Eric D. Kupferberg, PhD October 2010. “The basic rule of human nature is that powerful people speak slowly and subservient people quickly... because if.

Eric D. Kupferberg, PhDOctober 2010

“The basic rule of human nature is that powerful people speak slowly and subservient people quickly . . . because if they don’t speak fast nobody will listen to them.”

-- Michael Caine

Tragedy: the “serious drama typically describing a conflict between a protagonist and a superior force (as destiny) and having a sorrowful or disastrous conclusion . . .”

-- Websters 7th New Collegiate

The health care market comprises a disorganized aggregate of diverse parties or groups

Each group pursues its own interests with marginal regard for the interests of other parties or groups

Each views the health care market as a zero-sum game

All parties view the current health care market as sub-optimal

Garrett Hardin’s1969 article in Science warned of the dangers of unmanaged population and economic growth.

Now a classic in ecology and economics, Hardin’s paper argued that economic incentives lean toward over-utilizing or destroying communally-owned resources.

Area herds grazed on town commons

Social and communal pressures limited excessive use

Increasing social and occupational diversification removed social checks

Farmers gradually viewed commons as a free and endless resource

Each additional animal benefits the herdsman by +1 with sales of meat or wool.

Given the limited grass on the commons, each +1 benefit to one herdsman represents a -1 benefit to another.

The communal “price” of overgrazing is the degradation of the commons, leading to eventual system collapse.

BUT, the costs of degradation are shared by all farmers. Thus, no individual farmer perceives a short term gain by limiting their herd.

The full brunt of the “tragedy” maybe self-limiting, as the depleted commons encourage some farmers to leave and others to exercise short-term restraint.

BUT, when each farmer perceives their own economic interests as both fragile and confined to zero-sum calculations, communal solutions become impossible and the result is catastrophe.

Clean air and water

Fisheries and coastlines

National and state parks

Landfills

FDIC insurance of banks and savings & loans

Geosynchronous orbit & radio bandwidth

Public “goodwill” toward large corporations

Imagine the a commons where diverse parties busied themselves herding animals, building condos, paving roads, organizing softball tournaments, dumping trash, etc.

Each group would perceive a gain by another as their own loss.

Each stakeholder is naturally suspicious of collaborations among other parties.

At present, health care is a Greshamite system, a term named in honor of Thomas Gresham (1519?-1579) to designate any system doomed to failure.

A “field” is structured system of social or market positions – occupied either by individuals or institutions – which defines the situation for their occupants. The field forms an arena within which parties maneuver or compete over capital or desirable resources (e.g., market share or social capital).

“Stakeholders” are groups of individuals or institutions that share a set of core interests and have ability take actions in pursuit of those interests.

For the moment, we borrow heavily the work of French sociologist Pierre Bouridieu

When we discuss alternatives to the current pattern of model of unbridled stakeholder competition, we will enlist the work of R.E. Freeman, a Professor of Business Management at the University of Virginia

A stakeholder is a group of individuals or institutions that share a set of core interests and have ability take actions in pursuit of those interests.

Stakeholders can vary in their homogeneity

Each stakeholder category greatly influences the health care market

What are the salient characters that all members in the category share?

How heterogeneous is the group?

Where do interests diverge?

What actions do these stakeholders take in pursuit of those interests?

What hinders their ability to achieve their goals?

Who opposes those interests of each stakeholder?

What alliances have each group formed with other stakeholders? How successful or lasting have those alliances been?

How have these alliances and struggles altered the interests of the groups?

Is the power of any stakeholder, relative to other stakeholders, significantly increasing or decreasing?

Antibiotics Paying Patients Healthy People Financially Solvent Purchasers Emergency Rooms & Safety Net

Facilities Medicare, Medicaid, VA Hospitals High Profit Procedures

Growing trend toward specialty-based facilities

Physician owned & operated

Community hospitals stuck with very sick and very poor patients

Huge economic & racial disparities

Proliferation of specialty hospitals lowers income across the board

Providers seek market advantage via latest and most advanced diagnostic technologies (MRI, PET, CAT)

BUT, competitors acquire same machines, patients demand unnecessary services, EBM guidelines are ignored, and system wide costs increase

Hospitals suffer under diagnostic technologies arms race & cut costs elsewhere

Providers & payers lose leverage over instrument suppliers who then raise prices

“Lifeboat Ethics” cautions actors to view the larger consequences of the unbridled pursuit of self-interests.

Unfortunately, one violator of the communal norm of self-restraint would reap great short-term benefit.

Health care markets particularly subject to “Tragedy” because they enclose multiple stakeholders pursuing multiple interests on the same plot of land.

Prospect of extensive government intervention and likely backlash against potential rationing

Can health care ever become “de-commodified”?

The essence of dramatic tragedy is not unhappiness. It resides in the solemnity of the remorseless working of things.

-- Alfred North Whitehead