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The medical-industrial complex in an age of reform

By | October 1, 2009, 5:58 AM PDT

Every great American city today is defined by its medical-industrial complex.

Take my own home in Atlanta.

During this decade my home doubled in value, and held that value, thanks to its proximity to Emory and the CDC (right). There are a lot of jobs there. It’s a primary economic driver for the region.

Other great cities are similarly defined. Boston has the complex around Harvard and its medical school. Stanford is rapidly building its medical-industrial complex. UCLA drives Los Angeles. And so on.

The question for today is, will this continue to be the case in an era of health reform?

The innovation process works like this. A University (often private) does the basic research, helped by government, business and foundation grants. The hospital and medical education complex engineers this science into practical knowledge. Then the entrepreneurs swoop in, licensing the intellectual property and creating drugs or devices for the world market.

It’s expensive, it’s complex, and it’s also unique. No other country combines a variety of public and private interests in quite this way.

It works in part because the entrepreneurs can quickly sell their wares throughout the U.S. market. We don’t have centralized purchasing. Doctors, hospitals and the market are the gatekeepers. Practitioners are always looking for an edge against disease, and can justify even expensive treatments to insurance or government paymasters.

Other countries don’t work that way. New treatments must prove themselves both medically and financially before they go into general use. This helps keep health care costs modest in those countries, as a percentage of their GDP.

The difference between the roughly 16% of GDP we pay for care and the 10% Canadians pay doesn’t all go toward insurance company profits. Most of it runs through this medical-industrial complex.

So if the U.S. system becomes like those in other countries, under either government or insurance industry leadership, will this medical-industrial complex continue to thrive?

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Dana Blankenhorn

About Dana Blankenhorn

Dana Blankenhorn was a contributing editor for SmartPlanet from 2009 to 2010.

Dana Blankenhorn

Dana Blankenhorn

Contributing Editor

Dana Blankenhorn has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement and founded the Interactive Age Daily for CMP Media. He holds degrees from Rice and Northwestern universities. He is based in Atlanta.

Follow him on Twitter.

Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn has been a technology reporter since 1982, a business reporter since 1978, and a writer for as long as he can remember. His Schwab IRA has a few tech stocks in it, most notably some Intel and Applied Materials bought over 10 years ago. But the vast majority of his tiny fortune (emphasis on the word tiny) is invested in mutual funds. He presently writes for no one else but ZDNet, SmartPlanet and himself. But if you've got an opportunity let him know. If he takes the gig he"ll first add it to this disclosure page.

He writes for SmartPlanet and is not an employee of CBS.

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0 Votes
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Wrong
Since you have failed in providing valid facts and citing sources, something all journalists should be doing these days, I will do it for you.

First of all, our cure rates for most illnesses are higher in this country than other systems:

http://www.firstthings.com/blogs/secondhandsmoke/2009/07/21/most-cancer-survival-rates-in-usa-better-than-europe-and-canada/
http://www.medscape.com/viewarticle/561737
http://www.webmd.com/cancer/news/20080716/cancer-survival-rates-vary-by-country

The quality is there. Now you can make the argument that we are more expensive. We won't be lowering costs with a "public option", single-payer, government-run system. Instead we will lose money on fraud, waste, and bureaucratic red-tape.

Why do we need to copy failure ? The private sector copies success. The private sector will always do it better than the public sector.
Posted by pizzaman7
1st Oct 2009
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Better, sometimes. But statistics don't lie
We pay nearly 17% of GDP to get results like those of Cuba. Tens of
millions have no insurance and millions more don't wind up getting
coverage when they get sick.

These are costs our free enterprise system can no longer bear. Our
health care inflation rate is higher than that of our neighbors, and
our costs in some cases are nearly double.

All the rhetoric in the world won't change the reality of the
situation.

Our health care industry is suffering on the high end, too. Other
countries now deliver equivalent care to paying patients at much
lower cost than we do -- and not because of malpractice. The medical
tourism business is booming.

Conservatives' refusal to seriously engage in the health reform
debate and blindly support the present system in the name of ideology
is an historic mistake. But it's not a mistake that was driven by
those at the top of the conservative movement. It's a choice driven
by the grassroots, which learned over two decades that liberals are
"evil" believers in "big government" who will "give America to our
enemies," not their neighbors.

The personal contempt rank-and-file conservatives toward anyone, on
any level, who dares disagree with their ideology is something that
needs reform even more than health care.

Posted by DanaBlankenhorn
3rd Oct 2009
0 Votes
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RE: The medical-industrial complex in an age of reform
Your statement "The personal contempt rank-and-file conservatives toward ... who dares disagree with their ideology is something that needs reform even more than health care." is only half of the larger problem. The personal contempt of rank-and-file liberals toward those who disagree with their ideology is equally toxic, and the mutual contempt of both sides toward each other far overshadows any interest either side might have in the common good. That's what got is into the many messes we're in, and that's what is preventing recovery from any of them.
Posted by AES2
4th Oct 2009
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