Thursday, July 24, 2008

Medical Market is Changing

The market is reacting to the changing economics of healthcare in the US.

In this story from the Arizona Republic, some primary care physicians are moving to a "concierge" model for their practice.

Dr. Neil J. Sapin wooed his patients last week with a wine-and-hors d'oeuvres reception at his Glendale office. Next month, the doctor plans an encore bash at Arrowhead Country Club.

Such receptions are an unusual way for a doctor to mingle with patients, but Sapin has an unusual request for his patients. He wants them to pay an annual retainer of $1,500, a fee that will buy these patients better access and more attention from the busy doctor.

Sapin is among a handful of Arizona doctors who are so frustrated with the pressures of being a primary-care physician that they are striking a new, more exclusive path known as concierge medicine. The practice typically involves charging an annual fee in exchange for better access, longer appointments, more emphasis on preventive care and other medical perks.

As they say, read the whole thing.

At the same time, over at Carpe Diem, Mark Perry notes that medical associations aren't too happy with the proliferation of low cost clinics.

Translation: The family doc cartel is worried about increased competition.

Again, read the whole thing.

What these stories tell me is that the industry is changing yet again as both suppliers and customers adjust to costs and benefits. I suspect that both types of changes will be beneficial. Low cost clinics will take care of the more mundane stuff and doctors will focus on the people and things that really need their attention and expertise.

As with most transitions in industries, it will be a bit messy as things get sorted out.

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Sunday, July 20, 2008

Today's Choices also Matter

A couple of weeks ago many of the economics blogs were commenting on the most lucrative college majors. Over the long run, economics turns out to be a good choice. Others include computer science and engineering. A nice graphic may be found here.

What occurred to me is that women are tending not to choose these lucrative majors. Although Maricopa Community Colleges are 56% female, an economics class is only rarely more than a third women. Often it is substantially less.

Given the long run earnings effect of these choices, I suspect that we will continue to see men earning more than women (on average) for at least another generation.

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Incentives Matter

Incentives matter and so do disincentives. Few things provide as significant a disincentive as relatively high tax rates and high costs of doing business. People and economic activity tend to flow to places with fewer disincentives.

Bulgaria has recently instituted a flat 10% tax rate for both individuals and businesses. The results are pretty dramatic. (From Stephen Moore writing in

Ms. Kostidinova... tells me: "The situation was getting desperate in Bulgaria. We were losing our population and our best workers. They were leaving for Western Europe to find jobs and the No.1 form of foreign capital came from remittances." All that began to change when the corporate tax was cut to 10% in 2007 and the personal income tax to 10% in January of this year. "We told the politicians that it was symbolically important for Bulgaria to have the lowest flat tax. We were surrounded by flat tax countries, we wanted to be the nation most friendly to capital and business."

Result: A country that ten years ago had a 12% unemployment rate now has a 6% jobless rate. Instead of people leaving Bulgaria to find jobs, "now it is the reverse. Western Europeans now come to Bulgaria for jobs. We're gaining population now," she says.

Closer to home, the California State Automobile association is moving its call center operations to Arizona and Oklahoma.

The California State Automobile Association has decided to close its call centers in California, including one in the East Bay, and shift hundreds of jobs to CSAA call centers in other states...

The departure of the call centers is tied to what over the last decade has become an economic bogeyman for a number of businesses with major operations in California: the state's chilly business climate.

"It costs more to do business in California than in other states," said Cynthia Harris, a spokeswoman for CSAA. "Moving our call center operations to states outside of California gives us an opportunity to reduce our operating costs."

As an aside, I wasn't aware that there was a beach between Arizona and California.

The jobs, about 900 in all, will be sent offshore to Arizona and Oklahoma where wages are cheaper.