by Charles Hugh Smith, Of Two Minds:

Disregard these second-order effects at your own peril.

A great many systems that are assumed to be robust are actually fragile. Exhibit #1 is the global financial system, of course, but Exhibit #2 may well be the healthcare system globally and in the U.S.

Observers have noted that the number of available beds in U.S. hospitals is modest compared to the potential demands of a pandemic, and others have wondered who will pay the astronomical bills that will be presented to those who are treated for severe cases of Covid-19, as the U.S. system routinely generates bills of $100,000 and up for a few days in a hospital. Costs of $250,000 or more per patient for weeks of intensive care treating Covid-19 cannot be dismissed as “impossible.”

Beyond the possibility that the logistics and costs of care will overwhelm the system, there are numerous and highly consequential second-order effects to consider. As you may recall from recent posts here: first order, every action has a consequence. Second order, every consequence has its own consequence.

Second-Order Effects: The Unexpectedly Slippery Path to Dow 10,000 January 31, 2020

Could the Coronavirus Epidemic Be the Tipping Point in the Supply Chain Leaving China? January 28, 2020

Second-order effects of the pandemic colliding with America’s dysfunctional healthcare system include:

1. People avoiding care because they can’t afford it. Academic studies have shown that high deductibles make patients reluctant to seek care, even when they need it.

This second-order effect will exacerbate the contagion and endanger those suffering from severe symptoms.

2. Potential shortages of medications due to an over-reliance on supply chains in China. The number of unknowns far exceeds the number of knowns in this situation, so complacent assumptions may be misplaced.

3. U.S. healthcare’s obsession with maximizing profits by any means available has transformed healthcare from a calling to just another burnout job in the Corporate America profit-maximizing grinder. A long time general practitioner (physician) recently explained the consequences of this transformation should the pandemic engulf the U.S.:

“The risk of wholesale healthcare system failure from a stress even a fraction of what is experienced in China is deeply, deeply under appreciated. The transition of medicine from calling to career is nearly complete– as is the removal of any mentors who might teach otherwise.

If Corona hit my community 20 years ago, at a time where all the administrators and most of the staff of our 200 bed hospital lived in town, my partners and would’ve sucked it up and did our best, even at the risk of our life. I’m not boasting or saying we’re heroes, it’s just that that was the way we were trained. White coats were only for the broadest shoulders. And you were taught that the risks of taking care of sick people was part of the deal.

Our patients were our neighbors. They counted on us. Such respect as we were given was due to the fact that we were their healthcare resource. The leadership and medical staff of the hospital would have done what we could to make it work. And yet here were a number of independent pharmacies and health supplies we could rely on if things got tough.

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