Warning⎯Competition Can Be Hazardous to Your Health

Economists like competition, and politicians all over the country have acquired this mindset as well. Politicians here in Oklahoma are especially enamored with competition (except when it involves third parties!) and become very braggadocious when discussing their love of competition. We are proud of how tough we are! Our ancestors were pioneers and cowboys! Because we are so tough, we can face any competition thrown at us, and it’s only those sissy city slickers who might be afraid.

I was reminded of our love of competition when a friend sent me an article about our national health care dilemma. It’s quite a long article, but well worth reading¹. The subject is the perplexing high costs of medical care in two different cities in Texas. (Oklahomans always enjoy puzzling over the quirks of our southern neighbors.)

An economist, the thing that jumped out at me was competition. Competition sometimes hinders the quality of medical care and simultaneously raises costs, and this can occur at several different levels within the medical-industrial complex. The article relates a situation in which physicians who are reluctant to collaborate with colleagues in delivering medical care duplicate tests and prescribe unnecessary procedures. It is not difficult for us to envision doctors’ refusal to collaborate¬. After all, pride alone would lead to wanting to be the only star on the patient’s horizon. Then there are the questions about exactly who gets to prescribe what, and to whom financial rewards go. The resulting lack of cooperation leads to a duplication of services, unnecessary services, and extra expense with no better health outcome for the patient. In some cases, the outcome is even worse, due to risks associated with tests and procedures. A combination of pride (concern of students of human nature) and greed (concern of economists but called “profit motive”) interact and the result is unfortunate.

Additional examples of medical insanity include the relatively new practice of advertising. There is no need to elaborate about the proliferation of often-embarrassing advertisements in American media. Creative people are working to bring us advertising to encourage us to “choose” hospitals, clinics, and medications. With all the problems our society has, couldn’t these bright energetic people be using their talent somewhere else?
Anywhere else!

And one of my all-time favorites involves high-tech mega-gadgets purchased by hospitals. A terrific example is the introduction of the Gamma knife in the mid 1990s. Everyone wanted a Gamma knife, though the types of ailments for which a Gamma knife is needed are quite rare. One surgeon threatened to leave a hospital if he didn’t get his Gamma knife. Every hospital administrator felt her hospital would “lose out” in the race to profitability if she didn’t buy a Gamma knife. The result, of course, was too many Gamma knives, under-utilization, and bloated costs for everyone².

The long-accepted economic theory, that competition is the inescapable best solution to all human ills, falls flat. But we find it hard to turn loose of the idea. We feel we must assume the worst about our neighbors; they are our competitors—they will take advantage of us if they have the chance. This assumption can bring out the worst in us, and so it goes.

Mayo clinic is often seen as an example of an alternative economic arrangement. Doctors are not financially rewarded for each medical procedure. My question is, how did the Mayo clinic arrive at this model? Did they dig up the writing of radical economists and read about wasteful competition? Were they motivated by knowledge of human nature or psychology? What cultural factors would have to exist in order for a Mayo clinic model to work? Our confidence in competition, our certainty that it is an inevitable natural law, and the acclimation of our culture to competition has led us to a very dark place. We need a new vision.

Arden Rea lives in Oklahoma City.

FOOTNOTES

1.  Atul Gawande, “The Cost Conundrum,” New Yorker, November 12, 2009

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande.

2.  George Anders, “High-Tech Health: Hospitals Rush to Buy A $3 Million Device Few Patients Can Use — Surgeons Want Gamma Knife For Certain Brain Cases And Often Get Their Way — Two Machines 10 Miles Apart,” The Wall Street Journal, April 20, 1994, pg. A.1

Religitics

It is dangerous, and generally unwise, to talk about politics and religion. The trouble is, here in Oklahoma, they’re the same thing.

Christian fundamentalists have long dominated Oklahoma, and when I was young most fundamentalists were Democrats. That changed with the election of Ronald Reagan. At that point fundamentalism became Republican. Fundamentalists, who had always had enormous strength of conviction about religious matters, expanded these convictions to include free-market economics and other right-wing political positions. Suddenly de-regulation and union bashing were on par with doctrines of redemption and atonement. Oklahomans responded to those who questioned for-profit health care as if the questioner had advocated atheism or moon worship.

Americans who live outside the Bible Belt might be puzzled and ask why we can have such a blind faith in markets that sometimes fail catastrophically. How did a religion founded by a guy who said, “Love your neighbor as yourself,” come to embrace dog-eat-dog capitalism? To understand this, one really needs to understand the theology that is prevalent in Oklahoma.

Oklahomans believe strongly in sinfulness⎯especially the sinfulness of their neighbors. Each Oklahoman knows he is redeemed, but he also knows that each person meeting him on the street is sinful. This belief, unfortunately, leads us to mistrust others. When the idea of a free market came to the fore, bringing with it the idea that each individual acts in her own self interest, maximizing her own welfare with no particular obligation to others, the idea dovetailed nicely with the way we already perceived each other. It was easy enough for Oklahomans to meld the conventional economic theory of homo economicus into the religion of Oklahoma orthodoxy.

So, what am I arguing for? Two things.

First, a reexamination of Oklahoma orthodoxy. Yes, all of us make mistakes, some big some small. Some mistakes have far-reaching consequences; some are almost meaningless. We are capable of great evil, or great good. We are free to choose which path we will pursue. We do not need to assume the worst about others. Oklahomans lack of trust in their neighbors leads to an exaggerated sense self-reliance that sometimes borders on the ridiculous.

Second, let’s learn our history. The idea that greed is part of a system (Invisible Hand) that leads to maximizing community welfare came from Adam Smith, an 18th century Scottish philosopher. Smith was a deist, rather than a Christian, and he never claimed any sort of relationship between his ideas and Christianity.

A willingness to examine long-held beliefs, accompanied by knowledge of history could give Oklahomans a chance to form a different perspective. We no longer need to accept laissez faire economics as the inevitable reality that can and need never be changed.

Arden Res lives in Oklahoma City.