Who's Behind High Health Care Costs? Maybe the Middlemen With the Clipboards

May 2, 2011

. Reimbursements continue to diminish, while the costs of doing business steadily increase. Meanwhile, we don’t seem to have lost any of our middlemen. In fact, the offered solutions usually seem to involve the creation of even more middlemen, who we are told will increase our efficiency and help us streamline our operation. Middlemen who will hold clipboards, sit in meetings, and spew words like “quality” and “compliance” when they have to show what they’ve contributed to the system.

Suppose I want to invest some of my hard-earned capital into a new business. I hire two fellows who seem to have a knack for making pies, and set them up in a store I’ve leased. They’ve got different skills - Larry deals well with people, so he works at the counter, taking orders from customers and selling the pies to them. Curly is best in the kitchen, so he’s in back making the pies. The business doesn’t get off to a flying start, but it does manage to stay afloat and even turn a little profit.

Along comes a third guy, Moe. Moe sizes up my business and tells me that he can take it to the next level. He doesn’t bring any pie-making or pie-selling skills to the table, but he tells me he sees ways he can increase the efficiency and profitability of the place. For instance, he’ll coordinate Larry’s and Curly’s efforts and make them more of a well-oiled machine. In other words, Moe wants to be a middleman.

Does it make sense for me to put Moe on the payroll? As the owner of the business, I’m likelier to hire Moe if it seems to me that he’ll be able to make the pie-shop sufficiently profitable to cover his compensation (salary, healthcare, etc.). If he can boost income by 20 percent, and he only costs me 10 percent, he’s on my team.

Now suppose times get tough, and business isn’t booming quite as much as it once did. It might not be my employees’ fault, but the day may come when I have to make some changes in order to stay afloat. If I have to lay someone off (or even cut someone’s pay, potentially making him quit or at least a little less cheery and less likely to give me his best effort), who’s it to be? Curly? He makes the pies; can’t lose him. Larry? He moves the merchandise; he’s also key. It makes the most sense for me to cut my middleman, who doesn’t actually produce any of my goods or services.

Our society has a lot of middlemen. Healthcare, in particular, is rife with them. Few would deny that times have gotten tough, just like they did in my pie-shop. There has been a lot of talk about the need to cut costs, eliminate waste, and increase efficiency.

Somehow, the focus always seems to be on our pie-makers and pie-sellers. Reimbursements continue to diminish, while the costs of doing business steadily increase. Meanwhile, we don’t seem to have lost any of our middlemen. In fact, the offered solutions usually seem to involve the creation of even more middlemen, who we are told will increase our efficiency and help us streamline our operation. Middlemen who will hold clipboards, sit in meetings, and spew words like “quality” and “compliance” when they have to show what they’ve contributed to the system. Middlemen employed by health-insurance companies, who function not to produce or deliver our healthcare goods and services, but rather to restrict access to them.

I’m not suggesting that all of these middlemen are without value and should be carved out of the system. But maybe, just maybe, the actual producers and deliverers of healthcare shouldn’t always be first in line when it’s time to cut costs.