Thursday, June 04, 2009

How Resilient Is Healthcare? Health After Oil blog

Imagine the American healthcare industry as the proverbial proud oak tree that refuses to bend during a windstorm. For decades the industry has been deft at fending off resolution of the Three Cs, cost, coverage and quality of care. Predictably, this political success has nurtured a lack of resilience, by which I mean the ability of an organization to absorb exogenous shocks or disturbances and return to its original state.

As with the financial sector and the automobile industry, healthcare will be humbled by the ongoing fiscal/economic crisis, which has hidden ecological roots and far-reaching social and political implications. My view is that in the context of this crisis the Three C’s will take on the aura of “toxic assets” and SUVs –once profitable now a millstone. This suggests three outcome scenarios: 1) a medical care system affordable only to the rich; 2) nationalized universal coverage in a system using less energy and other resources; 3) a collapse followed by reorganization at a lower level of complexity and resource consumption, probably accompanied by an integration with public health and alternative forms of medicine (Wikipedia[a] ND).

A warped recognition of the macro-economic predicament is betrayed in the industry’s recent proposal to “voluntarily” hold down cost escalation. Whatever motivation lies behind this offer is it not astounding that this is the response with unemployment spiraling upward; federal debt growing at an unprecedented pace, with a $2 trillion deficit in 2009 and one of every two dollars budgeted borrowed; world oil production at its peak, population growth, climate change, water scarcity and a host of environmental pressures; Social Security and Medicare in distress; income and sales tax revenues declining; most states and many cities this year dependent on bailouts from a debt-ridden federal government with California on the precipice of fiscal calamity; housing prices continuing to plummet; production capacity utilization at its lowest point in at least 42 years; double digit wealth destruction that is eviscerating retirement plans; commercial real estate set for major defaults; GDP shrinking at a rate of 6% a year; and on and on it goes.

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