Tuesday, November 24, 2009

The Medical Good Shepherd: Structuring "Invisible Hand Values" to the Supply Side of Healthcare and Medicine

In The New York Times this morning,David Brooks sums up the conventional wisdom on healthcare, arguing that we face a choice between "vitality" and "security." Brooks' dichotomy, which echoes Virginia Postrel's distinction between "dynamism" and "stasis,"is the familiar way of thinking about healthcare. Do we want raw-boned capitalism, and inequality, or do we want the snug, albeit somewhat smothering, cradle-to-grave welfare state?

That's familiar analysis, and it's also static analysis, taking it as a given that if somebody gets more, somebody else will have to get less. As we shall see, there is a third, dynamic, way of thinking about the problem, which Brooks neglects. That dynamic alternative is to use medical technology as a sort of "good shepherd," improving everyone's life, from the richest to the poorest, while lowering costs and improving outcomes for all. Sadly, that Good Shepherd alternative is not only absent from Brooks' column, it is almost entirely absent from the current debate.

Here's Brooks, in his own words, offering us a choice between "decency" and "vibrancy":

The bottom line is that we face a brutal choice.

Reform would make us a more decent society, but also a less vibrant one. It would ease the anxiety of millions at the cost of future growth. It would heal a wound in the social fabric while piling another expensive and untouchable promise on top of the many such promises we’ve already made. America would be a less youthful, ragged and unforgiving nation, and a more middle-aged, civilized and sedate one.

We all have to decide what we want at this moment in history, vitality or security. We can debate this or that provision, but where we come down will depend on that moral preference. Don’t get stupefied by technical details. This debate is about values.

Where to begin? Let's start by noting that for opinion-mongers, it's always comfortable to divide choices into two: we can do A or we can do B, and the pundit, of course, has ready phrases and formulations to describe both A and B. But what makes life easy for the pundit is not often the same thing as what makes life better for Americans. If the choices, "brutal" or not, are familiar, then the odds are that those choices aren't the best choices, because in a dynamic world, the best choice is often the newest choice. But new choices tend not to fit into the comfortable repositories of conventional wisdom. Binary is easy, multiple choice that is really a multiple is hard, because the choices need to be updated with the speed of Schumpeterianism.

We might further illustrate the defects in this sort of binary thinking by asking the question: What if this same kind of static discussion had been about information technology, circa 1970? The punditical worthies of that bygone day might well have said, "Computers are ruinously expensive. Only the rich and powerful can afford them, and besides, they don't really work that well. Moreover, for most people, they are cold and alienating, with all those punchcards and tape reels. So let's think through whether we really need more of them in America, with an eye toward cutting back, because, as we all know, 'Small is Beautiful.' And if we do need more--big if--let's focus on making sure that everyone has fair access to computational power. Because, after all, the computer discussion should not about 'technical details,' it should be about 'values.'"

Here at Serious Medicine Strategy, we remind the reader that "values" are always good turf for pundits, who are rarely equipped, in any case, to talk about technical details. But its technical details, technology, that drives the future.

Our little parable about computers in the Disco Age is a prefiguring of the rationing discussion that we are hearing in our own time, the iPhone Age. Policy discussions, then and now, are inflected with the anti-technological ethos that suffuses the Brooksian right, as well as the post-New Deal left.

But let's continue to draw the parallel between computers then and healthcare now. The conventional-wisdom-dispensing pundit of 1970 would add, "Now there are some who say that we should try to figure out how to equip every small business and other small users, with greater access to an IBM 360. But that's just too much--such an expansion of the computer market would drive the share of our national GDP devoted to computers to an absurd new high, and it would increase the gap between the computer 'haves' and the computer 'have nots.' So let's slow down the development of computers, even as we seek to figure out how to help small businesses with greater access to computer timeshares."

If that had actually happened--if the same politicizing forces that are seeking today to grab control of our healthcare had grabbed control of computers back then--it's a safe bet that today we would all be waiting in line somewhere, punchcards in hand, queued up to do a little computing. (If that is, we knew how to do it, and where to go.) Or, as another alternative, Japan would today be the world's computer superpower, leading the world with computers about a quarter of what we actually have now; those of us who wanted to advance in computer science would thus have to learn Japanese.

Happily, none of that happened. The government had a huge role in fostering the development of computers, and the Internet, but then it mostly got out of the way. And here we are, choosing apps for smart phones, most of which are free.

