Koalas are interesting animals. They have adapted to survive in a very narrow ecological niche, consuming only eucalyptus leaves. This food source is a poor nutritional source, low in protein and energy and rich in toxins. Over time reliance on this solitary, non-optimal low energy food has resulted in a shrinking brain which has lost almost half of its former size. The koala is the product of compromise.
I see elements of the koala in health care financing at multiple levels. Within an academic medical center we have multiple missions including research, teaching and training, and patient care. Like all activities, these require an energy source, that being primarily human creativity and money. Track the funds that flow into an institution like my own and you find that the vast majority comes from a single source, the federal government. This cash flow comes in many forms including federal grants from the NIH, NSF, or the Veteran's Administration, direct payments from Medicare or Medicaid (indirectly through states), GME payments to support resident education, and federal grants and loan guarantees to support the education of a host of health care professionals. Federal monies are the eucalyptus leaves of the health care economy.
There is no question that the infusion of federal monies changed the health care environment and in the short term were a driver for dynamic change, much of it positive. However, because the growth and expansion based upon federal monies is not sustainable, it has created an economy which is unhealthy in terms of its increasing dependence upon a "food" supply which is both constricting in terms of what it can support and gradually more toxic in terms of poisoning other aspects of general operations.
The koala responded to sole dependence on a poor energy source with scaling back on what required energy, it its case its brain. Successful adaption meant re-allocation of energy to digestion and detoxification. I would suspect that at some point in the past the koala ancestors had a more varied diet but they evolved toward greater and greater reliance on what appeared to be an abundant but poor quality eucalyptus diet.
It now appears that the health care dependence on federal diets is looking more like eucalyptus leaves. While at one point in time this energy source was robust and supported missions with sufficient margins, it is not looking increasingly like a low energy source. Patient care supported by federal monies must be underwritten by subsidies from private insurers. The scramble for federal research dollars is looking more and more like a giant zero sum game with institutions making large bets vying for indirect dollars to offset operating costs. The entirety of graduate medical education is supported by GME dollars or VA monies to support resident salaries in a hospital based format. All of these pools are either shrinking or growing at a pace not capable of supporting these missions as presently configured.
Like eucalyptus leaves, these monies are also increasingly toxic. The regulations which accompany these monies require more and more oversight and reporting. This takes time, money, and people. Perhaps the most pernicious element of this scenario is the fact that the regulations are constructed in such a way that the more federal money you take, the more difficult it becomes to use other financial sources. Furthermore, the regulatory environment is capable of transforming other revenue sources, which may be of higher quality and less toxic, into eucalyptus like sources.
Ultimately, we need to be able to hedge our bets. Where are the financial resources going to come from to support all of these various important care, teaching, and research missions? I don't know. However, I do know that the more dependent we become on any given source, particular on a single source, the more at risk we become for a really bad outcome. We need to learn to liberalize the diets which feed this machine.
The koala spends its days eating constantly to derive sufficient energy to survive.