The Business of Morgentaler

It will be virtually impossible to take a look into the effects of the loss of the Morgentaler Clinic in Fredericton NB without wading into the Pro Choice / Pro Life debate, but I hope that I can stand as clear of this debate as possible and suggest a more solution focused approach to this situation.

Yes, I am Pro Choice, so that is out of the way. Do I carry pickets, or preach my believes at social gatherings - nope. I am Pro Choice, and one of the choices of my belief is that I chose not to try to influence or simply care of what others position on abortion is. As personal as the decisions are around abortion, my reasons, my justification (so to speak) are just as personal. Kinda wish both side of the debate had this philosophy.

OK - nuff on that.

With the recent closure of the only abortion clinic in Atlantic Canada we are now in a bit of a dilemma. Abortion is legal, and if deemed medically necessary by TWO physicians - abortion is available in the safety of state of the art medical institutes and paid for by our Medicare system. Previous to the closure, Abortions were available at Morgentaler's Private Clinic for $700 - $850 (depending how far along the pregnancy is)

Aside from the moral endless debates - this seemed a pretty good solution. Non approving taxpayers were not burdened with financing non-medical related abortions, and medically necessary (with approval checks by 2 doctors), were treated like any other necessary medical procedure and paid for from public coffers.

I suggest that a out of pocket cost of up to $850 was a pretty solid deterrent for being completely oblivious to the chance of unwanted pregnancies - a box of condoms, or other forms of birth control comparably are a much cheaper and less uncomfortable option. But, for those cases that a pregnancy is unexpected or unwanted, the cost was not beyond reach for young couples, but would certainly be a financial punishment for being irresponsible.

I will not address the availability of the 2 doctor approved medical availability of abortions as that has checks and balances and is unchanged before and after the closure of the Morgentaler Clinic.

So where are we now? The only option for private abortions is a trip to Montreal - which now upsets the balance of reasonable financial pain, to encourage responsible birth control. It now becomes so cost prohibitive that several unsavoury consequences may be in the works. Self administered abortions are not unheard of for desperate couples, desperation for finding the money to now afford a trip to Montreal that could run well beyond the financial means of young couples. Or (yes this is debatable) the fact that couples will have babies that they do not want, and are not mentally, financially or mature enough to raise. Yes, Adoption is an option.. that unfortunately looks much better on paper than actually applies in real life - but I will leave that for another article some day.

My interest in this situation is one of economics.. a service that is legal, and required, is artificially overpriced by the now cost of travel.. that is will have significant ripple effects on the health and well being of young couples. So what is the solution??

Clearly the clinic was not financially viable to remain in business (like any other business), so how can that be resolved? An interesting business challenge.. not a simple supply and demand as it is so influenced by others that do not agree with the service, it is not a luxury that can simply find a price that the business can exist profitably, as there are couples entire lives at stake.

In situations that a (health and wellness) product or service must exist at such a high cost to maintain the providing business, our socialist (small "s") government typically steps in to make it available to all levels of financial status. But, and I respect the Pro Lifers on this, they do not want their tax dollars spent on providing a services that they are so morally opposed to.

Yet to add to the challenge, to reduce cost to to patients, again, supply demand would require a higher volume of business, which, whatever side of the fence you stand on this debate - is not a positive option.

As far as I can determine, (and I look forward to being corrected) - a clinic with a reasonable priced service, must be subsidized by an outside investor. Which should not be the government, It would required a clear understanding of the required, reasonable profit margins to operate this clinic, determine the shortfall of revenue based on historical traffic - and find funding to augment the shortfall.

Maybe the Pro Choice group would be better served by organizing and fulfilling this financial shortfall to make safe abortions available, and spend less time screaming at Pro Lifers and attending rallies. As Pro Lifer's make lots of noise - Pro Choicer's can quietly go about their business of raising money, and making local couples indeed have a choice.

Beware, There are a lot of butterflies flapping their wings in Africa!!

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"When an outside force artificially influences this beautiful balance very, very bad thing things happen"

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How can I summarize two years of study into a preamble paragraph? I can’t and should not.. but a necessary evil for me to get to my point is a VERY quick overview of a very fundamental concept is a must. Be patient, I will get to my point quickly.

In economics, there is a magical convergence on a simple graph, a graph that has one axis that plots Quantity, and the other axis Price/Cost. This graph is a basic Supply and Demand visual. As quantity (of available items changes and is plotted) is plotted in conjunction with a plotting of price/costs.. These two plotted lines will intersect at a very special position.  An extremely important position. The natural position where, when uninfluenced will indicate at a particular quantity what the correct price/cost will be. This position will always be the TRUE cost/unit.. and surprisingly enough is very logical to follow even without formal study in economics..  If fewer items (quantity) are available, the price naturally increases. If there is a glut of products available, then the price decreases. Yeah, Yeah.. Oversimplified.. but enough to continue with my thoughts.

So this magical convergence of supply and demand, how does this relate to our lives and fills our newspapers?  How is it blogworthy?

When an outside force artificially influences this beautiful balance very, very bad things happen.

A union decides that their members need a pay raise, and often result in a strike or arbitration. There is another outcome as well - a disruption of the economic balance! As the supply and demand graph offers the ideal price/unit in a commerce model it also offers perfection in Wages (cost) and Employment levels (quantity). Simply put, it determines what the economy is prepared to pay for a particular line of work. If a job required a certain degree of skill, wages will have to rise up to meet what those skilled workers are willing to work for (or obtain education and training to get those jobs). McDonalds can offer minimum wage, because there is a significant number of people willing to work at those wages. Engineers have much higher expectations of wages as there are many fewer of them thus their value is higher.

The market has established the appropriate wages for workers, but when the  union forces a pay raise, this has effectively messed with economics version of mother nature and comes with significant penalties. As the members are now being paid more than Supply and Demand dictates, it causes a waterfall effect. The employer who will  be competing against other companies bearing the weight of an over inflated staffing cost, and will be forced to reduce costs by laying off staff, or cutting spending, hinder growth etc. Far too many companies have been forced to close their doors as a 

result of tinkering with the laws of natural balance.

Unemployment, Stifled business growth, bankruptcies and financial collapse are all inevitable outcomes of these seemingly harmless union demands.

Union bashing? Absolutely not! However it stands as a simple example of a how a butterfly fluttering its wings in Africa may cause hurricane in Florida.

Slightly more complex examples of this tinkering surround us daily, Oil production and Marketing, Government economic bailouts, Interest rates, Crown corporations competing in the private sector, Auto Industry rebates, Social Security Programs, etc. It is an interesting exercise to apply a simple graph with two lines intersecting and foresee the inevitable outcome that awaits us.

When it comes election time, and candidates begin speaking of handing out subsidies, offering financial support for private ventures. Campaigning based on tax cuts/increases, increasing or decreasing spending. This is an opportune time to revisit the iron clad rules of supply and demand and we all need to understand how these policies will truly affect this natural balance. Even the smallest artificial influence in the convergent point of our graph, may cause a hurricane to our economic health.

Beware, There are a lot of butterflies flapping their wings in Africa