Philip Longman, in the cover story for the current the Washington Monthly, outlines how the VA hospital system can offer better quality care, at lower costs, than any private health care provider: largely through active management of chronic illnesses, aided by extensive investments in information technology. The dramatic gains made by VA in improving care show just how deficient the rest of the US health care system is in basic, good management: think of the entire system, provide life-cycle services rather than products, etc.

The problem with this approach, he points out well into the piece, is that it isn’t replicable within the current privately funded US healthcare regime: high-capital-cost investments with long-term outcomes only make sense for single-payer, usually government, schemes like VA. (The only other US health services provider to employ so much IT is non-profit Kaiser, which is run strikingly like a government health service.)

Indeed, there are huge disincentives to change within the current pay-to-play system: since surgeons and thus doctors get paid per operation, there’s no incentive for hospitals to steer patients towards less invasive, preventive care, even when such care would cost less and result in better outcomes. Investing now in subsidizing preventive care makes little sense when the patients jump ship every few years; the investment will save money for the next guy, not for your firm.

And thus, the profit motive once again foils socially strategic investments. The market doesn’t always win.