Wednesday, August 19, 2009

Exporting premium health care to the U.K: The Steadman-Hawkins Clinic

Its mid August and for sports fans like me that could mean a few things. Being American, it certainly means one thing: National Football League pre-season. The signings. The trades. The Comebacks. The Tragedies.

For fan's of the Queen's football, it also means the beginning of the English Premier League.

For those that played NCAA soccer, it also means being at preseason camp.

After thirty-five years of playing, I have had 4 knee surgeries. ( 2 scopes, then ACL reconstruction, then another scope.) I kind of consider myself an expert on the choices available and the history of knee surgies. It also happens that the real experts on knee surgery, the surgeons of the Steadman-Hawkins Clinic, are head quartered in Vail, not too far from me here in Thornton.

And they are winning business from Britain's National Health Service. Some of Europe's top players come to Vail after they have damaged their knee. Alan Shearer and Michael Owen are two examples of top EPL players of British nationality that have come to the clinic.

This is nothing more than another example of a private company competing successfully with the government. Another example is the rise of UPS and Fedex, even though the US government had a monopoly on the delivery of mail. They did it by offering premium service. And don't forget the bond market. The government competes with private business every day in the selling of debt.

The healthcare companies are not lying when they say that the government would take away some of their business--it would. Conversely, if we got rid of mailboxes and the US Postal Service, Fedex and UPS stock valuations would surge.

Steadman Hawkins exposes the lie that private industry can't compete with the government

The government could provide healthcare in a 'basic/standard package' offering. Sun Roof, 17 Inch Wheels, Premium Sound are extra. If three tests are good enough, the government provides three. If private industry can innovate another two, and you want to be on the 'bleeding edge' of medicine, you can buy, from a private insurer, the Upgrade Package. You are a competitive teenage athlete whose family can't afford private health insurance and you blow out your knee. You are covered. And you may miss the season. You are the parent of a competitive teenage athlete. You buy the the upgrade health insurance and get the fastest service.

You have birth announcements, you use a US Postal Stamp. You need a passport in your hands before the flight tomorrow? Probably going to go with Brown or have it Fedexed.

This is exactly what private industry is so good at: filling the market for the buyers: the wealthiest and healthiest. This is a good thing!!! What is not so easy for them to do is to take on customers that cost them a lot of money and don't bring in much. This is the concept in private business known as 'Fire Your Customers.' Your customers suck? Get rid of them and get better ones. The better ones make you money--and that is what you are in business to do. Private health care has a natural incentive to try to disclude customers that don't make them any profit.

Why should we expect anything else from them?

The government doesn't. In exchange for taking market share from the private insurers, the government can offer to take on those individuals that cause damage to the private insurer's balance sheet.

I wonder if there is a waiting period for the Steadman Hawkins clinic.