The escalating cost of health care is a drag on society and a potential death threat for every citizen.

The current administration has vowed to do something about escalating health care costs. One idea is to increase the number of doctors. However, doctors are not anything like widgets. Having a greater supply does not drive down the cost. Doctors have worked for centuries to raise the bar to becoming a doctor and thus limit the supply. That seems to have worked to the doctors advantage but it will not work in reverse without draconian intervention in ‘private practice.’

In a CNN commentary titled “We don’t need more doctors” two well qualified observes today make good case for a proposition that all who want to cut the scale of Agency spending should applaud.

While the Association of Medical Colleges advocates a 30 percent increase in medical school enrollment, Professor Christensen and Dr. Hwang at the Innosight Institute argue instead for transformational change in the delivery of health care. Their diagnosis matches EMR’s experience.

Fundamental Transformation of health care anyone? It goes hand in hand with Fundamental Transformation (FT) of settlement pattern, FT governance structure and FT the economic system.

What society needs is not just a better delivery system but better educated, better trained and more motivated citizens who can manage their own health care. Only the president and hypochondriac billionaires have doctors who know enough about the patient to ‘manage their health.’ All doctors can do is mitigate the crisis when the patient gets sick. Usually it is too late and that is why a quarter of what is spent an individual’s health care is spent in the last three months of their life.

There is a settlement pattern perspective that will not save as much money as many aspects of systemic change in medical service delivery but one that needs to be considered if only to expand the universe of health system transformation options:

Society does not need more doctors AND it for sure does not need as many doctors offices.

How is THAT important? Thousands of new doctors offices have sprouted up in the past decade. Building and maintaining doctors offices that are not used full time is a waste and the cost is passed directly to those who need medical help and to all tax payers.

How did this happen?

Every doctor likes to get out of the office – a little golf on Tuesdays, fishing in Montana next week … and have someone to cover for them 24-7. No one can blame them but this means that group practices are very attractive. Group practices are attractive to both specialists and general practitioners. (The desirability of practicing in a group contributes to why many smaller Urban agglomerations in Urban Support Regions have no doctors – but that is another story.)

Medical practice business advisors recommend from 5 to 25 in a group practice depending on the specialty and the settlement pattern. Because of the dysfunctionally low distribution of human settlements, getting a critical mass of patients to support a practice of 6 to 10 doctors in one location is not easy.

The solution, especially in Beta Communities of under 10 persons per acre, is multiple offices. Under recent past conditions – cheap gasoline, luxurious Large, Private Vehicles, electronic connectivity, tax advantages and developers who profit from packaging a build to suit for a limited partnership made up of doctors – multiple offices are a win-win.

The trend has been for group practices to have 2, 3, 4 or 5 offices where one or more doctor practices when the schedule is convenient. It is a grand slam. All the expenses, including depreciation on the building, can be written off and the doctors have flexibility as well as building equity in real estate. (What is the past tense of ‘building equity’?).

It is not just doctors that are doing this. Dentists, especially specialists, do it too as well as most of health related professionals.

How big is the problem? The doctors offices that sit empty much of the time would pay for building a lot of hospitals and walk-in clinics for those who really need health care provided by those who do not cost hundreds of thousands to train.

How to cure the waste? Only allow a doctor’s practice to write off the cost of only one office per doctor. In a heartbeat there would be a whole new advocacy group for better settlement patterns. The benefit of grouping medical services is a current hot topic in the field – see “One-Stop shopping for Better Health” WaPo 21 April 2009. More on that soon.

In the meantime, there are many ways to cut the cost of delivering health services but if the whole health care system were examined in a way that ferrets out waste such as the excess of Class A speciality office space, the cost of health care would be a lot different.


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29 responses to “THE COST OF HEALTH CARE”

  1. Larry G Avatar
    Larry G

    what would universal electronic records do to the issue of how many doctors located where and in how many offices?

