‘Is Curing Patients a Sustainable Business Model?’

This morning “someone on twitter” posted a link to the CNBC article, which made the rounds (and even turned up on daring fireball – The twitter user who I deeply respect, reacted with the reasonable outrage at the inhuman question put out by the worlds largest human aid organisation, Goldman Sachs. Since you can't see my face right now (and also I'm really good at keeping a straight face, at least when no one's looking): yes that was sarcasm.

I tried to argue that I find this statement quite logical and actually not that controversial, which did not fall on understanding grounds. I then figured out that I actually misinterpreted the original quote.

If only I could read properly

The part that angers people about this is of course the “curing” part. The article talks about the sustainability of a business model based on “one shot” genenetic engineering cures. I somehow managed to completely ignore that part and assumed GS made a much more general statement ala “Is helping sick people a sustainable business model”.

Now, while that's two very different questions, I think, in the broader conversation about how health care is financed and structured, the difference is not as big and important as for the specific discussion of how bad a human being a Goldman Sachs consultant can be.

First of all, I think, in the current climate (and especially given that we would need to assume that this statement was pretty much made in the context of the completely broken US health care system), GS would not ask that second question, as, yes, for many companies, human health is indeed a very good, sustainable business model. So, that was a completely unforced error on my end.

Who gets to benefit from the current system?

But the actual question GS asks as cited in that article is connected, as it shows, very openly (which should give you a hint on the current environment we're in) a deep conflict in for-profit healthcare. This can be generalized for free market capitalism in general in the form of “What's best for the customer (patient) is often not the best for the company or producer”.

In the context of the health care system, this is a huge problem. The main focus of the health care system should be to heal people. In the best way possible, given the constraints (cost, time, labor, you name it). If a cure doesn't get developed because it's one-off nature makes it hard or impossible to turn it into a sustainable business model, this is a failure of the health care system, as in every other aspect, this would be the optimal solution. Every subsequent touch point with the health care system for a patient that didn't get that one-off cure puts an additional strain on an already loaded system. The only beneficiaries: The private companies who get paid for the extra visit and who developed a cure that does not do one-off healing but instead just eases the symptoms (as you can see: A much better business model). Everyone else – The overworked hospital or doctor's staff, the state that still pretty much subsidizes every aspect of health care up to a point and most importantly the patient – worse off.

Which actually leads us to the question that I thought I heard when I read the article the first time: Is health care a sustainable business model – Yes, for private companies, who, through a ton of lobbying, shady business practice and a lot of unforced errors on behalf of the regulators, managed to carve out a nice niche for them in a system that in many countries (including praised Germany) relies on exploiting it's personnel and to a large degree only functions because people do their utmost best to keep it running.

Privatize gains, socialize losses

But this also shines light onto one of the main problems with this construct: Health care is one of the most crass examples of the principle of “privatize gains, socialize losses”. The people, either in the form of super expensive private health insurance policies or taxes or both, are taking the losses and keep the system running, because, for most of the developed world, letting poor people die is not exactly an option (At least for people who are already in the country. Totally fine to let them die while crossing the Mediterranean Sea, but I digress), while for-profit companies are bagging the profits. And this is not only true for things like running hospitals: In many countries, the state (aka taxes) pays for most of the cost of medical research at universities (I believe, the system is slightly different in the US), where the results are then often privatized with way too little compensation and, more importantly, increasingly without any regulation on how much profit these companies are allowed to make after bringing new cures to the market – Again, bagging profits while at least large parts of the initial cost was carried by the public.

This is not to argue that publicly funded medical research should not happen, quite the contrary – One thing that happened throughout the last few decades is that due to increasingly close relationships between pharmaceutical companies and universities, research has shifted in many places towards medical research that looks promising in terms of profitability when produced later in contrast to the things you really want, like finding a good solution for the antibiotics crisis or, maybe, developing one-off cures for diseases we can't heal right now.

And I'm also not suggesting that we should socialize pharmaceutical companies. In some cases, for example for low margin standard medicine that has been around for ages (Insulin comes to mind) that might actually work, but I think a more important part is to bring back proper regulation. Make sure companies cannot coerce whole markets into paying ridiculous prices for cheap to make standard stuff (again, Insulin, but also the Epi-Pen comes to mind).

And also, maybe, just in general, come to terms with the fact that we've now tested the hypothesis that the whole health care sector can be organized by market forces and for profit companies in a cheaper way and everything that has happened is that cost for the tax payer has exploded while an increasingly concentrated medical supplies and pharmaceutical industry takes away record profits.

So, yes, I think the question that Goldman Sachs posed in that article is a valid one, even if it comes from a very dark, inhumane and cynical place and instead of spending time arguing against those fuckers, maybe we should start discussing how we can rebuild our social and health care systems in a way that puts patients and their health first, health care personnel second and is financially viable. I'm afraid the answers we may come up with won't go down so well with Goldman Sachs, but again, maybe we shouldn't care so much about that.