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Major Concepts of Health Care EconomicsMajor Concepts of Health Care Economics

Victor R. Fuchs, PhD
[+] Article, Author, and Disclosure Information

From Stanford Institute for Economic Policy Research, Stanford, California.

Disclosures: Authors have disclosed no conflicts of interest. Forms can be viewed at www.acponline.org/authors/icmje/ConflictOfInterestForms.do?msNum=M14-1183.

Requests for Single Reprints: Victor R. Fuchs, PhD, Stanford Institute for Economic Policy Research, 366 Galvez Street, Stanford, CA 94305-6015; e-mail, vfuchs@stanford.edu.

Author Contributions: Drafting of the article: V.R. Fuchs.

Final approval of the article: V.R. Fuchs.

Ann Intern Med. 2015;162(5):380-383. doi:10.7326/M14-1183
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This article applies major economic concepts, such as supply, demand, monopoly, monopsony, adverse selection, and moral hazard, to central features of U.S. health care. These illustrations help explain some of the principal problems of health policy—high cost and the uninsured—and why solutions are difficult to obtain.







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Posted on March 20, 2015
Guglielmo Trovato, MD
University of Catania
Conflict of Interest: None Declared
Fuchs’s article is excellently addressed to major concepts of health care economics [1] and to their effects in medicine as a science and practice. Monopsony in health systems is a market form in which only one buyer interfaces with would-be sellers of any pertinent products; actually, even in apparently de-regulated health systems, the mechanisms of clinical demand and of its generation, maintenance, development and change are conditioned by scientific drives and pressures, regretfully mainly funded by the same future sellers, undermining monopsonists’ power. This mechanism is easier to understand considering the establishment of therapies with innovative drugs; the features and the interactions of diagnostic tools addressed also to guide therapeutic choices have been less investigated even if are equally important.
This complex subject can be summarized by the quote, “The increase of the number of tests in the practice of medicine is enhanced by the lower skills of doctors”.
Tools and diagnostic tests used in our health systems are essential for the prevention, recognition and treatment of diseases and even for definition of the health status of an individual or a population; nonetheless diagnostic methods and cutoffs are not always scientifically supported by sound research [2]. Moreover, credit and authoritativeness are sometimes achieved by strategies inspired by “publish or perish”. Much alike within Academy, frequent and even cloned publications are used to demonstrate talent, to bring attention to scholars and their sponsoring institutions, including pharmaceutical and medical device industries. This can facilitate continued funding and an individual's progress through a chosen field, but it also operates as a coherent system of building-up scientific credit to equipments and criteria insufficiently recommendable [3].
Contentious and confusing situations that trigger improper and expensive "defensive" medicine strategies thrive and prosper, eventually increasing health care costs but not the accuracy of diagnosis nor the efficacy of health systems [4]. Proficiency of the doctor is inversely proportional to the number of prescribed tests: but it is also true that today health systems demand some documentation at every diagnostic-therapeutic step, acting by “adverse selection”[1] in the doctor’s behavior. The reliability of this trusted approach is mostly based on “objective” quantitative reports, achieved by laboratory or imaging tools [5]. Nonetheless, since there is a lack of independent regulatory verification, the further downward spiral of excessive diagnostics prescription is favored; in analogy with the FDA and similar agencies throughout the world regarding drugs regulation, reliable points of reference for technology and diagnostics are warranted.

[1] Fuchs VR. Major concepts of health care economics. Ann Intern Med. 2015;162:380-3.
[2] Prasad V. Statins, primary prevention, and overall mortality. Ann Intern Med. 2014;160:867-9.
[3] Prasad V, Vandross A. Cardiovascular primary prevention: how high should we set the bar? Arch Intern Med. 2012;172:656-9.
[4] Greenberg J, Green JB. Over-testing: why more is not better. Am J Med. 2014;127:362-3.
[5] Trovato GM, Sperandeo M. Sounds, ultrasounds, and artifacts: which clinical role for lung imaging? Am J Respir Crit Care Med. 2013;187:780-1.
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