How the Mighty Haven't Fallen

By Kim Bellard, February 17, 2015

I recently read an article that speculated on how even the mighty Google could fade into irrelevance faster than we might think.  It made me wonder why that kind of change doesn't seem to happen in health care.

The Google article, by Farhad Manjoo in The Wall Street Journal, cited one-time technology leaders like Wang and DEC, and pointed out that other long-time powerhouses such as Hewlett Packard and even Microsoft are furiously trying to reestablish themselves after decades of (relative) decline.  

Then there's health care.

Just out of curiosity, I looked at share of spending by type of service in the National Health Expenditures, from 1960 to 2013.  Here's what I found:

For all our many clinical and technological advances, the same three health sectors that dominated health care spending in 1960 still command virtually the same shares in 2013 -- over 60% of our overall spending.  They've "lost" less than 2% of share to other types of spending during those decades.  

It hasn't all been smooth sailing, of course.  Hospital spending reached almost 40% in the early 1980s, dipped below 30% in the early 21st century, and rebounded this decade.  The physician share has been steadier -- a peak of around 22% in the early 2000's, a low of 18.3% in 1978, but mostly stayed around 20%.  Prescription drugs spending, on the other hand, got to as low as 4.5% in 1981-82, reached a peak of 10.4% in 2006, and now seems to be on a slow decline.  But, all in all, the composition of Big 3 of the medical-industrial complex remains unchanged over a very long time.

It's as if the Big 3 U.S. auto manufacturers still maintained their 1960 dominance today, or the 3 TV broadcast networks still had their pre-cable/Internet share of viewers.  Both trios still have hefty market shares, still play key roles, but are nowhere near their historical dominance. New competitors emerged to give consumers more options, and took away significant shares of those markets.  

Unlike what has happened in health care.  

Hospitals, physicians, pharmaceuticals, and the health care industry generally have certainly evolved significantly in the past 50+ years, but it is more incremental evolution than the kind of "punctured equilibrium" Steve Jay Gould and others posit that result in rapid changes that overthrow species.  

I don't have anything against hospitals, doctors, or prescription drugs, at least not in principle.  It just doesn't feel like progress that we're not coming up with radically new care and delivery options that don't rely on them.  

Unlike most markets, health care isn't really driven by consumer demand.  A couple years ago, JAMA published a survey of physicians, in which  they blamed rising costs on pretty much everyone else but themselves, more than half even blaming patients.  A new study has cast doubt on the view that patient demand is driving unnecessary spending.   The saddest thing for me from the study was that only 8.7% of patient encounters included a patient demand.  We're a long, long way from informed patients taking responsibility for their own care, or their own health.

Having control over what constitutes the "practice of medicine" is certainly an effective way of forestalling new kinds of competitors.  That control has been placed in the hands of the providers practicing care, ostensibly to safeguard patients' interests,. but it's getting harder and harder to believe those interests are primary.  It seems more like protecting turf.  

A couple months ago I wrote a post that raised the question of whether, in a world where microbiome treatments, gene therapy, even nanobots may emerge as prevailing types of treatment, we'll even need physicians, at least in the same way we do now.  I received a number of comments that were aghast at the notion that we might not always need physicians to deliver our care.  I believe it is this kind of thinking that has allowed the Big 3 of health care to retain their dominance.  

If we can't even imagine a health care system that doesn't solely rely on the traditional sources of care, we'll certainly never achieve one.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting