Why Bureaucracies are Harmful to Your Health

There’s a reason we make fun of the Department of Motor Vehicles.

We’ve all been there. If not the DMV, it’s some other bureaucracy. Waiting in lines. Having to come back because of a document nobody told you they needed. No flexibility.

SOOOOO painful.

It’s not because we have the dregs of society working in these bureaucracies. Nor do we have the most corrupt people in them. Although there are a fair share of both.

The actual structure of the bureaucracy is the problem. At least that’s what the economist Ludwig Von Mises (Ronald Reagan’s favorite economist) wrote in his book ‘Bureaucracy’ back in 1944.

Apparently this problem has been going on for a long time.

Von Mises argued that bureaucracies can happen both in government and in large private organizations.

You can probably guess that there might be a hint of it in healthcare (sarcasm added).

Bureaucracies are characterized by an administrative system governed by rules, procedures and hierarchical authority. Also:

• They often don’t operate under a profit/loss system which tells them if they’re messing up

• Success is based on adherence to rules and procedures

• There’s not really an incentive for innovation or risk taking

• Bureaucracies are incentived to grow and create new rules to justify their existence

I’m sure readers of this email in other countries can vouch for the problems in their government-run healthcare.

What about the United States? Isn’t healthcare run by the private sector?

Not really.

A large amount of healthcare spending is from Medicare, Medicaid and state run programs. The vast majority of the rest of healthcare spending is through the highly-regulated insurance companies.

I see the effects of bureaucracy in the assisted living industry all the time. Many care home owners brag about how well they did on their last state inspection.

Never mind that all their residents are bed bound and eating very poorly. As long as all the paperwork is correct, nothing else matters.

During one of my inspections, a state inspector commented to me how healthy my residents seemed to be.

“Want to know what I’m doing to help them?” I asked.

“Nope. We’re hear to check for compliance to state regulations. We’re not supposed to get into anything else.”

I’m convinced bureaucracy is why we don’t have lots more innovation in healthcare. It’s why we have statins to lower cholesterol when there is obvious fraud in heart disease studies. Or why dementia medications go after reducing Beta Amyloid plaques, when those studies were fraudulent as well.

Because the rules say that’s what the problem is. Following rules is all that matters.

Recently I looked into purchasing a soft hyperbaric oxygen chamber for one of my assisted living homes. I called up the Department of Health to find out what I needed to do to by in ‘compliance’.

DHS’ response? That’s not in the ‘scope of services’ for assisted living and therefore is prohibited.

The rules won’t allow it, so I can’t have it.

The good news is that eventually bureaucracies crack and fall apart under their own weight. The Soviet Union is a good example. We may be starting to see that in healthcare as well.