    Yes.. you have to see the Doctor physically… but where does that doctor get your complete medical history?

    If he/she are not your Primary Care physician and they need your medical history – how do they get it?

    From my experience, “how” they get it is from you and a clipboard as you sit in the waiting room – and trying to dredge up your entire medical history from memory – absent your primary care doctor’s records and notes.

    I cannot think of a more dumb, expensive, error-prone, …dangerous … way to go about medical care….

    I want to start a movement.

    The next time a doctor gives you a clipboard – hand it back and ask that they get a copy of your records and reschedule your appointment once they have them and the doctor has had an opportunity to review them.

    When you do that clipboard.. you are essentially certifying that if the doctor makes a mistake based on what is on (and not on) that clipboard – it is your fiscal responsibility … if he orders duplicate tests.. or make a diagnosis that is missing some relevant parts of your medical history, etc.

    Further… have you ever had blood work done?

    and what do they ask you?

    WHO do you want the results sent to?

    so.. what do you do…?

    most folks just have them sent to their primary care physician

    and you know what?

    when you make an appointment with a referred Doctor, he/she does not get that blood work UNLESS your Primary Care sends it and you won’t know whether they have or not unless you ask…

    and if you ask.. as I have.. you’ll be dismayed to find out that much of the time lab work is NOT routinely copied to the other doctors you are seeing.


    because.. even though the LAB itself has your complete record contained on their electronic files… the method of transmittal is guess it – paper….

    they print a copy.. and then fax it to your Dr. who then pays someone to take that FAX and put it in your file…

    and if by some miracle.. someone decides to FAX a copy to your other doctor – you pay.

    If Doctors had to present you with an itemized bill for services that broke down the charges for his/her personal services and the administrative/office costs – you’d get a shock.

    So… the solution that EMR is after… doesn’t get better if paper is still the primary means of record-keeping…

    in fact.. it gets worse…

    Imagine if your bank or credit card company or virtually every other kind of business that can be conceived – imagine if they still operated on a paper-centric basis….

    well.. so far.. most Doctors stubbornly and stupidly continue to insist that it’s “too expensive” to convert to electronic records.

    a POX on the l

  2. Anonymous Avatar

    Good post on medical care. I have a few points to add:

    (1) You correctly describe the imbalance of too many doctors in the wrong places. Yet many parts of the country are underserved. Take a young doc graduating from MCV or UVA med schools. He or she may well want to settle after further training in a place like Charlottesville or NOVA becuase they offer more amenities. I’ll never forget visiting the SW Va. coalfields a few years ago for a story and noting that in Clintwood and ENTIRE HOSPITAL had shut down because of some financial problem with its Ohio-based owner. Don’t know how many doctors were affected but probably a few dozen. Patients needing care had to drive to Norton or Wise, 30 or 40plus miles away.

    (2) There still is a major problem with doctors and managed care. The medical community laregly brought managed care on itself by overcharging and other ways of mismanagement. So, the insurance companies fought back and with government help started dictating what fees were, what kind of gatekeeping would go on before treatment, etc. Doctors are at the mercy of what insurance companies will actually pay and that varies tremendously.

    (3) Because doctors have lost control of their economics, aggressive hospital-led medical groups have dominated care. Last summer, the Wall Street Journal had a briliant piece about Roanoke and how Carillion had bought up so many medical practices and somehow managed to control all kinds of medical gear like local MRIs, CAT-scans and the like. The Journal found that Carillion took advantage of their monopoly and was charging several times the going rate for colonoscopies and MRIs and other procedures. The WSJ claimed that Carillion bullied doctors who protested. The firm played hard ball with billing. One day a week was dedicated in General District Court as “Carillion Day” when the hospital sued patients who were late on payments.

    (4) I have friends who are doctors who are fighting back by forming their own groups so they won’t be totally at bay when they face big time hospital corporations like HCA or insurance firms.

