Tuesday, November 4, 2014

Stay Off of My Turf!

The obvious thing to write about would be the announcement of Microsoft Health, but I thought I'd switch gears by focusing on a seemingly unrelated topic: America's slow yet expensive Internet. 

Bear with me and I promise to loop this back to health care.

The Open Technology Institute just released its Cost of Connectivity report for 2014.  It concludes that "customers in the U.S. still tend to pay more than their peers in Asia and Europe for comparable broadband Internet service."  Put even more simply, OTI asserts that we're "paying more money for slower Internet access."

Sadly, their conclusions are neither new nor surprising; the problem is well-understood.  The OTI report includes an extensive literature documentation, but here are some similar findings:
  •  Akamai's State of the Internet report has the U.S. slipping to 14th place for average connection speed.  Our average speed is less than half of South Korea's.
  • The Ookla download speedtest puts us in 27th place, right between Finland and the U.K.  South Korea is 3x faster, and they're only 2nd best in the world.
  • Ookla puts us at a dismal 34th place for cost per Megabit per second (MBPS), paying $3.50/MBPS versus only $0.47 in Bulgaria.  At least if measured by relative cost (calculated as cost divided by GDP per capita), we jump all the way to 19th place.
Sprint Chairman Masayoshi Son summed it up aptly earlier this year: "This is the nation that invented the Internet.  How can Americans live like this?"

There is widespread agreement about the reason why we're getting such a poor product: lack of competition.  As Tim Wu, a Columbia law professor and antitrust expert, told The New York Times: “It’s just very simple economics.  The average market has one or two serious Internet providers, and they set their prices at monopoly or duopoly pricing.”

In the early days of the Internet, before broadband, we got by through using cable or telephone lines.  Now that we have moved into broadband, fiber optic is the technology of choice.  But it is expensive to lay fiber optic cables, and monopoly or duopoly providers haven't seen much reason to make that investment. 

Sure, maybe we can squeeze more speed out of copper wires -- as Bell Labs has demonstrated -- but technology isn't standing still; at some point, even current fiber cables will be outdated.  It is a technological arms race that we are falling behind on.

ReadWrite's Adriana Lee contrasted concerted efforts to build out broadband infrastructure in South Korea and Romania versus our rather more laissez-faire attitude approach.   The results?  Well, as FCC Chairman Tom Wheeler said in September, "...three-quarters of American homes have no competitive choice for the essential infrastructure for 21st century economics and democracy."

The OTI report noted that the U.S. cities with the fastest service tended to either have municipal high-speed networks, or were pilot markets for Google's fiber-optic efforts.  Susan Crawford, a former technology and science advisor to President Obama, told BBC last year:
We deregulated high-speed internet access 10 years ago and since then we've seen enormous consolidation and monopolies, so left to their own devices, companies that supply internet access will charge high prices, because they face neither competition nor oversight.
Hmm, a capital-intensive industry that has rapidly consolidated, to the point most markets have only one or two service providers, and those providers take advantage of their cozy market positions to charge high prices and innovate very cautiously.  It may very well describe ISPs, but it sure as hell also characterizes much of our health care system, especially when it comes to health systems.

You could rephrase the OTI quote above by saying that, when it comes to health care, we're paying more money for worse outcomes.  If you don't believe that, check out OECD or Commonwealth Fund statistics.

The increasingly lack of competition is coming from provider consolidation, with health systems merging or acquiring rival systems, and also buying up physician practices.  I've written on provider consolidation before, as have numerous others (e.g., Delbanco or AHIP).   Much of the consolidation is done in the name of "clinical integration," but there is some pretty good empirical evidence that the main effect is to raise costs (for example, see Robinson and Miller).  It is something that should worry anyone concerned about cost, quality, or innovation.

The aspect of our health care system that most obviously intersects with Internet speed is perhaps telemedicine, which has been fighting an uphill battle for mainstream recognition for much of this century.  It is making progress, but the barriers to more widespread adoption are not technological but rather issues with our 20th century mechanisms for reimbursement and for provider licensing.

The common thread between provider consolidation and provider licensing is, of course, protecting turf.  Providers vow that both are done in the best interests of patients, but that rings hollow to me.

The turf issue reached ridiculous new heights recently when the Supreme Court agreed to hear North Carolina Board of Dental Examiners vs FTC.  Essentially, the Board tried to prevent anyone but dentists from doing teeth whitening.  They claim they were simply protecting their (would-be) patients' oral health, but it sure looks like cartel activity to me.  And I don't think either North Carolina nor dentists are unique in this kind of protective behavior.

George Will says these occupational licensure laws are "...residues of the mercantilist mentality, which was a residue of the feudal guild system, which was crony capitalism before there was capitalism."  Ouch.

I've written previously on both state medical boards and medical education, which control who can do what to us for our health care.  The Supreme Court has already previewed that it has a strong desire that such appropriate health care experts decide health care issues, rather than "bureaucrats," but I just wish I felt more confident that these various professional organizations were, in fact, acting in the public's best interest rather than that of their profession.

If they were, they'd be leading the charge for better performance monitoring and increased focus on patient safety.  Instead, they're being dragging kicking & screaming,

It's not about the patient.  It's about the money.

Rates for long distance calls plummeted in the 1980's, due to telephone companies being required to offer equal access to other long distance providers.  That's the kind of innovation we should be looking for.  It may be easier to see how that might apply to the Internet than to health care, but that's the fun challenge.

We need to be radically rethinking where we receive care; how and from whom we receive that care; how the people giving care get trained, licensed, and overseen; even what "care" is.  Hey, in China they are working hard to integrate Traditional Chinese Medicine with so-called Western medicine; maybe nothing will come of it, but it is far too early for us to have closed minds about what works and what doesn't.

What I'm pretty sure won't work is anything aimed at artificially protecting someone's turf.

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