Shortages and Surpluses

In my post yesterday on how resources are allocated I mentioned that in any system other than a market system there are bound to be shortages and surpluses. This morning courtesy of memeorandum there’s a story from the Daily Mail that illustrates my point nicely:

Thousands of women are having to give birth outside maternity wards because of a lack of midwives and hospital beds.

The lives of mothers and babies are being put at risk as births in locations ranging from lifts to toilets – even a caravan – went up 15 per cent last year to almost 4,000.

Health chiefs admit a lack of maternity beds is partly to blame for the crisis, with hundreds of women in labour being turned away from hospitals because they are full.

Most of those commenting on this story are using it as an illustration of the horrors of socialism but I don’t think that’s quite right. However well-intentioned there is no such thing as an allocation of resources by need in healthcare. The choices are fiat, the political process, or markets. Clearly, NHS planned wrong and the political process is being brought to bear to correct it.

The farther any system deviates from an efficient market system, the greater will be its tendency to produce shortages and surpluses. And that includes our system which, as I pointed out this morning, is not an efficient market system by any stretch of the imagination.

8 comments… add one
  • Sam Link

    It’s all about scale. Catastrophic insurance necessarily pools together several people to offset the small percentage that will actually have the catastrophe. This requires some kind of bureaucracy on the buyer’s side, be it public, private, or hybrid.

    On the doctor’s side, several doctors must pool resources to buy the expensive machines and facilities to better treat their patients. This creates a need for a bureaucracy to offset the risk of their capital costs, as well serving to make the cost for the procedure out of reach for the majority of the uninsured.

    On the other hand I agree that bureaucracies for small things like doctor’s visits which people can easily afford are wasteful and unnecessary.

  • steve Link

    This could also illustrate the difficulties in planning for peak levels of care. Hospitals staff for average numbers with some ability to increase numbers during peal periods. AS budgets have been cut, it is harder to expand beds on short notice. My hospital had the ER halls filled and patients in hallways every winter for a while when the peak respiratory disease season hit. All of the other hospitals in the area were overflowing also as we all now try to work at peak capacity. (This has national defense implications also.) My friends at several other university hospitals had similar stories for their labor floors. If you build and staff for peaks, you lose lots of money.

    Given that it takes a long time to train physicians, I suspect that while markets should be better, they will not be able to respond very quickly either. I still remain a little surprised that what we have for a market system now has not resulted in more primary care docs. You would think insurance companies would be increasing pay to primary care with the available data showing that they decrease spending.


  • PD Shaw Link

    I’m not sure what to make of this story, but my initial thought is that maternity wards are unique. My impression of maternity wards in the U.S. is that they are suites, about three-times as large as normal hospital rooms, with whirlpool baths, furniture that can be used for the father to sleep on, and you don’t have to share. The hospitals will give tours in advance. It seems that in the U.S. some sort of competition is taking place, at least in this wing of the hospital.

  • Sam Link

    @PD Shaw – Your statement is a slippery slope to birth panels, where a group of bureaucrats stand between you and your doctor and decide the maximum square footage of your maternity suite. Anything under 200 sq ft with at least Ikea quality daddy furniture is rationing!

  • PD Shaw Link

    Well, if you’re going to start figuring out what medical care is truly necessary, I would think childbirth would have a large target on it’s back wouldn’t it?

    In 2012, historians attempt to piece together what went wrong in the Obama presidency that caused it to fail so precipitously. Most agree it was with these two words spoken at a White House press conference in October of 2009: “Epidurals? No.”

  • Its Gammon’s Law folks. More and more resources go towards administration than providing the actual service in question. That’s it.

    ….furniture that can be used for the father to sleep on that are worse than the rack.

    There fixed it for ya.

  • steve Link

    PD-You are correct, it is part of marketing. Research has shown that women make the health care decisions. If you can capture women early, via the labor floor, you can capture them forever, or so goes marketing theory. Therefore, hospitals have splurged on labor floors. It is one area where they do not skimp much and they take Press-Gainey scores there pretty seriously.


  • PD Shaw Link

    Thanks Steve, that confirms my suspicions.

    And it also explains Steve Verdon’s (and my own) complaint about the visually appealing, but extremely uncomfortable furniture for fathers in the maternity suites — men are often merely props in the greater commercial scheme of things.

Leave a Comment