Date: August 14, 2015
Listen to the Podcast here:
Session 30: Medical Malthusians
Hello, this is Scott McDonald and welcome to the Perfect Place to Put a Practice Podcast. In this session, we are going to go a little further afield than simply considering the narrow definitions of healthcare practices. In fact, there are some important trends in where one will have an easier time practicing than other places. I will refer to this as the theory of Medical Malthusians. I don’t doubt for a minute that some of you may disagree with me.
First, let me state a personal point-of-view that informs my thought process: I believe that no matter who THINKS they control medicine, dentistry, or any other manifestation of health care, there is going to be a demand for healthcare and it is going to be satisfied. In short, the market will always find a way regardless of regulators.
Second, I am on the side of the providers. It is not because every provider is ethical or that they always act in the best interests of their patients, their professions, or their practices. Still, if providers cannot make a living at doing their important work, the public will suffer every single time.
Three, politicians and regulators are not doctors and are motivated by forces that are outside what is really best for patients (the professions and practices). Therefore, I see them as a part of the background noise. They will go away in an election or two. That is why looking for reality based market solutions to health care makes more sense to me.
Now, let me explain about Medical Malthusians and how this should influence where practices are located. As you may recall, Thomas Malthus was an English cleric and scholar born in 1766 and died in 1834. He was a serious student of demography.
In 1798, he wrote:
Famine seems to be the last, the most dreadful resource of nature. The power of population is so superior to the power of the earth to produce subsistence for man,that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.
—Malthus T.R. 1798. An essay on the principle of population. Chapter VII, p61
They referred to this destruction of mankind by its over population as the Malthusian Crisis. He believed that mankind was going to destroy itself because there was no way for the world’s population to feed itself. Ultimately, it was an argument regarding supply and demand. There are so many demands in the form of a new population that it could not supply itself. Now, let’s switch over and take a look at how we are considering healthcare.
The current state of medicine, Obamacare, must be acknowledged as the elephant in the room with an 800 pound gorilla riding it. It was brought about by people who either did not understand how markets worked or it was such a manifestation of political doctrine that ignores reality in favor of an outcome. Everyone who knows medicine has already come to the conclusion that it won’t work as it is currently structured. The seeds of its destruction are already spouting but are being studiously ignored by the media. The only question is how long we will allow it to die and how many people will suffer in its death throws. Malthus considered that humanity would ultimately destroy itself unless dramatic steps were taken. These included forced sterilization, public policies that promoted bloody war, or engendered apocalyptic style plagues. The Malthusian Crisis in Healthcare really means that we are going to be faced with a wholesale replacement of this system that will destroy itself. There are, in fact, state governments that are so philosophically supportive of Obamacare that they will ride the elephant and gorilla until they are trampled into a wet spot on the ground. There is no other way to explain how California, with all of the problems that exist for Covered California, could now pass legislation that will welcome into the program millions of illegal aliens. It cannot afford to pay for the subsidies it is already giving but that does not seem to matter.
The first major blow to this state sponsored subsidy is the disappearance of doctors to accept this plan. There is talk in Sacramento to make sure that anyone with a medical license will be forced to accept pro bono patients. Should this proposal be ratified, every practice in the state will become unprofitable. The quality of care would decline sharply. And providers would become even rarer. We have seen the market forces already influencing the quality of care as charges per unit of medical care give way to measures of satisfaction by patients. As the listeners know, the solution is to provide pain killers to every patient who accepts them. This is the surest way to encourage “satisfaction.” It is also the way to encourage drug dependence on a massive scale. My original premise is that the market will prevail whether it is done by intentional or unintentional means.
I have mentioned California. But the same agenda is in force in Illinois, New York, Connecticut, and several other large states. These have been the home to some of the best training facilities in the U.S. Unfortunately, political will in these states continues in the direction that healthcare is a right. Ancillary to this is the belief that someone else should pay for it. The bottom line is that practitioners seeking to set up clinics and medical facilities should consider the states that have the most market-based regulatory pictures. So where are they?
A good rule of thumb is to look for states that have no state-wide health exchanges. This isn’t hard to do. Actually, only 15 states have really developed these state exchanges and the investment states have made is so significant and the devastation of having them fall apart is so big that in terms of where to put a medical practice, we have to consider this: unless the situation you are entering into will give you a 30% greater likelihood of success and superior compensation, we do not recommend them. Seven more states are being lured with huge federal subsidies that the U.S. Supreme Court allowed in its June ruling. These additional states must be considered as dangerous as well but not on a par with the big 15.
Idaho, Arkansas, Utah, and New Mexico are on the “No Exchange List.” Texas and Pennsylvania are two of the largest states that are also on the list. Florida is wavering and may go to the exchange (there are billions of dollars and a growing population in this state who want someone else to pay for the subsidies) but so far they are in the No column. States that may go off the “No” list are Kansas, Maine, Montana, Nebraska, Ohio, South Dakota, and Virginia. Still, these states have not drunk the Cool Aide just yet but look like the HHS is pushing them hard.
We are not saying that the “Yes” states are evil but we do believe that given the Supreme Court’s decision to allow Federal subsidies in spite of the lack of state exchanges, choosing which state in which to practice and which to avoid is becoming easier and easier.
This is Scott McDonald for the Perfect Place to Put a Practice. You can learn more about us by visiting our web site at DoctorDemographics.com. And thanks for listening.