Page 202 - The Drucker Lectures

On Health Care [ 183

it is both labor intensive and capital intensive. This is Economics
101. At the very beginning, the hospital was totally labor inten-
sive. Today, hospitals have high capital investment. And yet, at
the same time, they are still totally labor intensive. It violates
the first rule that capital investment substitutes for labor. When
one of your hospitals brings in a new ultrasound machine for the
prostate, you do not save labor; you bring in 12 people to run it,
don’t you? New people. And that is an economic monstrosity. I
don’t think we yet know how to manage it.
Another problem is one that the HMOs are beginning to
highlight very clearly. You know, in my part of the world, my
physician friends all scream because with managed care they
now have to call up and get permission to administer a treat-
ment. And then they don’t talk to another MD; they talk to a
22-year-old clerk. And they’re absolutely right. That is an abom-
ination, and it’s unnecessary.
And let me say I come from a medical family, and this was one
of the great complaints of the elders of my medical clan in the
early ’20s [when Austria had state-mandated health insurance].
At first, those physicians were outraged when there was a non-
MD with whom they had to discuss a patient. And we learned
very fast that every one of those funds had to have a medical
director. At Kaiser [which during World War II launched one
of the first voluntary prepaid medical plans in the United States]
there was also a lay administrator at first. And it took five years
for Kaiser to learn that this didn’t work, and now, as you know,
there is an elected medical director in each region, who usually
serves for five or ten years. And so the physicians deal with a fel-
low physician, and that we will have to learn.
I don’t know how long it will take us to come to grips with
fundamental things instead of trying to patch. Yet this is what
we are doing, and not only in this country. You may be very
critical of Mrs. Clinton’s plan [for universal health-care cover-