Discussions in Improving Efficiency in Health Care

This blog began around the compelling evidence mounting around the shortage of RN’s.  The graph below is another view the result of a National Institute of Health publication of 2004, showing the demand for nurses (green line) against the supply based upon various assumptions on increasing supply of graduates.  Still this isn’t the story, but rather the result of a story.

As I’ve been looking into this issue, I find on the net, no shortage of articles, I’ll be it sparsely published, describing the size of the problem, but few focused, as we are here, on what to do about it. One choice might be to simply ignore it.  The assumption here might be that it is simply to big a problem of multiple causes so why bother.  Another might be that some form of technology will likely come to the rescue and eventually mitigate the problem all together.  Frankly, either choice is likely as reasonable as the other because the chooser can move on and no longer bothered by the issue.  But if curiosity won’t allow that, then additional thought is required, so for a moment, consider this.  Why is it so difficult to create an RN?

I started out as a Hospital Corpsman in the Navy, a course that took about 12 weeks of training, 8 hours a day, 5 days a week.  It was legitimately challenging, and highly rewarding.  As a result of that training and subsequent hospital work, I was able to “challenge” the Licensed Vocational Nurse exam.

As a civilian I returned back to college and now able to work part time as an LVN.  Later became an RN while finishing my undergraduate degree in Economics.

I recall being struck by how little the RN training provided me in incremental education relative to the work required.  Sure, the core sciences of physics, chemistry and biology were important, but for an experienced LVN, the nursing training was remedial.  For one term I was taking calculus at the university in the morning, and nursing math (a licensing requirement) at the nursing school in the afternoon.  There was no way to take advantage of predicate, outside the nursing program training, and because I really did want to become an RN, I just sucked it up and showed up.  Still I regret the waste of time and requirements to license that produced dubious marginal value.

Having become an RN, I finished the BA in Economics, I stayed around an additional year studying the labor economics of nursing.  Here are some things I think you should know.  You may not like it, but here it is.

1. Nursing is a technical job, not a “profession”.  This doesn’t mean that nursing doesn’t have professional ethics or objectives, or is any less important or “prestigious”, just that it doesn’t posses the necessary attributes of autonomy to be classified as a classical Profession; nurses do not practice independently.   Now it’s important to get comfortable with this in order to move on in assessing nursing as a career choice. The focus on nursing as a profession avoids the real issues of compensation and competing in the market place of skilled labor.
2. Nurses have a relatively flat wage-experience curve.  This, fits with #1 and explains part of why we have so few nurses in the field.  What this means is that a nurses wage does not grow dramatically with experience and compete effectively with other labor choices.  Typically nursing wages flatten out within two to three years after receiving a license, this means that in order to accelerate earning, one has to leave. There is a lot more behind this which I hope to address at a later time.  You’ll like the story thought it might anger you at first.  Perhaps another time, remind me.
3. Caring is not enough.  I’ve heard the adds from Johnson & Johnson in support of attracting people into nursing and I applaud them for their effort and investment, but its more than caring.  If you care about me as a patient, but have no idea what your doing and as a result my condition worsens, it matters to me little that you cared. What matters is that you are aware of my condition, know what to do and can intervene if things go poorly.

As the single largest providers of healthcare in the world, nurses are valuable because what they do is valuable, necessary and effective.

In today’s Real Time Economics section of the Wall Street Journal appeared a piece entitled “Thaler on Nudging People to Make Better Choices” that is certainly worthy of comment.The net of the piece speaks of an upcoming book entitled “Nudging” in which Dr. Richard Thaler, professor of Economics at the University of Chicago, along with co-aughor and law professor Cass Sunstein, also at the University of Chicago, write about linguistic phrases which “nudge” people into “better choices.

The writer begins with a common issue we all face in the market place, statements though true, are positioned for greatest favor. A salad, as an example in the article, is labeled 98% fat free rather than simply saying 2% fat. Though both are accurate, and the latter more succinct, the former is most commonly used, and this is the result of a great deal of thought and research. In the end, 98% fat free is more enticing to those who seek to limit their fat intake, and this positioning goes on all around us, all the time. Most often it is relatively harmless, though not always. Consider this response by the author when asked of their consulting services acquired by the Obama campaign.

Thaler: There are several ways in which the Obama campaign employs nudges. For example, the idea of automatic enrollment is used in several domains such as his health-care plan, and of course, his reluctance to have a mandate is in line with our philosophical approach.

As a response to the nature of Obama’s plans for heathcare, it seemed clear that people were “reluctant” to anything that forces them into a healthcare plan they do not want, hence the replacement phrase: “automatic enrollment”.

There is something profoundly unappealing about this. Perhaps in March of 1971 one could say that I had been “automatically enrolled” and simply nine months later found myself in Vietnam. I don’t for a minute regret my service, but we were more honest back then and simply called it the draft.

