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Monday, November 23, 2009

Externality

I was killing time last week with Super Freakonomics, a mildly interesting compilation of counterintuitive economic factoids, when I was struck by a term that explains a lot.

The authors were attempting to explain why nobody is ever going to do anything about global warming, other than what politicians do, which is contribute their fair share of hot air and methane. The problem, they claim, is the problem of externality.

Externality is the term economists use to describe a situation in which I create a problem, but somebody else pays the price. That is, the cost of my action is “external” to myself.

Global warming is, maybe, kind of, a byproduct of industrial civilization. We Americans contribute more than our fair share by living the Good Life, which includes automobiles and clothes dryers, both of which my parents lived without in the early 1950s. Honest. Now we are asking Indians and Chinese to forego the lifestyle we have come to enjoy, and the answer is (no surprise here) "Hell, no."

If we’ve been externalizing the problem for the last half-century, why shouldn’t they have the same privilege? Good luck explaining that to them in Copenhagen, President Obama.

But it struck me how often I feel like the Chinese. When I get a preauthorization request for a medicine, who benefits from the work of my nurse to fill it out and fax it back? It ain’t me. An insurance company is trying to save some money, and using my free labor to do so.

When I get a four-page disability form to complete, who benefits? When an attorney asks me to appear at a deposition or be available at a moment's notice to testify at trial, who is footing the bill? When a consultant prescribes a drug for a medical problem or a dentist performs a root canal, and makes himself unavailable for refills or questions on the weekend, why is it my problem just because I make sure someone always answers the phone?

The challenge is to figure out a way to make these yahoos internalize their externality, which is a fancy way to say “feel the pain they cause.”

Because we are lowly family physicians, we have to take this problem seriously if we want to eat dinner with our wives and children. Sometimes, I confess, passive-aggression is the best tool.

For my patient’s attorney, I always ask if he is wanting expert testimony or mere factual testimony. He has the right to subpoena me, for free; I have the right to do absolutely nothing more than read what I have written in the chart. If we wants an interpretation or explanation, well, now I’m an expert, and my fee for that work is my hourly gross income. The trial will be out of town? Now it’s getting expensive, because every minute I’m asked to be out of the office is going to be paid in advance.

That’s why I’ve never had to testify in court.

Forms are a time-consuming hassle, and I find that I just can’t fill them out accurately unless the patient is with me, in the exam room. The record is never sufficiently detailed. That costs the patient a co-pay, and the company (indirectly) the rest of the cost of the visit.  

Because I can’t punish my patient for the dereliction of other professionals, and I can’t get my pound of flesh out of them, I just have to let them externalize all over me. Ditto with preauthorizations, unless I simply refuse to use expensive drugs. Because I’m fanatic about cost-effectiveness and generics, I suspect I suffer less than my colleagues.

Old business: In a past article I recommended investing in offshore hospitals if American medical care keeps heading toward the edge of a cliff. A fascinating front-page story in the Wall Street Journal on Nov. 21 (“The Henry Ford of Heart Surgery”) shows how close we are.

India’s Dr. Devi Shetty, once Mother Teresa’s heart surgeon, is going to build a hospital in the Caymans that would serve Americans seeking lower-cost health care. And he can do it. His flagship 1,000-bed heart hospital charges an average of $2,000 for open-heart surgery, with better results than in America, where the comparable charge is $20,000 to $50,000.

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About the Author

Doug Iliff, MD, is a family physician in solo practice in Topeka, Kan., and a former member of the FPM Board of Editors.

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