The similarity between financial markets and healthcare: uncertainty


A question: Does uncertainty in medicine mean consumers should be more or less involved in choices?

As the country watched wild swings in the stock market these past weeks, every investor faced unfortunate hindsight: if only I had cashed out at 12,500! Combined with the pain of continued uncertainty, many investors decided to remove their (remaining) funds simply to stop the discomfort of an unknown future.

While we all dread the anguish of downward market fluctuations and wonder daily what is in store for our dwindling nest eggs, no one can change the fundamental truths of investing: risk and uncertainty.  Yes, experts can advise us and help us assess varying degrees of risk among options, but no one can guarantee the success of our investment decisions, no matter how well-informed.

If the world of financial markets is this uncertain, should investors be less involved in the decisions about where they place their money and how much risk they assume?   One could easily argue that the average investor is not capable of making good decisions.  So, should we all find a seasoned stock broker to make decisions for us, independent of our personal circumstances and preferences? After all, they are the experts—right?

What about letting someone else make decisions about our health?

There is more of a parallel between managing financial assets and health assets than most of us would like to believe. Would it surprise you to know that of more than 1,100  medical studies conducted on new treatments or therapies between 2006 and 2010, 92%  were labeled unreliable (1)?  Or that 75% of new treatments in the past 20 years provided no clinical improvement (safety, efficacy or compliance) over existing treatment (2)? Or that scientists conducting medical trials admit being pressured or influenced by the sponsors or manufacturers funding the research (3)? Or that the popular press (or researchers themselves) often exaggerates research findings to make the study results more compelling (4)?

And this is just the part of standard medical practice that has been studied; a large part has never been investigated carefully at all.  By some estimates, over half of what is accepted as the “right” course of treatment has no scientific basis; rather, they’ve simply became customary based on anecdotes and traditions passed on over time (5). Almost every week we hear of a study that disputes, updates, or flat-out reverses a medical “fact” proving that a standard practice has no proven basis (6).

To be fair, the presence of uncertainty does not imply a failure of medical science, but instead reveals our societal desire to minimize risk and guarantee answers, even when neither is completely possible.  It is more comforting to believe that certain treatments and cures are absolute.   Like watching stock prices rise and fall, there is anxiety in the unknown.

In a wonderful description of how uncertainty affects doctors and patients, physician Richard Hayward (7) writes that:

“Nowhere is the equation, condition A, if followed by treatment B, will produce result C, less certain than in the practice of clinical medicine.” Yet, “Such uncertainty can be as dispiriting for doctors as it is for patients, often leading to denial (by both parties) that such uncertainty even exists.”

As somewhat of an “insider” to healthcare and knowledgeable about the challenges of rigorous research, I still find myself startled by the degree of uncertainty in clinical treatment.   If my reaction is one of mild surprise, I have to assume that scores of “outsiders” have misplaced enormous faith in the credibility and dependability of medical science.

So does inherent uncertainty make patient choice more or less critical?

Back to my earlier question, rephrased: If the world of healthcare and medicine is this uncertain, should patients be less involved in the decisions about their personal health and how much risk they assume?   Should we all find seasoned physicians and allow those people to make decisions independent of our personal circumstances and preferences? After all, they are the experts—right?

Because I often write and speak about patient decision-making, I commonly hear concern that medicine is too complex for the average person to understand, suggesting that only physicians are capable of choosing the right course of treatment.  I’ve been pulled aside many times to hear someone confide, “All this work to inform consumers is fine, but in the end, few patients will go against their doctor’s advice.” What does this say about our system if we believe doctors and patients are on opposing sides of a treatment decision? More importantly, how can doctors make appropriate decisions without knowing a patient’s preferences?

If patients believe that medicine is much safer and more effective than it actually is, what is healthcare’s responsibility to inform and educate patients and consumers?  Does this suggest we should be more or less transparent about uncertainty?  And given the degree of risk, should we be more or less inclusive of patient preferences?  Doesn’t the person who will experience the consequences deserve to have the final decision about risk versus reward?

For me there is no question.  Just as investors need to understand the balance of risk and opportunity, so too do patients require frank, open information about what is and IS NOT known.  The higher the risk of loss, the more the investor (or patient) needs to make the decision.  In business, leading an investor to believe that a particular return is almost certain—without informing him of potential risk—constitutes fraud.  A talented investment manager educates clients in ways that they maximize gains, while minimizing risk to the levels they choose to tolerate.  A responsible medical provider must do the same.

Why this matters: Financial and physical health are tightly connected.  Protecting our health is vital to a productive work life, and protecting our finances provides us more options for managing our health.  Responsibility for neither can be assigned to someone else.

Every time you seek healthcare, remember that more than half of what a doctor suggests is based on opinion and tradition rather than science.  Then, ask yourself if you’re better off blindly taking that suggestion, or if you might benefit from additional information about what is known and unknown, and what other options might be available.  If you wouldn’t give someone else complete and independent control over your financial assets, don’t your personal health decisions deserve the same level of care?


