Briefing Paper No. 111

Does the Doctor Need a Boss?

The traditional model of medical delivery, in which the doctor is trained, respected, and compensated as an independent craftsman, is anachronistic. When a patient has multiple ailments, there is no longer a simple doctor-patient or doctor-patient-specialist relationship. Instead, there are multiple specialists who have an impact on the patient, each with a set of interdependencies and difficult coordination issues that increase exponentially with the number of ailments involved.

Patients with multiple diagnoses require someone who can organize the efforts of multiple medical professionals. It is not unreasonable to imagine that delivering health care effectively, particularly for complex patients, could require a corporate model of organization.

At least two forces stand in the way of robust competition from corporate health care providers. First is the regime of third-party fee-for-service payment, which is heavily entrenched by Medicare, Medicaid, and the regulatory and tax distortions that tilt private health insurance in the same direction. Consumers should control the money that purchases their health insurance, and should be free to choose their insurer and health care providers.

Second, state licensing regulations make it difficult for corporations to design optimal work flows for health care delivery. Under institutional licensing, regulators would instead evaluate how well a corporation treats its patients, not the credentials of the corporation’s employees. Alternatively, states could recognize clinician licenses issued by other states. That would let corporations operate in multiple states under a single set of rules and put pressure on states to eliminate unnecessarily restrictive regulations.

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Arnold Kling is an adjunct scholar at the Cato Institute and the author of Crisis of Abundance: Rethinking How We Pay for Health Care. Michael F. Cannon is the Cato Institute’s director of health policy studies and coauthor of Healthy Competition: What’s Holding Back Health Care and How to Free It.