Intrigued by many things in my first few days in the U.S., what perplexed me the most was that there seemed to be a DaVita Dialysis wherever I went; in malls, in the mainstreet of West Philadelphia, near high rises and near lower rises. I felt that I was being ominously followed by nephrologists. How on earth could providers of renal replacement therapy have a similar spatial distribution as McDonalds?
After reading Friedrich Hayek’s essay, Use of Knowledge in Society, I realized why. In stead of building a multiplex for dialysis, which has shops selling pulmonary edema-inducing fried chicken, DaVita set shop where people lived or hung out. It wasn’t a terribly clever business plan but its genius was its simplicity, its humility. If the mountain will not come to Muhammed, Muhammed must go to the mountain. DaVita went to the masses.
The link between Hayek’s wisdom and DaVita’s business plan may seem tenuous. But Hayek has been misunderstood, particularly in healthcare. Many a times and oft in the policy world Hayek has been rated about money and usances. This is because of a misperception that Hayek was all about profit and loss, which are anathema to healthcare. Hayek’s message was simple: local knowledge can’t be aggregated. From this premise sprouts others – dispersed agents in certain times and places possess fragments of knowledge which don’t come easily to central planners.
For Hayek, socialism and capitalism weren’t moral but epistemic issues. Socialism would fail because of a coordination problem – markets would succeed because they could use price signals to coordinate. Healthcare doesn’t use price signals to coordinate, not explicitly, at least. Nor does it capitalize on dispersed agents – on local knowledge. Hayek, a supporter of universal healthcare, didn’t specifically discuss healthcare in his essays. Nonetheless, it would be a useful intellectual exercise to speculate how Hayek might have applied his wisdom to modern healthcare.
What does local knowledge in healthcare even mean? Stated in a rather unlettered way, it is the provision of healthcare locally. AEDs are no good if they aren’t located where people congregate. The value of local presence of medical facilities, particularly in poor neighborhoods, is hardly rocket science. Just as great cities grew near rivers, great hospitals germinated in poor neighborhoods. But, with growing centralization of healthcare, with hospitals becoming multiplexes, futuristic cities with a distinct architectural phenotype, different from the neighborhoods they serve, the value of decentralization can be missed.