Dr. X, a urologist, has just told his patient, Mr. Y, a fifty-eight-year-old businessman, that he has prostate cancer. The revelation was difficult for both parties, but it did not come as a complete surprise because it had been preceded by a multistep diagnostic process. Although hoping for better, Mr. Y and his wife were expecting this bad news when they went into the doctor's office.

After offering some words of hope and encouragement, Dr. X tells the patient and his wife that, before they discuss any further the important choices that lie ahead in the treatment of Mr. Y's condition, he would like them to take time to review carefully the information contained in the CD-ROM program he has just handed them. The program, entitled “Living with a Diagnosis of Prostate Cancer,” is one of a library of such programs developed and marketed by a company specializing in computer-based patient education products.

Over the last few decades, the U.S. health care system has been the beneficiary of tremendous growth in the power and sheer quantity of useful medical technology. As a consequence, our society has, for some time, had to make cost-benefit tradeoffs in health care. The alternative—funding all health care interventions that would produce some health benefit for some patient—is not feasible, because it would effectively consume all of our resources.

Modern American medicine is far from ideal. Physicians practice by rules learned in medical school, rules often based on anecdotes or untested hypotheses. Medical opinion leaders shape practice by their own experience even though anecdotes are no substitute for clinical studies. Pressures to diagnose and treat come from pharmaceutical companies, equipment manufacturers, hospitals and managed care organizations (MCOs). The end result is often too much medicine or too little, but rarely the appropriate amount. Patients can end up suffering iatrogenic effects of infections picked up during hospital stays, complications from surgery or drug side effects or “cascade effects” that occur when several interventions fail in succession.

Nursing homes perform a vital function in the long-term care continuum by providing nursing care around the clock to the elderly and disabled. By entrusting these institutions with society's frailest members, the general population relies on government agencies and their regulations to ensure that the elderly receive quality care. States expect quality care, but providers often lack the financial support and regulatory guidance.

Recently, the conflict between reimbursement and quality care received national attention. Vencor, the U.S.'s second largest nursing home chain, attempted to terminate its Medicaid contracts and evict all its Medicaid residents. Executives explained that the contract terminations and resident evictions were strategies to make room for higher paying private pay residents. Faced with state, and potentially federal, fines, as well as a district court injunction and public outrage over the patient dumping, the company quickly abandoned its policy and apologized.