What David Cutler Doesn’t Understand about Health Economics
This is from his NBER paper:
Despite widespread publication of the results at Alleghany General and a few like institutions, rates of hospital-acquired infection are going up. This problem is not a minor one. Nationally, about one in twenty hospital patients are harmed because of the care provided in the hospital, and medical errors are among the leading causes of death. Hospital-acquired infections cost the medical system about $30 billion annually.
Hospital infection control officers – every hospital has one – are frustrated. They know that medical errors lead to death and higher cost, but they can’t get their institutions to focus on the problem. Standards, monitoring, and the ubiquitous checklist exist in theory, but not yet in practice. Indeed, when asked how long it would take for checklists to diffuse throughout the medical system, the leading evangelist for them, Peter Pronovost at Johns Hopkins, replied “At the current rate, it will never happen.”
I propose as a central question for the social and behavioral sciences the understanding of such problems: why do people and institutions not do things that are so obviously in their self-interest, even when they want to do so?
I thought I had already answered these questions. When hospitals don’t compete on price, they don’t compete on quality either. The reason they don’t compete on price or quality is third-party payment of medical bills.
There was a poll of hospital executives recently and improving quality was below several other factors on their list of objectives.
Good response to Cutler.
What David Cutler doesn’t understand? Economics.
John, I thought your pieces on hospital quality were exceptionally good.
I think he assumes healthcare is market based in some form. By that statement alone, he does not understand economics.
An article published earlier this week reported declining rates for a variety of Hospital Acquired Infections, including CLABSI, urinary tract, and MRSA. Something is driving this improvement. What is it?
To have any change in the current system, you have to change the way the incentives work. Right now, there just aren’t enough incentives for error-free care. This might not be the worst thing in the world, since the cost of preventing errors might be very high.
If we want folks to change their behavior, we have to change the payoffs for different decisions.