    (5) The certificate of need stuff needs revisiting. Big monopolistc companies like HCA use this to keep possible competitors, such as Bon Secours, out.

    (6) Medical testing has been overly coporatized. I have had to deal with LabCorp for a blood test recently. They actually wanted my credit card info so they could automatically bill me if my insurance company didn’t pay what they wanted for the test. I said no way. When I get LabCorp’s bills, they are packaged with all kinds of scare devices to get you to pay quickly. Many medical practices automatically use LabCorp because it is big and has an aggressive billing system. But there’s no competition and as a patient I have few choices.

    So much for the free market system that so many BR bloggers pay homage to.

    Peter Galuszka

  3. E M Risse Avatar
    E M Risse

    EMR agrees with you on this one Larry.

    Electronic records are a great idea but only within a revised system of health care delivery.

    By themselves, they are a waste of time, an invasion of privacy and a gold mine for hackers and blackmailers.

    This is an extension of EMR’s First Rule of Communications:

    The more modes of communications there are, the less effective the transfer of informaiton.

    80 percent of the emails sent never reach, are read by and understood by the intended recepient.

    Many citizen no longer answer telephones, especailly if they do not reocognize the information on the caller ID.

    Robo calls, junk mail, advertisements, informercials and spam make up most of the incoming information content to most Households, even with filters and do not call lists.

    Let us not even get into texting, twitters, Facebook, MySpace and the rest of the ways that the communications Enterprises have devised to run up the cost of being ‘connected.’

    On top of all this who will gather, verify and distribute the information citizens need to make intelligent decisions in the market place and in the voting booth.


    And what happens when citizens stop paying attention to advertising as they have stopped buying things?


  4. E M Risse Avatar
    E M Risse


    As with Larry’s comments, EMR’s experience is consistent with all the points you make.

    Here is Greater Warrenton-Fauquier we have Fauquier Health (nee, Fauquier Hospital) that from our experiences and every indication is a great Institution. They advise the group practices but do not own them so far as we know.

    In Fairfax we had the opportunity to deal with INOVA on many levels. They are a 800 lb gorilla but I could call a fellow Chamber Board member who was the CEO and get results.

    If it is a ‘national’ outfit there is no chance.

    Which gets to the bottom line on not just medical service delivery but finacial service delivery and Agency service delivery.

    Size, accountability to a Community (with a Capital C) and sunshine is the only perscription.

    Those who chant “limited governement” but turn a blind eye to unlimited Enterpries and Institutions are just shills who hope to get a handout — a commission, a job or a donation.


  5. Larry G Avatar
    Larry G

    Our medical care system – as currently configured – is a free-for-all scam by many different players – each of them looking out for their own fiscal interests.

    The example of Roanoke is but one peek into one part of the window.

    Let’s do a little exercise here.

    Let’s say that you have done something to your knee…

    and you want to find out two things 3 things.

    1. Whose in business that deals with these kinds of inuries

    2. – what do they charge – in general

    3. – how long have they been doing it and what is their reputation?

    No.. go forth for your own locale and come back with a ranked list of the top 3 in terms of cost and quality.

    You can find out more about a Chevy Tahoe than you can about the folks who will put you under anesthesia and take a scalpel to you.

    we are in some respects – among the smarter beings on the planet but this area we are not.

    We fret about the trans fat in our potato chips more than we care about the guys(gals) that are scrambling our innards on an operating table…

  6. James A. Bacon Avatar
    James A. Bacon

    Ed, Excellent analysis on patterns of land use and the overbuilding of physicians offices. Dysfunctional human settlement patterns expresses itself in so many ways!

  7. Anonymous Avatar

    Query – Fairfax County has some government offices spread throughout the county where there are some duplication of functions/services. Is Fairfax County government more expensive because of this? Should government services be centralized?


  8. Larry G Avatar
    Larry G

    TMT's question is deceptively simple on it's face but that question is one that is at the heart of many decisions in private industry – like WalMart and McDonalds in terms of what size facility they build that provides what scope and scale of products & services.