1.    Socha, T. Assessing New Medications Using Evidence-Based Value. First Report Managed Care, Nov 19, 2010;,0 (accessed Aug 17, 2011).

2.    The National Institute for Health Care Management, Research and Educational Foundation. Changing Patterns of Pharmaceutical Innovation. NIHCM Foundation, May, 2002; (accessed August 17, 2011).  (accessed Aug 17, 2011).

3.    Fairman KA , Curtiss FR: Rethinking the “Whodunnit” Approach to Assessing the Quality of Health Care Research – A Call to Focus on the Evidence in Evidence-Based PracticeJ Managed Care Pharmacy 2008;14:661-74.(accessed August 17, 2011).

4.    Fairman KA , Curtiss FR: Making the world safe for evidence-based policy: let’s slay the biases in research on value-based insurance design.  J Manag Care Pharm 2008 ;14:198-204.

5.    Joelving, F. Medical “best practice” often no more than opinion. Reuters, Jan 10, 2011;   (accessed Aug 17, 2011).

6.    Krumholz, H. Medicine’s Drip of Uncertainty. Forbes, Mar 2, 2011;  (accessed Aug 17, 2011).

7.    Hayward R: Balancing certainty and uncertainty in clinical medicineDev Med Child Neurol 2006; 48:74-7. (accessed August 17, 2011).



2 Responses to The similarity between financial markets and healthcare: uncertainty

  1. Financial Markets and Health Care: More in Common Than You Think…

    We’re all investors and we all need health care. So how much do we need to know, and how involved should we be in decisions affecting our financial and physical well-being?…

  2. Very interesting post. I will have to cite and discuss it on my REC blog.

    As to clinical uncertainty, I observed some 12 years ago during my late daughter’s illness:

    “I have mostly found mainstream health care professionals to be a dedicated, unpretentious, and self-deprecating lot quite aware of the limits of their knowledge and the risks of presumption. Once, during a series of health care quality improvement seminars I attended at Intermountain Health Care in Salt Lake City during my Peer Review tenure, a speaker– himself a noted pediatric surgeon– wryly observed that “the best place to hide a hundred dollar bill from a doctor is inside a book.” The Director of the seminar series, Dr. Brent James of IHC (and a Fellow of the Harvard School of Public Health), noted in our opening session that physicians would probably admit– off the record, of course– that perhaps only 10% of their clinical decisions made during daily practice could be traced to the peer-reviewed scientific literature. Dr. James also made the droll observation that, were you to walk into the typical medical adminstrator’s office, “you’d be much more likely to see copies of the Wall Street Journal rather than the New England Journal strewn about.”

    What can one take away from such remarks? First, the many physicians I have come to know in the past few years are in the main acutely sensitive to the problems of clinical conceit and “paradigm blinders.” Indeed, the Utah pediatrician’s”$100 bill” wisecrack was offered to an audience of doctors and their allied health personnel during quality improvement training. Second, the body of peer-reviewed medical literature does not constitute a clinical cookbook; even “proven” therapies– particularly those employed against cancers– are generally incremental in effect and sometimes maddeningly transitory in nature. The sheer numbers of often fleeting causal variables to be accounted for in bioscience make the applied Newtonian physics that safely lifts and lands the 747 and the space shuttle seem child’s play by comparison. Astute clinical intuition is a necessary component of a medical art that must, after all, act and act quickly– so often in the face of indeterminate, inapplicable, or contradictory research findings.

    Finally, with respect to Dr. James’ Wall Street Journal quip, the capitalist imperatives within which health care clinicians must operate are, in the aggregate, neither of their making nor under their control. Moreover, blanket indictment of the profit motive as necessarily inimical to optimum medical care and research is a rather simplistic notion. Strategies aimed at maximizing investors’ net returns probably spur at least as many medical advances as they inhibit.

    As we move away from FFS to outcomes-based toward “patient-centered care” the issue of patient participatory/self-management of their “health assets” will be central.

    The moving targets of clinical uncertainties aside, the continuing ethically bankrupt state of financial markets gives one pause apropos of your analogy.

    Consider Yves Smith:

    “Opacity, leverage, and moral hazard are not accidental byproducts of otherwise salutary innovations; they are the direct intent of the innovations. No one at the major capital markets firms was celebrated for creating markets to connect borrowers and savers transparently and with low risk. After all, efficient markets produce minimal profits. They were instead rewarded for making sure no one, the regulators, the press, the community at large, could see and understand what they were doing.”

    I would refer you as well to the works of medical economist J.D. Kleinke.

    “All but the most zealous free-market ideologues recognize that some markets simply do not work. Indeed, reasoned free-market champions often deconstruct specific market failures to elucidate normal market functioning…

    …public health benefits are well beyond the reach of a health care system characterized by the complexities of medicine and conflicts of multiple parties working at economic cross-purposes. They are trapped outside the economic equation, positive externalities of a stubbornly fee-for-service health care system that inadvertently rewards inefficiency, redundancy, excessive treatment, and rework.”

    The most difficult of navigations await us.

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