David Goldhill, owner of the Game Show Network, published an article in the September 2009 The Atlantic called “How American Health Care Killed My Father”, and, on October 2nd, discussed the implications of his article in an event hosted by the Cato Institute. Goldhill considers himself “not an expert on health care” but, rather, “like 300 million other people, [a] customer of health care.”
Goldhill’s interest in health care was triggered when his father went to the hospital for a case of pneumonia and died, not from the effects of pneumonia, but from the variety of infections he acquired in the hospital.
Hospital infections are a relatively correctible occurrence, claimed Goldhill, citing the reform efforts of Dr. Peter Pronovost, anesthesiologist at John Hopkins, whose sterilization and sanitation checklist reduced “hospital-infection rates by two-thirds within the first three months of its adoption.” Surprisingly, even though hospital-infections cause over 100,000 deaths annually, many hospitals resisted these reform efforts, Provonost told The New Yorker in January of 2008.
Hospitals are unwilling to progress in other important ways, such as improving their information technology (IT) to catch up to the rest of the business world, said Goldhill, In his Atlantic article, Goldhill asked, “How can a facility featuring state-of-the-art diagnostic equipment use less-sophisticated information technology than my local sushi bar?” At the Cato Institute event, Goldhill explained that his sushi bar gives its waiters hand-held devices to take orders with to make sure the waiters get the orders right. The waiters are dealing with food, not people’s lives.
The lack of IT is “a symptom of an underlying problem” where hospital patrons “are not the customer,” stated Goldhill. He blamed this fact for what he saw as the mismanagement of his father’s care, saying “my father was not the customer; Medicare was the customer.”
In the corporate world, he said, businessmen have an incentive “to be responsive to [their] customers.” There is no incentive for hospitals to invest in IT, he said, because the nature of health insurance ensures that hospitals get paid basically no matter what happens.
Not only do hospitals not have an incentive to respond to their patients, but patients’ own expectations are damaged by a moral hazard. Patients take less care of their money because someone else is footing the bill, claimed Goldhill, adding that this moral hazard is driving up costs and driving up treatment through an excess of demand.
Cost is typically a function of demand, he claimed, but this is not so with health insurance where prices are pushing up costs. In his article, he said that “the use of insurance to fund virtually all care is itself a major cause of health care’s high expense” (emphasis in original).
Goldhill claimed that this inflation of health care costs began in about 1965, with Medicare and Medicaid. Medicare has failed, he stated, adding that seniors pay more out of pocket for health care now than they did in 1965, defeating the purpose of Medicare. Health care costs are also increasingly eating up the U.S. government’s budget, stated Goldman in his article, pointing out that “in 1966, Medicare and Medicaid made up one percent of total government spending; now that figure is twenty percent and quickly rising.”
Goldhill, who said he was not a libertarian, did not call for the government to withdraw completely from health care issues, but rather called for a balance between government care and consumer-driven care where consumers would be able to buy much of their care directly. Goldhill suggested that the government’s focus in reform should be to bring “greater transparency and competition to the health-care industry.”