    For instance, – how BIG should a doctor or government office be?

    what radius should it be intended to serve?

    Is there a connection between a government office that is designed to serve a radius of 50 miles verses say.. an ABC store mean to serve a radius of 5 miles or a McDonalds size/scale/demographic radius and a Dollar General or a Walmart?

    We know this – we cannot afford to put a Regional Medical Center within 5 miles of each person…so we have the concept of Regionally-provided services… they exist… and I've never heard anyone say that regional medical centers are inherently wrong size..wrong scale.. and that they should operate with satellite facilities…

    though I would make that argument .. that much of what they offer could be done with satellite offices if they had robust electronic communication and data infrastructure..much the same way that banks have done this… using robust communication and data infrastructure.

  9. E M Risse Avatar
    E M Risse


    You have not been paying attention. Or are just trying to make folks mad.

    Centralizaion accross the boundaries of the organic structure of human settlement is not the solution to any known problem with governance.

    The arbitrary borders of Fairfax County encompass 244,000 acres and all or part of 9 Beta Communities.


    Each of the nine Alpha Communities to achieve Balance must be made up of Alpha Villages — EACH WITH THEIR OWN GOVERNACE STRUCTURE…

    And so forth….

    As you know as a resident TMT, in many ways Fairfax County is 9 — or is it 10 now? — supervisory districts that function as semi-Agencys.


  10. Anonymous Avatar

    Well then, should Fairfax County dismantle and become several smaller governing bodies?

    The Fairfax County Schools always argue that they are more efficient because they have economies of scale. Or is that just to keep the huge central staff on the payroll?

    Fairfax County police and fire provide most of their services on a decentralized basis?

    I worked for a big company years ago that centralized its network staff in only a couple of locations around 15 states. They were surprised to find that many talented people refused to move.


  11. Larry G Avatar
    Larry G


    Our current government is hierarchical … with several layers of governance….

    I cannot tell from what EMR is saying if he is advocating one level – a “flat” governance structure … or he acquiesces to the current structure but disagrees on how power and authority are allocated….

    but he also does not address commerce… where …whether it is radio shack or a barber shop or a Kohls… each of those enterprises has it’s own business plan that is driven by (for many) zip code demographics.

    and the argument has been made about the concept of “one stop” shopping being a net saver of resources – time and money.

    Your local CVS or Walgreen or RiteAid for example.. where you get your prescription drugs…

    what argument would EMR make about the non-local… nature of the prescription drug supply chain which extends far, far beyond alpha or beta communities?

    You could have huge power allocated to local government – but would it change the way that CVS and their competitors operate?

  12. Anonymous Avatar

    Perhaps you would like to comment on the book “The Blue Zone” which studies the global locations which have pockets of exceptional longevity.

    None of them have good access to healtcare, and all of them are sparsely populated. Peoples in these loocations walk a lot compared to Americans.


  13. Anonymous Avatar

    In a free market, by definition, buyers and sellers do not coerce each other. Once you recognize you do not have a free market situation, then the problem is how to have government step in to equalize things without making them worse.

    The free market does what it does very well, but it doesn’t do everything. The government does what it does, but it cannot do everything or make every decision: the market is very good at making financial decisions, but not necessarily social ones.

    Ideally, the best social decisisons are nothing more than the sum of the best individual decisions, but failures in the markets mean that government intervention is often necessary.

    The only justification for government action is when it can show an improvement in social welfare compared to what is provided by the “free” market (or market as previously constrained).

    I don’t think anyone doubts that heaqltcare in the US is seriously broken.

    The only question is how to fix it most economically. EMR thinks the best way to do that is rebuild everything according to his prescription. And, if his prescription also cures every other known social ailment, then it might be economical.

    Only problem is that he is likely to have 250 million or so people disagree with him on one thing or another.


