitters, the high school graduate who answers the phone call from the physician….they all get paid – but to the extent that their efforts do not result in more patients being served better – they are adding to the cost but not to the benefit side of the equation and "productivity" goes down.

The only way to bring costs down is to allow innovative organizations the ability compete and be competitive – this means "to be productive"…to more efficiently turn "time" into "product and services".

A few suggestions:

1. Allow competition nationally to health insurance – why on earth does "insurance" need to be "regional"??
2. Create a panel of doctors who review malpractice suits – if a panel of doctors view the actions of a doctor as within acceptable levels of medical judgment – within the bounds of medical ‘best practices’…then the doctor becomes protected from malpractice litigation.  Society must make it clear that medicine is NOT the same as auto mechanics – that a "bad outcome" does not mean that the doctor was at fault.  If the litigant wants to pursue litigation after being turned down by this panel, they are liable for expenses if the jury finds that the suit had no merit.
3. Make the medical boards "liable" for allowing physicians who have a history of sloppy practice to maintain their licensing.  The medical boards have to have the fortitude to make the painful decisions when malpractice is really what is going on.
4. Make insurance companies "liable" for malpractice when they "practice medicine" by forcing the doctor to make decisions based on cost – not efficacy.
5. Patients should be motivated to use the less costly drugs because it saves THEM money – allow the patient in consultation with his/her physician to do the cost-benefit analysis: the role of the insurance company is to pay the claim.
6. Return medical insurance back to its role as "insurance"…the concept of paying money to pool your risk and part of your assets into a larger "risk pool" so that if you have an insurable event – you appear to be very wealthy for one thing only…to pay your medical bills .  Medical insurance is not a "right" its an asset that people buy to protect themselves and their family.

We need to recognize that the problem is not "that healthcare costs are increasing"…

….the problem is that we are wasting people’s time.

America needs to wake up to the fact that wasting people’s time gets "expensive".