Cesareans are not widgets

For NCB advocates, anything that happens in obstetrics must be squeezed, manipulated and molded into the approved story line: evil obstetricians subject women to unnecessary interventions for personal gain.

Hence an NCB website and an NCB advocate on Babble published the exact same analysis on the very same day. They even gave it the same words, All About the Benjamins, the title of the piece on The Unnecessarean and the first line of Danielle Ellwood’s screed on Babble, charmingly entitledOB/GYN’s Admit Money Drives C-Section Rates?

Both pieces discuss a newspaper article on Tennessee’s plan to reduce TennCare (Tennessee Medicaid) reimbursement rates for C-sections:

Under Gov. Bill Haslam’s proposed spending plan for next year, hospitals and obstetricians would get only half of what they now receive for C-sections. The change is projected to save $14.9 million, accounting for more than one-third of the overall cuts to TennCare.

“In my opinion, the state is just trying to save money on the backs of hospitals and doctors,” said Dr. Frank H. Boehm, professor of obstetrics and gynecology at Vanderbilt. “I don’t think there is any big medical reason to do this.”

Danielle Ellwood on Babble responds with the typical inane NCB claptrap:

But what gets me most about it all is, finally there is a group of OB/GYN’s coming out and saying what many have been suggesting in the birth community for ages… money drives the number of c-sections that take place. An extremely doctor friendly procedure that takes 45 minutes, and of course they are home for dinner, when compared to long on call hours with laboring mothers, missing birthday parties, and golf games.

Her predictably offensive response merely reflect the fact that she is ignorant of the basics of healthcare economics. She, like most NCB advocates, thinks that economics of healthcare are just like the economics of widgets. However, if the last 25 years of health care reform efforts have taught us anything, it is that healthcare is not a widget.

In economics, “widget” stands for a unit of economic production. Producers sell widgets, consumers buy widgets and there are economic rules that govern the sale and purchase of widgets. When producers find they can command a greater price for one form of widget than an other, they will begin producing more of the higher priced widgets.

Imagine that you knit scarves and you sell them on E-bay. The scarves come in two colors, puce and turquoise. After a few weeks, you notice that the puce scarves get few bids and ultimately sell for an average of $10, but the turquoise scarves get lots of bids and sell for an average of $12. In light of that information, you begin making lots more turquoise scarves and many fewer puce scarves. That’s not surprising; economics tells us that if you can get more money for one form of widget than another, you will preferentially produce the widget that commands a higher price.

But Cesareans are not widgets and do not behave like widgets. Why? Widgets are interchangeable; medical procedures are not. It makes no difference to the manufacturer what the scarves look like on the people who choose them. The manufacturer has no obligation to determine that the customer choose the scarf color that harmonizes best with her wardrobe. If the customer is willing to pay more for a turquoise scarf, the manufacturer will preferentially produce turquoise scarves.

In contrast, medical procedures and not interchangeable and it matters a very great deal whether the procedure is the best procedure for the patient in question. If a laparoscopic appendectomy is reimbursed at $1000 and a laparoscopic gall bladder removal is reimbursed at $1200, we do not expect that the surgeon will preferentially perform a gall bladder removal every time a patient complains of severe abdominal pain. If the appendix is inflamed, surgeon will always remove the appendix and never remove the gall bladder regardless of the fact that he would be paid more for gall bladder removal. That’s because the surgeon has a legal and ethical responsibility for the outcome.

Cesareans aren’t widgets, either. Just because a C-section is reimbursed at a slightly higher rate than a vaginal delivery does not mean that obstetricians will preferentially perform C-sections. They can’t and they don’t forget their legal and ethical responsibility to perform the procedure most likely to produce the best outcome regardless of reimbursement rates.

Imagine for a moment that TennCare decided to cut reimbursement rates for gall bladder removals in half, making appendectomies of TennCare patients far more profitable than gall bladder removals. Would we expect to see an increase in appendectomies among TennCare patients and a decrease in gall bladder removals? Of course not. The most likely outcome is that doctors will refuse to take care of TennCare patients. They are not free to substitute the more profitable procedure for the less profitable procedure because of legal and ethical constraints. The most likely outcome, therefore, is that doctors will refuse to take care of TennCare patients because if they do, they know they will lose money.

Similarly, despite the gleeful predictions of NCB advocates, if TennCare cuts reimbursement for C-sections in half, it will have no impact on the C-section rate. The virtually inevitable outcome is that obstetricians will refuse to care for TennCare patients.

I know that NCB advocates really, really, really want to reduce C-section rates. But given what we know about health care economics, it is nonsensical to expect that cutting C-section reimbursement will reduce C-sections. The only thing it will reduce is poor women’s access to medical care.