Now back to healthcare. Currently costs are rising rapidly in healthcare, mostly because of inefficiently delivered routine care, and inefficiently delivered futile care. The conventional wisdom says that these costs are unsustainable. And the c.w. is correct, as far as it goes. But the conventional wisdomeers need to understand that cutting back on healthcare costs by simply ordering cuts in healthcare is like cutting back on the cost of IBM 360s in 1970. Yes, you could have said, back then, that we needed to reduce the rate of growth on computer spending, perhaps even impose price controls, but computers wouldn't have gotten better under such an edict, they would almost certainly have gotten worse.

So what's the answer? The answer, for computers, was to move forward, piling on more capital, and more R&D, and more freedom for geeks in garages--and the result, of course, was a stupendous explosion of computing power, far beyond anyone's imagination. And yet at the same time, computing got cheaper, to the point of ubiquity. Just about everyone in America today has access to more computing power, in his or her hand, than whole buildings of computers possessed just a few decades ago. That's success.

But does such success count as a "value"? Such success might be called an example of "invisible hand values." As Adam Smith wrote in The Wealth of Nations, 234 years ago:

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self–love, and never talk to them of our own necessities but of their advantages.

Such talk of self-interest, shrewd as it is, offends many. And in fact, self-interest is not the highest human emotion. Adam Smith didn't write to get rich, he was, at heart, a moral philosopher, who wrote because he had distinct opinions on how to help England in particular, and humanity overall. Smith understood that self-interest is merely the most effective human emotion, a proven mechanism for unleashing (among other things) the world-transforming power of economics, productivity, and discovery. Those emotions, he argued, could and should be harnessed for the greater good of the whole.

The highest human emotions, most people would agree, are love and charity and a sense of duty. And these emotions should oversee the provision of ethical medical care.

Hence the idea of "The Good Shepherd," which I freely admit that I am borrowing from the late Jack Kemp, the apostle of both supply-side economics and also "bleeding heart conservatism." Kemp's argument, back in the stagflationary 70s, was that both the left and right had it wrong when it came to economic issues. The right, in those days, said that we were spending too much, and that we had to cut back--only then could we think about cutting taxes. The left said that we had to spend more, and that thus we needed to increase taxes.

Kemp's "supply side" argument went right down the middle, or, more precisely, the center-right: If we cut tax rates, we would increase economic activity, and thus increase tax revenues. The Laffer Curve-driven result woud be more for everyone: both the private sector and the public sector could get bigger. Thus Kemp's argument didn't sit well with those who were more interested in inflicting pain on their enemies: conservatives who wanted to abolish the welfare state, and liberals who wanted to soak the rich and build socialism.

But to Ronald Reagan, the argument made sense; the Gipper embraced "supply side economics" in the late 70s, on his way to the 1980 presidential election. And the American people, too, came to embrace the argument during the great boom of the '80s. Of course, it can be argued that for some things, such as welfare for non-work, we should cut spending, not only for the sake of principle, but for the absolute betterment of the people in question. And that's undoubtedly correct; unfortunately, Kemp had something of a blindspot when it came to controlling spending. But it's also the case that in a complicated society, there will be plenty of things to spend public money on. And such spending will will be popular--and thus inevitable. Thus the challenge is to make sure that the money is spent wisely, generating the greatest possible individual and social return.

And so, once again, back to healthcare. A libertarian purist might say that we shouldn't spend public money on healthcare, even if we had the money--because the money, after all, was taxed away from someone else. And a left-wing purist would say that we should have absolute equality of healthcare, administered by the state, aka, single payer. Both of these positions have been thumpingly rejected by the American people, over and over again, but of course, ideologues never did worry about elections. What's left is the mostly non-ideological but somewhat center-right remainder of the country. Those are the folks who liked Kemp's message in his time, at least what they knew of it, and those are the folks whom the Serious Medicine Strategy is targeted at today.

The Serious Medicine Strategy is not per se about tax rates, but it is about providing more--providing abundance. Not just more care, or an abundance of money, but more cures, and an abundance of good health outcomes for people, so that they can live longer and healthier lives. (And if they live longer, they'll produce more and spend more--once again, a win-win fusion of good health and good economics.)

