in Cheap Thoughts, Futurist

Cheap thoughts: medical care reverse auction

Joseph Ness’s recent series on profits in supposedly non-profit hospitals in the News and Observer is some great reporting. I was glad to see my neighborhood hospital, WakeMed, was holding its costs down, comparatively speaking.

On my morning walk the other day, I was still steaming about my last doctor’s visit, where my doctor basically sleepwalked through our appointment. Why does it take a medical degree to write a prescription to whatever high-priced drug-du-jour the pharmaceutical companies are pushing? Where’s the curiosity into what might really be going on? If I’m going to pay $150 to see my doctor for all of 15 minutes, what does it take to get his full attention during that time?

What is there was a marketplace that did for healthcare what and Hotwire did for travel costs, a reverse auction? What if you as a patient could anonymously list whatever maladies you have (or think you have) and doctors could bid on treating you? The best doctors would be be rewarded not only with business but with “site karma,” (i.e., their reputation) so that others on the site would be more willing to work with them.

I’ve long said that telemedicine will one day shake up America’s broken healthcare industry. A site bringing patients and doctors together could be a good first step to harnessing the medical abilities of doctors not just in this country but of doctors from around the world.

(Yes, I know I’m a big fan of the reverse auction idea, having recently suggested it whimsically for citizenship).

  1. The short answer: because virtually no patients today actually pay for their own care, so they have little incentive to be cost-conscious.

    Priceline and the others work because people want the best price for their money. When it’s a third party paying incentives to save money are much lower. This goes double for the government-provided healthcare, which is price-controlled.

    Your doctor knows that you won’t change providers regardless of his service, because you need his approval to buy the drugs you need or want. He knows this because your health insurance plan is restricted to a specific set of providers. He also knows that even if you move your business elsewhere, being part of that network and being in high demand guarantees him patients (an artificial supply shortage created by the laws on prescriptions and limitations on people entering the health care field). He essentially has no incentive to provide good service, and thus does not.

    Of course, in such a situation the obvious suggestion would be to move the competition to the health insurance providers. Unfortunately, there are layers and layers of red tape and government restrictions on health insurance competition, much of it built up by the lobbying of the large health insurers to protect their market position. For example, one cannot purchase health insurance across state lines, as you can with Priceline or car insurance. This limits the market to the health insurers who can jump the state-by-state hurdles. In North Carolina, if you want a personal insurance plan, the state has made it so difficult to offer health insurance in the state that virtually the only possibility is Blue Cross Blue Shield … not coincidentally, a company that provides health insurance to state employees, helps administer Medicare, and also supplies health insurance to federal employees.

  2. I think that’s one of the biggest problems with our healthcare: everyone is playing a shell game with the actual costs of a procedure. No one knows exactly how much anything costs, or who’s supposed to be paying for it.

    I would love to see some laws similar to the law that created the “Annual Percentage Rate” requirement that forced healthcare providers to spell out the actual cost for procedures. With so many middlemen, and with overcharging being blamed on treating indigent patients, how can a patient know what anything actually costs?

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