What would medical care be like in a genuine free market?
Nobel laureates in economics have opposing views. But does India have the answer? There, healthcare has a strong private sector: patients usually pay directly and the insurance industry is just emerging.
Milton Friedman believed that markets would work just fine in healthcare. Kenneth Arrow was not so optimistic. In his much cited opus, Arrow singled uncertainty as the key factor which distinguishes medical care from other goods and services. Uncertainty means that one doesn’t know when and how much healthcare one is going to need. Not quite the same as shopping for cereal in Waitrose.
George Akerlof felt that asymmetric information, i.e. when one side knows far more about the product, could be problematic for quality.
In Akerlof’s hypothetical market, “Market for Lemons,” which takes the example of used cars, there are “peaches” (good cars) and “lemons” (low quality cars). Buyers can’t distinguish between peaches and lemons, but know lemons exist and so offer a price that’s too low for peaches. Sellers who, of course, know their peaches and lemons, remove good cars and retain bad cars. Process continues, and there’s a downward spiral, with market progressively enriched with lemons.
Asymmetric information in a free market could lead to fall in quality and market failure. There’s asymmetric information in healthcare when buying insurance; people are more inclined to purchase when sick. Also, when the physician knows more about quality of product and its need than the patient. Continue reading “The Sunnier Side of India’s Free Market Medical Imaging”
Filed Under: Tech, THCB
Tagged: India, Market for Lemons, Medical Imaging, MRI, price variation
Jan 12, 2015
Currently, India spends about $20 per person per year on healthcare and spending more once seemed like a peripheral concern, taking a back seat to basics like food and sanitation. However, in the past decade, as the Indian economy has grown and wealth followed, Indians are increasingly demanding access to “high quality” healthcare. But what does “high quality” mean for a country where a large proportion of the population still goes hungry? Where access to sanitation is so spotty that the Supreme Court recently had to decree that every school should have a toilet? What is “high quality” in a setting where so many basics have not been met?
It turns out that “high quality” may mean quite a lot, especially for the poor. A few weeks ago I spent time in Delhi, meeting with the leadership of the Indian health ministry. I talked to directors of new public medical schools and hospitals opening up around the country and I met with clinicians and healthcare administrators at both private and public hospitals. An agenda focused on quality rang true with them in a way that surprised me.
The broad consensus among global health policy experts is that countries like India should focus on improving “access” to healthcare while high income countries can afford to focus on the “quality” of that care. The argument goes that when the population doesn’t have access to basic healthcare, you don’t have the luxury to focus on quality. This distinction between access and quality never made sense to me. When I was a kid in Madhubani, a small town in in the poor state of Bihar, I remember the widespread impressions of our community hospital. It was a state-run institution that my uncle, a physician, once described as a place where “you dare not go, because no one comes out alive”.
Continue reading “Can Quality Be on India’s Health Care Agenda? Should it Be?”
Filed Under: Uncategorized
Tagged: Access, Ashish Jha, Health Outcomes, India, Medical errors, Quality, Quality measurement, sanitation, the poor, Waste
Nov 8, 2012
I visited Safdarjung Hospital in New Delhi today – an institution with 1,531 beds and 145% occupancy rate. Yes, 145%. You do the math. A lot of bed sharing and asking families to bring in cots. It’s right across the street from the All India Institute of Medical Sciences (AIIMS), the premier public healthcare institution in India. While both AIIMS and Safdarjung are run by the federal government, only AIIMS is renowned for famous specialists, world class facilities, and an international reputation to boot. Safdarjung doesn’t suffer such burdens – its specialists are not well known, facilities are dilapidated, and you probably have never heard of it.
I spent several hours walking around, talking to lots of physicians, visiting ICUs and cath labs. I visited the outpatient department where 7,000 people show up every day, many lining up the night before, to get a ticket by 11 a.m., when registration closes and those who haven’t gotten a ticket are out of luck. In the ER, there was a line of between 50 and 100 people waiting to get rabies shots. This is the hospital where every poor person in Delhi unfortunate enough to get a dog bite is sent. They have the rabies serum. Most other public hospitals do not.
Safdarjung has “efficiency” baked in. In a typical year, they do 800 cardiac surgeries, 2,000 angioplasties, 3,000 echocardiograms, and 100,000 EKGs. They see tens of thousands of patients in the cardiology clinic. They have 4 (yes, four) full-time cardiologists on staff. The rest of the work is done by medical residents, who call when they get into trouble. Brigham and Women’s Hospital, which probably doesn’t have one quarter the volume of this place, has 140 cardiologists. The patients at Safdarjung pay essentially nothing. Even their medications are free. For those who are not extremely poor (and I doubt there are many non-poor patients who go to Safdarjung), you do have to pay for your own devices. Need a stent? Bare metal ones cost $200 to $1000. Drug eluting stents are $1500 to $2500. You get to decide which one you want. They have a chart with pictures and prices that looks a lot like a dinner menu. Continue reading “How the Rest of the World Does It: New Delhi’s Safdarjung Hospital”
Filed Under: Uncategorized
Tagged: AIIMS, efficiency, India, International, Safdarjung Hospital
Oct 7, 2012