Nilza I. Cruz Ruiz
939-644-7683
"The tragedy of bad economic ideas is that once they grab hold of society's imagination, it becomes nearly impossible to persuade people to abandon them. Instead, the ideas must be... disproved by experience".
Thomas I. Palley,,economist and author From Financial Crisis to Stagnation (2012)
Equilibrium is frequently heard as the heart of modern macro-and microeconomics. Associated models start with the simplest concept of supply and demand. The downward-sloping demand curve intersects the upward-sloping supply curve. The intersection represents an equilibrium point at which supply = demand at a price which results satisfactory to both sides.
In this case, agents are represented by consumers and producers. Equilibrium is reached as a result of the interrelation between these agents in a given environment defined within a landscape which is many times composed of interrelated sub-landscapes. Agent properties and behaviors, as well as environment characteristics may be defined, designed and controlled, in order to "predict" or anticipate "expected" results. This definitely sounds like an optimal scenario. But the truth: the financial system, as many other systems as for example the healthcare system, are Complex Dynamic Systems.
In particular the healthcare system in the US and in Puerto Rico has been presenting symptoms related with recursive arrhythmia for the past years. A heart attack within the system is very clearly presented within every mountain in the existing landscapes or structural healthcare models. How can the healthcare system in Puerto Rico reach a point of equilibrium when more than fifty percent (50%) of the island's population is below the level of poverty within a universal third party payer system model the government cannot afford?
Just last week, I was watching a program in which licensed health care administrators were discussing the financial challenges most of the hospitals on the island (public and private) are facing. It struck me they were focusing on how the number of "empty beds" was increasing, and that "things had to be done". But what, and based on what underlying factors? You see, I'm not focusing on a fish bone cause diagram or what's on the tip of the iceberg; I'm talking about identifying and understanding how the system's genetic code or DNA works. I'm referring to discovering and "seeing" what cannot be seen! Then interrelate this genetic code, and design conceptual models aided by simulations that would lead expected outputs or results to be different!
The dynamics of complex systems are best understood using Complexity Theory, a hard science that offers the knowledge and tools to see and understand catastrophe coming in advance. Complex dynamic systems (e.g.; healthcare systems) produce unexpected results by means of "conspiracies" developed (intentionally or not) by the interactions of agents that lead to the systems instability resulting in emerging behavior as output.
Internal instability within the state of the system causes ruptures which, as a domino effect, create more recursive ruptures and so forth. Ruptures are really represented as fractals within the system at different scales. A perfect example are the unsustainable financial results emerging from the Government Healthcare System, and how this financial unsustainability is growing exponentially on a yearly time series that has been path dependent.
The government in its role as a buyer of health insurance pays insurers to "assume the risk". The risk defined as providing healthcare services to millions of humans under the level of poverty by a provider distribution network contracted and controlled by insurers. Providers depend on performing healthcare services through different healthcare facilities they don't control unless they own the facilities. Talking about complexity and the dynamics within!!! The most interest part of the system relies on the financial model. Contracted healthcare facilities bill insurers for incurred services through providers based on fixed rates that represent less that $.30 for each $1.00 incurred by the different healthcare facilities (PSG rates have dramatically decreased). Payments or collections are then received by facilities up to thirty (30) days after the services are provided. Think about cash flow and liquidity constraints for healthcare facilities and providers under this system! How's this for equilibrium? Think about which agent is really assuming the risk.
This is the mountain we should all be closely observing and transforming! The existing structure of the healthcare system, including the financial model. This cannot be political, but again, there's a price to pay; by US! A price related to the consequences associated with the pathway imprinted by administrative deficiencies of many government administrations, associated with politics, governance, inefficient structures, and internal infighting within government entities. Yet, there have been various proposals submitted to the government, legislature, and other entities; but again...silence, and many don't want to see the mountains!
There is a dissonance between the political world view and the real-world in healthcare, as in economics, that we need to stand up for! The catastrophe is closer, and the mayor healthcare earthquake is just a matter of time...far more predictable than hurricane IRMA...
We have to see the mountain, acknowledge it, and most of all, master it...
I guess, ideas may after all be disproved by experience.
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