And we'll get to that Abundance Point if we make sure that there is plenty of demand for healthcare, by empowering people to make their own choices (which usually tend toward "more"), and by empowering both the private sector and the government to further increase supply. In this sense, Serious Medicine Strategy, like supply-side economics, also owes something of a debt to Keynesianism, because spending more isn't bad, so long as you are getting something for it, so that the size of the pie is ultimately increased, thus rendering the debt more manageable in a relative sense.

If you spend money and get the TVA and Hoover Dam and LaGuardia Airport, as the New Dealers did back in the 30s--well, that's worth a lot. By contrast, if you spend money and you get nothing but padded payrolls and environmental impact statements--well, that's not worth much at all. Thus the difference between Franklin D. Roosevelt and Barack Obama.

Similarly, if we spend more on healthcare and medicine and we get real cures, we will not only make our own people happier and healthier, but we also be establishing the industries that can sell medicines and medical technology to the world. That's the sort of supply-side increase that we're looking for. Of course, to achieve those supply-side breakthroughs, we need not only lots of demand, both domestic and foreign, but also a lean, clean regulatory and legal environment. The New Dealers were pro-growth and pro-technology--they wouldn't have allowed growth to be crippled by trial lawyers. The supply-siders were the same in the 80s; the challenge now, in the 21st century, is to reclaim that producerist ethos.

But in the end, it's not about supply, or the invisible hand, or lawyers, or any of that stuff. It's about the Good Shepherd, as Jack Kemp explained. Kemp's fundamental impulse was Christian--or, as he was always at pains to say, Judeo-Christian. Kemp thought in terms of individual entrepreneurship, but as an old quarterback, he thought of teams, and team play. And as an American, he thought of his country, and everyone in it.

And because he cared about America, he was willing to think hard--think outside the box--about how to make America a better place. And so Kemp spoke frequently of the Good Shepherd, who uses his wisdom to care for even the least among his flock--even as that same wisdom increases the overall size and well-being of the flock. That's a gentle sort of conservatism, focused on bringing everyone up, while not hurting the prospects of the best or most fortunate.

In return, the American people cared about Kemp, and listened to him. As Fred Barnes observed at the time of his death earlier this year, Kemp was without a doubt the most influential American of his era who did not become president.

So then why is that Kemp-like thinking seems to have died with him? Why are so few today carrying on his intellectual legacy, seeking to use new ideas to establish win-wins across the board? Serious Medicine Strategy put this question to Peter Ferrara, a veteran of the Reagan White House domestic policy office, a longtime associate of Kemp, and a creative and hard-charging thinker in his own right. Peter's answer was that Kemp-like thinking does, indeed, seem scarce today, because there is something permanently counter-intuitive about the idea that you can get more out of less.

Taking a bleaker tone, SMS volunteered that perhaps because the chattering classes have reverted back to "root canal" thinking, taking a quiet pseudo-tough-guy glee in "brutal choices," because such thinking provides the pleasure of seeming stern, even harsh, toward friends as well as opponents. Being hard, after all, is a "value."

And yet, Peter observed, Kemp-like thinking is needed now more than ever--as America faces looming crunches over not only healthcare, but also other forms of spending, to say nothing of the prospect of a renewed bout of 70s-style stagflation. In all of those areas, Peter asserted, we need a revival of Kemp-Reagan thinking.

We've come along way, in this post, from David Brooks' static-analysis column. But although he is wrong to pose the choice as merely a static choice between "vitality" and "security," perhaps he was right, after all, in thinking that in the end it's about values. As we have seen, there are many values.

Here at SMS, we believe that the right value is to help people, to provide them with the tools to enjoy the best possible life. But an equal value is the willingness to think anew, and act anew, in pursuit of the greatest good, realizing that the answer, when it comes, will be shocking and startling to comfortable power relationships--as the mainframe makers discovered in the 80s and 90s. The willingness to be stunned by the power of the counter-intuitive is thus another valuable value.

That was Jack Kemp's great insight, and it's a positive and hopeful vision that animates Ferrara, and all of us here at SMS.


  1. Interesting article about bringing efficiencies to surgical procedures, in this instance heart surgery by a India based heart doctor. While some might say it sounds like 'assembly line' medicine for the masses, the article points out dramatic cost savings and above average outcome.

    But what may be more interesting is the good surgeon has plans to open a western hemisphere facility, not in the gool Ol' US of A, but in The Cayman Islands.


