The Secret Health Care Plans Of The 1%

When you acquire a specialized skill of value, people will pay more for your services. As famed management writer Peter Drucker once said, “The economic and social gravity of America will increasingly accommodate the knowledge worker class”. This has been, and is, especially true in the medical community where the price that wealthy Americans are willing to pay for healthcare in favor of themselves, their spouses, and children knows almost no bounds.

Even into the late 1990s, the advantage of affluence meant that you might have gotten the hospital room all to your yourself, some better food, and the likelihood that you would get a good doctor because wealthy people tend to live in wealthy areas and top-tier doctors tend to congregate at such hospitals.

But, in the past ten years, the best doctors in a given area have realized that they could earn annual incomes in the range of $700,000-$2,500,000 per year by banding together with several other area practitioners to open up a center in which each practitioner only has a limit of 50 or so households serviced by the arrangement.

The significance of this trend is that the most talented doctors are beginning to limit the scope of their talents to the select elite 50 or so families in their community because the payoffs are extreme and the amount of work necessary to cater to fifty families specifically is significantly less than having a broad practice.

This is the first time that we are seeing the medical sector adopt the type of exclusivity that we see in other areas of life.

But given that the distinction is largely a matter of life and death, the difference is qualitatively different. In investing, if you can’t access the downtown financial advisor that can stuff your portfolio with 9% bonds to a company that is secured by their inventories and real estate, you can do just fine thank you by investing in a plain vanilla S&P 500 Index Fund. If you have a legal claim with a likelihood of a high payoff, you can hire the best attorney in town. If your claim is not worth much, the degree of harm is likewise diminished. And if you are on the defendant side, you have the power to avoid engaging in behaviors that lead to you becoming a defendant.

A real detriment occurs when the best doctors close themselves off from offering services to all but the select few richest in their community. I suspect that the doctors that create these boutique offerings are of this, as they almost never advertise their offerings and do not index their websites for inclusion in the Google database. The advantage that accrues to the doctors that open successful executive medical practices–the annual infusions of $2 million from families that pay $40,000-$50,000 annually to belong to these programs–cannot be replicated through subsidy or options available through the traditional models.

The part that I find most astounding is that almost no mainstream media outlet has covered this phenomenon yet, with the exception of a lone profile in the New York Times a year ago titled “The Doctor Is In. Co-Pay? $40,000.”

It makes sense, as all participants in this arrangement benefit from the secrecy. Wealthy individuals and families may find it unseemly for the world to know the true extent to which their healthcare coverage differs from the hoi polloi, as their willingness to pay these exorbitant rates has the effect of removing top medical talent from a broader population base. And the doctors benefit from the secrecy, as their private arrangement could become a public policy issue (i.e. if the public gains general knowledge of these exclusive health care arrangements, it could result in a regulation to take on a minimum number of patients each year outside of these plans, analogous to the continuing educational requirements that are already imposed).

The gravity of shift of top doctors to such a small number of families is one of the visceral manifestations of America’s growing inequality, yet it almost never discussed outside of the realm policy wonks performing back-of-the-envelope calculations concerning the number of individuals that would have received top-tier care but do not.