Perspective: Why the free market isn’t a cure-all for healthcare

June 10, 2013

More market efficiency is needed in healthcare, but a completely unregulated free market actually may increase costs without improving quality, according to one expert.

It's comforting yet overly simplistic to think that most healthcare problems in the United States coud be solved by letting the power of an unregulated free market do its work, according to Peter Ubel, MD, an internist, behavioral scientist, and Duke University public policy professor. Medical Economics recently spoke with Ubel to get his take on some of the most pressing issues in primary care, health policy, and medicine.

Q: There seems to be a large faction of doctors who think that unleashing the free market will solve most of America’s healthcare woes. The impression I got from reading your article in The Atlantic about price transparency was that the exact opposite is true: More free-market reforms could easily increase costs without improving quality. What do you think the effect would be of unleashing free markets on healthcare?

A: The free market is a wonderful thing, when it enables consumers to make informed choices about which products to buy. But medical consumers, a.k.a.. patients, often have a hard time making the kind of savvy choices that will bring discipline to the market. Moreover, they are often in positions of making high-stakes, emotional decisions, in short time spans, without fully understanding their choices. To make matters worse, many physicians I’ve spoken with say they feel it would be inappropriate to discuss the cost of care with patients, especially when they face life-or-death decisions. Hard to imagine how the market, on its own, will work effectively in such circumstances. We need to bring more market efficiency to healthcare, but it is unrealistic to think that a completely unregulated free-market is going to solve our problems.

Q: For the United States to get health costs under control, do you think it’s necessary to reduce the amount of money physicians make?

A: If we control healthcare costs in the United States, lots of people are going to have to make much less money, including hospitals, pharmaceutical companies, device manufacturers, and, yes, physicians, especially highly paid procedural subspecialists. I’ll be quite upset if changes in the healthcare marketplace caused general pediatricians and family practitioners to make less money. But we cannot afford to continue to have our wonderful colleagues in orthopedic surgery, interventional cardiology, and the like make the kind of money they currently make. Right now, subspecialists in the United States often make two or three times as much money per year as their peers in Canada or Europe. In the long run, we need to reduce physician subspecialty income. To do that in an acceptable way, however, we also need to both reduce the cost of medical education and reform our malpractice system, so these reductions in income are not as painful.

Q: Why do you think the primary care shortage is overblown?

A: Sometimes we focus too much on the primary care physician (PCP) shortage without paying attention to broader issues about what kind of primary care providers should be offering what types of primary care to which patients. We have to ask ourselves whether some less-demanding parts of primary care should be handled more often by nonphysicians. Take the way that anesthesiologists and nurse anesthetists work together, for example. One anesthesiologist can be in charge of several patients at a time, with the help of nurse anesthetists, who handle the less-challenging parts of the cases. The anesthesiologists are nearby, able to step in when needed. But by sharing patients with nurse anesthetists, the anesthesiologists are able to practice more efficiently.

Q: In what ways do you think the primary care landscape will look different in 20 years?

A: Only a fool prognosticates in public! But I never said I wasn’t a fool. I have no crystal ball, but I hope that the role of PCPs expands over the next couple decades. I hope we more often manage large teams of allied health professionals, as well as better coordinate care for our patients in consultation with our subspecialty colleagues. Good primary care has the potential to control healthcare costs while maintaining or improving healthcare quality.