  14. Larry G Avatar
    Larry G

    Health care costs per Capita:

    United States 6,096
    Canada 3,173
    Japan 2,293
    France 3,040
    Australia 3,294

    do ya’ll see a pattern ?

    is the disparity due to good old fashioned free market capitalism…

    or is it due to Government “incompetence” ?

    Bonus Question – does any of the above have anything to do with how doctor’s offices and settlement patterns “work”?

  15. Anonymous Avatar

    Health care costs per capita don’t mean anything withut the health care benefits per capita.


  16. Larry G Avatar
    Larry G

    Life Expectancy:

    Rank Years

    Japan 2 82.07
    France 5 80.87
    Australia 8 80.62
    Canada 10 80.34
    United States 30 78.06

    what would be a better criteria?

  17. Anonymous Avatar

    That puts in more in perspective.

    A lifetime of healthcare in the US costs $478,000 but a lifetime of hel=althcare in Japan costs only $188,268.

    And for only $245,844 you could have a lot more fun in France.


  18. Larry G Avatar
    Larry G

    if we could cut our per capita health care expenses in half – we’d still rank the worst….

    think of how many people would lose their jobs if we cut our health care costs in half….

    but then we could spend that money on something else – like solar panels and the like.

    then we could have the Feds build Solar Panels in the parts of West Va where they outlaw mountaintop removal – on a one for one job lost – new job basis.

  19. Brian Crownover, MD Avatar
    Brian Crownover, MD

    The imbalance in our system is another primary driving force for excessive cost and lower quality; a 50:50 mix of primary care and subspecialty care provides the best blend. Unfortunately we are less than 30% primary care now and heading lower, plus we over incentivize subspecialty career paths by reimbursing their time and energy disproportionately to primary care. Barbara Starfield is a true leader in research on this topic. Rec: google her name and primary care or health care cost.

  20. Anonymous Avatar

    but then we could spend that money on something else – like solar panels and the like.

    You trade part of someones life for everything you buy.

    One life is no more valuable than the next.

    Someday you may catch on, yet, Larry.


  21. Larry G Avatar
    Larry G

    not sure of your point..guy.

  22. E M Risse Avatar
    E M Risse

    One last time:

    Lary said:

    “Our current government is hierarchical … with several layers of governance….”

    Yes. In 1789 it seemed like three levels was enough. In 1789 it may have been.

    “I cannot tell from what EMR is saying if he is advocating one level – a “flat” governance structure …”

    Be serious Larry.

    Do you recall “level of control at level of impact”? (With multi levels of impact having shared responsibility not biggest contorls.

    In New Urban Regions there should be five or six seven levels at and below the Regional level depending on whether there is a need for SubRegional governace in some cases. (E.g. parts of Regions that fall in separte states) No governace at the Dooryard scale.

    From the perspective of all the citizens in the Region, the Regional governance structure is the most important.

    For individuals the Cluster level is the most important.

    The Community scale is second most important and the SubRegional, Village and Neighborhood governance is fashioned to meet the needs of the citizens determined from the bottom up following a process outlined in The Shape of the Future.

    That covers the Agencies.

    Then Larry says:

    “but he also does not address commerce…”

    ‘Commerce’ is a function of Enterprises and Enterprise regulation is established by the appropriate scale of governance.

    Standards of purity — Food and Drug at the nation-state and multi-nation-state because it impacts everyone.

    Hours of opperation or other parameters that only impact those in the jurisdiction — at least one drug store open 24-7 in each Community.

    “what argument would EMR make about the non-local… nature of the prescription drug supply chain which extends far, far beyond alpha or beta communities?”

    As long as they meet the standards of quality and pay the full cost of opperations the scale of their supply chain is not an issue.

    “You could have huge power allocated to local government – but would it change the way that CVS and their competitors operate?”

    Just a red hering Larry.

  23. Larry G Avatar
    Larry G

    “there should be five or six seven levels”

    Home Rule or Dillon Rule at each of these levels?

