Reno Hayek Symposium

Many thanks to Bob Brigham for last evening’s presentation on the Mayo Clinic’s perspective on healthcare. The tripartite conundrum of getting any more than two of the three goals, high quality, prompt access, and low cost, in any healthcare delivery system is indeed difficult.

Bob discussed each element: Quality is a function of affluence with basic mortality at the low end and quality of life at the high. Prompt access can mean access to insurance, a doctor, the latest technology, or a specific treatment; turns out that in each case the US leads other developed countries. Low costs on a per capita basis in the US are in line with other developed countries.

Costs do not equal spending. Spending is indeed increasing in the aggregate but costs of specific services are decreasing. The spending increases that the politicians are crowing about are driven by general inflation, increased utilization, and healthcare prices in excess of inflation. Of the three increased utilization is the largest driver and healthcare price increases account for only 30% of spending. There are many drivers of increased utilization ranging from new treatments to aging population and unhealthy lifestyles.

Mayo’s objective is to bring value to healthcare. Value is quality in terms of outcomes, safety and service divided by costs over a span of care. We should pay for value not specific services or compliance with regulations. Healthcare doesn’t function in a market economy. Said another way it functions with severe cost shifting and misaligned goals and incentives. So change is needed and Bob posits a role for providers, patients, third party payers and the government in the needed changes.

Again thanks to Bob for a great presentation.

Tom Motherway, tom!@renohayek.com