John C. Goodman

Contrast that with what is happening to doctors dealing with impersonal bureaucracies, which do not bear any of the costs they impose on doctors and their patients. Dr. Virginia McIvor, a pediatric physician at Harvard Medical School explains the problem as follows:

…[T]he quality police demand that for any child who comes in for a physical whose body-mass index is above the 85th percentile, I must comply with certain measures — what we call box checking. I first need to check a box stating that the child is overweight. Then I must acknowledge that I entered "overweight" in his problem list. Next, I need to check a box stating that diet and exercise counseling were provided. Finally, I need to be sure that the counseling is documented in the patient note. If this patient has asthma, I need to check more boxes for an asthma action plan, use of an asthma-controller medication, and flu-shot compliance.

When a healthy child visits, I must complete these tasks while reviewing more than 300 other preventative care measures such as safe storage of a gun, domestic violence, child-proofing the home, nutrition, exercise, school performance, safe sex, bullying, smoking, drinking, drugs, behavior problems, family health issues, sleep, development and whatever else is on a patient's or parent's mind. While primary-care providers are good at prioritizing and staying on time — patient satisfaction scores are another quality metric — the endless box checking and scoring takes precious time away from doctor-patient communication. Not one of my patients has lost a pound from my box checking.

In Priceless, I made the following observation:

Over all, health care is a field that can be described as a sea of mediocrity punctuated by islands of excellence. The islands always spring from the bottom up, never from the top down; they tend to be distributed randomly; they are invariably the result of the enthusiasm, leadership and entrepreneurial skills of a small number of people; and they are almost always penalized by the payment system.

Now if you think like an economist, you will say, "Why don't we reward, instead of punish, the islands of excellence and maybe we will get more of them?" But if you think like an engineer you will reject that idea as completely unacceptable. Instead you will want to 1) find out how medicine should be practiced, 2) find out what type of organization is needed for doctors to practice that way, so 3) you can then go tell everybody what to do.

Atul Gawande is the author of The Checklist Manifesto, in which he argues that doctors can improve the quality of medicine by following a checklist similar to the ones that have reduced airline accidents. Here is his explanation of how medicine should be practiced:

This can no longer be a profession of craftsmen individually brewing plans for whatever patient comes through the door. We have to be more like engineers building a mechanism whose parts actually fit together, whose workings are ever more finely tuned and tweaked forever better performance in providing aid and comfort to human beings.

Here is Karen Davis, explaining (in the context of health reform) how medical care should be organized:

The legislation also includes physician payment reforms that encourage physicians, hospitals and other providers to join together to form accountable care organizations [ACOs] to gain efficiencies and improve quality of care. Those that meet quality-of-care targets and reduce costs relative to a spending benchmark can share in the savings they generate for Medicare.

The Affordable Care Act (ObamaCare) was heavily influenced by the engineering model. Who, but a social engineer, would think you can control health care costs by running "pilot programs"? What's the purpose of a pilot program if not to find something that appears to work so that you can then order everybody else go copy it? Pilot programs are a prime example of the social engineer's fool's errand. And by the way, there is no evidence whatever that pay-for-performance schemes improve quality or reduce costs — either in this country or abroad — either in health care or in education.

Social engineers invariably believe that a plan devised by people at the top can work, even though everyone at the bottom has a self interest in defeating it. Implicitly, they assume that incentives don't matter. Or, if they do matter, they don't matter very much.

To the economist, by contrast, incentives are everything. Complex social systems display unpredictable spontaneous order, with all kinds of unintended consequences of purposeful action. To have the best chance of good social outcomes, people at the bottom must find that when they pursue their own interests they are meeting the needs of others. Perverse incentives almost always lead to perverse outcomes.

In the 20th century, country after country and regime after regime tried to impose an engineering model on society as a whole. Most of those experiments have thankfully come to a close. By the century's end, the vast majority of the world understood that the economic model, not the engineering model, is where our hopes should lie. Yet health care is still completely dominated by people who steadfastly resist the economic way of thinking.


John C. Goodman

John C. Goodman is President of the Goodman Institute and Senior Fellow at The Independent Institute. His books include the widely acclaimed A Better Choice: Healthcare Solutions for America and the award-winning Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts.”