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Saturday, February 20, 2010

The Regulatory Choke hold and Health Care reform

I like to think about complexity and adaptive systems. There is an increasing appreciation that social systems and biological systems share certain characteristics.  Darwin realized this when he wrote the Origins of the Species and borrowed heavily from concepts initially introduced by Adam Smith and David Ricardo. However, the application of evolutionary biological principles to social sciences in the early 1900s under the description of Social Darwinism  and its adoption to promote specific social agendas resulted in hindering mainstream scholarship in the arena. It is a shame since complex systems are governed by evolutionary principles. Durable entities endure. Fragile ecosystems go away.

What makes systems durable? Redundancy and flexibility make systems enduring. More constraints generally lead to decreasing ability to deal with change. You might ask what this has to do with health care in the US? The health care ecosystem is remarkably fragile and is about to undergo a major stress test. It has been reasonably durable due to the continued infusion of lots of money and when that cash infusion is even simply moderated in an attempt to avoid economic bankruptcy, this will reveal the lack of redundancy and flexibility which is a characteristic of the business entities which take care of patients and train the next generation of health care providers.

I work in both realms and see the business models. They are flawed in a major way. The educational model is based upon an archaic model of training which is now fossilized based upon an alphabet soup mix of regulatory entities such as the ACGME and AAMC. They are all in on the bet that training of health care professionals needs to be non-profit University based and the organ based specialty training which made sense 100 years ago is the model which needs to be maintained into the indefinite future. The financing of these endeavors, particularly residency training is almost entirely based upon Medicare dollars which could easily disappear. There is no fall back position. We are Kuala bears living only off Eucalyptus leaves while we should be like regular bears which can use any number of food sources. 

Clinical care is also precarious in terms of it's support which does not come from a differentiated stream of sources. Medicare forces providers to again play the game in an all in or all out format. Robust systems allow players to hedge their bets. This allows individual actors great latitude and the system as a whole benefits from identification of optimal approaches through an evolutionary approach. Medicare stifles such activities and because it serves as a template for most privater insurers,  it basically insures that Medicare rules and incentives become virtually universal. It will become very interesting when the funds which have kept this system afloat are constrained. In an ideal world, we could have an insurance mediated safety net  which did not constrain innovation which could drive the delivery of better and cheaper care and individual doctors and patients could reside in both realms. The present rules of engagement are both ambiguous and carry the potential for catastrophic, capricious, and unpredictable penalties. The only choices are to stay in and keep you head down or pull completely out. That is a recipe for traumatic disruptions as opposed to a desirable ongoing adaption to change.

None of these issues are being dealt with in health care reform. If anything, the regulatory constraints will be worse. It is possible that health care reform will precipitate an unwinding of this bubble by removing sufficient money to unmask the precariousness of this ecosystem. With or without formal reform, financial constraints will drive this sooner or later. When this happens, we need to have countless unconstrained problem solvers willing and able to apply their efforts to define new and better approaches to deliver care to patients.

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