  24. Larry G Avatar
    Larry G

    “there should be five or six seven levels”

    how would health care be done with this many different levels?

    How would this kind of governance address the issue of too many doctors and doctor’s offices?

  25. Anonymous Avatar

    Five or six or seven levels just guarantees you can never get anything accomplished. It is conservation through coagulation.

    The individual might as well hang it up because only big corporations will be able to do anything.


  26. Anonymous Avatar

    work out, be healthy, and save the world.

    “The term “gym rats” has a new meaning: College students are turning workouts into electricity, AP reports. The University of Oregon retrofitted elliptical workout machines to generate electricity.

    Not a lot, mind you: “The university estimates that 3,000 people a day on 20 machines would generate 6,000 kilowatt hours a year, enough to power one small energy-efficient house in the Northwest.” And the new gizmos don’t pay for themselves, either.”


  27. Larry G Avatar
    Larry G

    Part of my reason for asking the question was the current configurations of the MPOs which attempt to coordinate – access & mobility ..and more and more are talking about how settlement patterns affect access and mobility and some… are now advocating outright – settlement patterns dense enough to meet the thresholds for cost-effective transit service.

    At the current level.. the entities represented are mostly entire..contiguous cities, towns and counties… though in some circumstances, not entire counties are involved in every issue – such as air quality.

    Layered on top of that is the State DOT which has responsibility for all roads within an MPO area that also serve other areas of the State – Interstates and Primary roads.

    So it already takes a high degree of coordination… and I'm trying to visualize how EMR's approach would be able to coordinate mobility and access issues because each of these very small entities that he advocates do not exist as landlocked islands that people never leave…

    He's got them organized according to governance.. but we all know that commerce is not oriented to "barnyard" clusters per se and more than zipcodes and other demographics.

    I've mentioned it before – that McDonalds … Dollar General, Walmart ..really don't pay attention to how governance is allocated in terms of how they serve their market… i.e. they can build in one jurisdiction.. meeting all the permit requirements but their market can be in an adjacent jurisdiction.

    Henrico County just changed several of it's zip code designations because of this – because it turned out that Richmond was getting the sales tax of some businesses who were located in Henrico but had Richmond, Va postal addresses.

    So.. EMR's template would play holy heck with figuring out who get's what part of the sales tax.

    Finally… I wonder if EMR is familiar with what is known as a Traffic analysis zone

    " A traffic analysis zone is the unit of geography most commonly used in conventional transportation planning models. The size of a zone varies, but for a typical metropolitan planning software, a zone of under 3000 people is common. The spatial extent of zones typically varies in models, ranging from very large areas in the exurb to as small as city blocks or buildings in central business districts. There is no technical reason why zones cannot be as small as single buildings, however additional zones add to the computational burden."

  28. Anonymous Avatar

    ” some… are now advocating outright – settlement patterns dense enough to meet the thresholds for cost-effective transit service.”

    This is a stupid argument. Building settlement patterns sufficiently dense to support cost effective transit service would amount to a HUGE subsidy to transit service, thereby rendering the cost effective argument moot.

    Really cost effective transit service requires VERY high density, and it still only supports a fraction of total transit needs.


  29. Anonymous Avatar

    ” some… are now advocating outright – settlement patterns dense enough to meet the thresholds for cost-effective transit service.”

    Half of this argument is a smoke screen designed to prevent building in the countryside. It is a conservation effort disguised as a transit initiative. It is ethically dishonest.

    And did you see this months Bay Journal? The lead article is about how some are now advocating for a halt to growth, not just managing it.

    Short of genocide and forced sterilization, how does that happen? Well, by limiting building, raising prices and thereby forcing people to live someplace else – which has its own growth restrictions.

    And yet you claim that people are not opposed to growth – they just want to make sure the required new infrastructure is put in place and paid for by someone else.

    I’m not sure which is worse.


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