The Beginning of a Healthcare Market

For years, I have said that the issue with healthcare is it does not act like any other market.  Other industries have competition based on price and quality.  If your price is higher, but your quality or product is better, some people will buy it.  If your price is the lowest, some people will buy it.  If your price is in the middle, but it is a good value, some people will buy it. 

It’s hard for any product to have quality stray too far from the highest point, or price stray too far from the lowest point and stay viable. Therefore, companies become more efficient and improve quality over time. Today the price per transaction is actually less for most products than it was when I started in the industry more than 20 years ago.  The value and service quality is way better.  We have had to improve and automate every year to stay viable.

A few plans are starting to add a little of the free market concept to healthcare by providing rebates to patients to get procedures done at less expensive providers.

Although I think this is less effective than high deductible accounts and providing price and outcome information so consumers can make their own choices, this is a start.  It is simple and creative.  All previous efforts have been aimed at controlling the providers’ behaviors.  This is closer to free market by providing consumer incentives to behave rationally.

I like it.  If you want to go to a doctor you like or who is the highest rated, and they cost more, that is your choice.  No rebate.  If you are willing to go to a more affordable provider, saving the health plan and company money, you share in the savings.  Simple, and still provides the consumer with freedom and choice.