    The Henry Ford of Heart Surgery
    In India, a Factory Model for Hospitals Is Cutting Costs and Yielding Profits

    The Wall Street Journal
    November 21, 2009

    BANGALORE -- Hair tucked into a surgical cap, eyes hidden behind thick-framed magnifying glasses, Devi Shetty leans over the sawed open chest of an 11-year-old boy, using bright blue thread to sew an artificial aorta onto his stopped heart.

    As Dr. Shetty pulls the thread tight with scissors, an assistant reads aloud a proposed agreement for him to build a new hospital in the Cayman Islands that would primarily serve Americans in search of lower-cost medical care. The agreement is inked a few days later, pending approval of the Cayman parliament.

    Dr. Shetty, who entered the limelight in the early 1990s as Mother Teresa's cardiac surgeon, offers cutting-edge medical care in India at a fraction of what it costs elsewhere in the world. His flagship heart hospital charges $2,000, on average, for open-heart surgery, compared with hospitals in the U.S. that are paid between $20,000 and $100,000, depending on the complexity of the surgery.
    The approach has transformed health care in India through a simple premise that works in other industries: economies of scale. By driving huge volumes, even of procedures as sophisticated, delicate and dangerous as heart surgery, Dr. Shetty has managed to drive down the cost of health care in his nation of one billion.

    His model offers insights for countries worldwide that are struggling with soaring medical costs, including the U.S. as it debates major health-care overhaul.

    [. . .]

  2. Right on the $$ Jim. While reading this very thoughtful column you wrote, my mind wandered to my Bronx childhood buddy Barry Kisloff who maintained that some day there will no longer be operations because medicines will cure us. Barry teaches Internal Medicine today and he was right on the $$ back in the early '60s. Every time I saw Bones in Star Trek I thought of what Barry said. And when you wrote about stem cell research, I said from your lips to God's ears! - or maybe Obama's ;) I've had many operations, not counting 14 colonoscopies. I would like to see stem cell research become the mini computer of medicine. In the '60's I billed IBM's customers for those 360's you mentioned & today I am here at my desk writing you this on my IMac, a $1,300 computer that takes up maybe 2 feet of space & more than 1,000 times as powerful as a 360.
    I believe medicine will go in the same direction as computers & its cost will become less and less, so long as big government stays out of medicine's kitchen.

  3. Jim, your article is very forward-looking, but we've already had the IT equivalent of progress in health care in the 1980s and 1990s.

    There was a paradigm change in the way pharmaceuticals was approached ... for one thing, science-driven rather than trial-and-error-driven development of drugs. Drugs were able to replace surgery and other procedures in many cases, saving thousands of dollars, and also to improve and extend lives.

    Miniaturization drove less-invasive procedures, saving thousands more, not to mention enabling the development of dramatically improved medical devices ... I got a pacemaker in the year 2000 that was far and away better than the one my mother got in the early 90s. No more avoiding microwaves, I can walk thru metal detectors, it can be "read" to the minutest detail thru external monitors with computer readouts, etc.

    There have been quiet breakthroughs against cancer, turning it into a manageable condition in many cases.

    Yet even as that revolution was occurring, demagogues were attacking the pharmaceutical companies and device manufacturers -- much of whose costs were attributable to early 20th century regulatory platforms -- as price-gougers and villains. It was no mistake that I saw in-flight movies on back-to-back trips in those days where the murderous bad guys were pharmaceutical companies.

    It was in that environment that I suggested the tag line I have shared here and which I still believe should be our guide: "the best healthcare reform is progress."

    In addition to further medical advances such as those you have described many times, the next area of progress involves IT. The Internet, as it has in other markets, can make everyday people informed consumers, pushing cost and waste out of the system, reducing overuse, increasing specialization, enforcing improved outcomes and ultimately, improving access. In other words, achieving all the objectives of the so-called reform with greater efficiency, lower costs and better outcomes.

    That, to me, is the next stage of "reform," and it can only come from the private sector, not from government. The focus of government should be, as it has been in other areas of IT, in getting out of the way to allow it to happen.

  4. You are right that we are being presented with a false dilemma of government-enforced penny pinching versus government-enforced flagrancy but you are wrong to claim that we would be "more decent" if we gave up our freedom and became a socialist state. How is there anything remotely "decent" about clubbing your neighbor over the head in order to force him to provide you with the things you want? That's practically the paradigmatic example of indecent behavior. That adopting this policy would ultimately result in impoverishment of everyone as those with money are reduced to poverty or chased away aside, I have have to wonder how you could call either the intentional or the unintentional consequences of such a policy "decent".