Now, Obama is not the first to use such approaches to persuasion, though his gift of delivery may make him more effective than most, the challenge lies in knowing when you’re being played. In many cases such linguistic positions, or nudges as preferred by Thaler and Sunstein, are relatively benign and only mildly manipulative. However, in matters of socializing the single largest sector of the American economy, the purposeful use of ambiguous language is dangerous.

In the end of the healthcare debate it breaks down to individuals being treated. If you get heart disease and need surgery, no one can step in on your behalf, you have to do your self. In this, as economists would tell you, you are the residual claimant. Only you and your loved ones bear the cost of the consequences of a medical treatment. Yes, the monetary costs may be shared by many and we as a society have lots of work ahead of us to make certain that we manage those costs well, but no one can do your dying for you hence you have a legitimate voice in how best that trip can be managed.

It is certainly not my intent to be “political” on this blog and I don’t expect this to have been an exception, though it might seem so. The issue here remains one of improving efficiency in healtcare, and treating the discussion with sober, respectful clarity and candor.

Discussed in earlier posts, is a growing concern over the increasing demand for healthcare services, and shrinking number of providers. On April 14th of 2008, the Institute of Medicine published an exceptional report entitled “Retooling for an Aging America: Building the Health Care Workforce”.

Retooling for an Aging America: …
Read this FREE online! Full Book | PDF Summary

Aside for validating this blog, the report outlines in greater detail the changing needs of the healthcare system in regard to treating older patients. Included in the report is an estimate that perhaps 32,000 qualified applicants annually are denied entry into nursing programs due to the lack of space and available faculty. In addition, physicians are not particularly interested in geriatric medicine which in general competes poorly with other sub-specialties like Dermatology.

The net of all this is, as stated here before, is that we lacking the labor needed to support the current and future demand for healthcare services.

In 1943, the Economist F. A Hayek wrote: “One need not be a profit to be aware of impending dangers. An accidental combination of experience and interest will often reveal events to one man under aspects which few yet see.”

Hayek was writing at a time when totalitarian socialism was running a muck in Europe and among many intellectuals here in the US. Hayek was, to say the least, suspicious and critical of “officials” who don’t actually do the work, make certain that they control those that are. Hayek points to experience and interest rather than position and intellect (or level of education) as a valued source in making sound judgments.

So then, consider this: what if your thoughts, perspectives, experience and insights are just as valuable as that of the “experts”? What if the issues involving healthcare are so broad, so complex and effect so many people in exceptionally personal ways, that no one person or group of professionals have any more to offer than do you?

This rather puts us into a quandry. This means that you and I along with anyone who has or will be involved with healthcare, have a legitimate role in contributing to any conversation on how best to reform healthcare, (providing reform is even indicated). In the book “The Wisdom of Crowds” James Surowiecki makes such a point, that many interested contributions to a problem often out performs the accuracy of a few experts. In this case experience and interest has a legitimate place in the public debate on healthcare reform, and for those who favor a centralized, “expert driven” approach compells an increasing burden of proof that it will work.

This site is aimed specifically at the doing. We’re interested in the comments and advice of many to guide the course of us all. The cheapest healthcare is the kind that works the first time. We need to understand the value of improving efficiency in providing care and how to make it happen. As mentioned here before, the demand for healthcare services is growing and the number of licensed individuals interested in providing those services is not. Something has to give.

Sipping on a cup of joe at my local Starbucks, I began thinking about the various healthcare proposals discussed by our candidates for President. As you may have seen in my previous post, ideas such as these produce consequences, many of which are not particularly good.

Anyway, as I continued, it seemed to me that the current set of ideas regarding healthcare reform are simply a contemporary version of good old 1930’s style Socialism. Perhaps cleverly written and poetically vague, all the same socialism it is. French writer Elie Halevy in 1938 said it best: “The socialists believe in two things which are absolutely different, and perhaps even contradictory: freedom and organization.” Is that not the promise? We will better “organize” healthcare and more people will have the freedom to receive the care the government thinks they need.

This quote seemed to put it together for me with regard to the healthcare debate. Most of the complains regarding healthcare are regarding costs, and of that the transaction costs, (insurance billing and such). Some estimates suggest that those costs are as high as 21% of US healthcare expenses, frankly I doubt that. Regardless, the question remains, is socialism the solution.

In reviewing the healthcare program of Hillary Clinton I happened across the following section:

Now just think about this a bit. The proposed solution of fixing a problem of an existing governmental bureaucracy is to replace it with an even larger one; now just why should we be optimistic? The United States healthcare industry is the largest in the economy, and passing that along to the Government to manage is nothing different than good old fashion socialism, in effect, more “organization” and less freedom.