Stossel Nails It

Thursday, April 21, 2016
First, r'fua shleima to Mr Stossel:

"I write this from the hospital. Seems I have lung cancer."

The post highlights some of the more egregious examples of customer service faux pas, but I'd like to focus on one or two specific points he makes along the way.

For example:

"I get X-rays, EKG tests, echocardiograms, blood tests. Are all needed? ... [N]o one discusses that with me or mentions the cost. Why would they? The patient rarely pays directly. Government or insurance companies pay."

This is crucial: when a third party is footing the lion's share of the bill, we become less sensitive (or completely desensitized) as to what that bill actually is. Hence, the kinds of pricing distortion we read about in Kelley's (fantastic) post yesterday on how providers calculate what a given encounter will cost.

Reinforcing this theme, he continues:

"Instead of answering to consumers, which forces businesses to be nimble, hospitals report to government, lawyers and insurance companies."

By implication, reporting to these outside agencies causes the business (hospital) to focus on the process, not the results. And since the provider's true "customer" is the government or insurer, why would it really care about the patient's convenience?

And then he gets to a very interesting point. He notes that we're told, over and over, that we can't legitimately second-guess these providers, because health care is " too complex for consumers to negotiate."

That may nor may not be true (and I would argue that it's likely at least partially true in the case of brain surgery or cancer treatment, but perhaps less so when it comes to less serious ailments), but Mr S notes that:

"[C]ars, computers and airplane flights are complex, too, and the market still incentivizes sellers to discount and compete on service."

True, and he underscores that by pointing out that we generally buy these goods and services with our own money, not the government's or an insurance company (company cars and travel excepted, of course).

Regular IB readers know that I've long been a fan of consumer-driven healthcare; the challenge is that I fear that that ship has sailed.