Did you ever wonder why there is no WalMart equivalent in health care? I have. While the current emphasis in the health care reform effort has been on expanded coverage, it is health care costs which need to be addressed in the long run before only the most well to do amongst us can afford medical care.
America is the land of the entrepreneur. Make it better, different or cheaper, then get it on the market. WalMart has been the king of cheaper. While WalMart has its detractors, it provides goods at low costs. There are downsides. First, the quality is often lower. However, consumers have spoken. They have been willing to buy cheaper clothes, appliances, whatever, knowing that they will just replace them more often. Next, the facilities are far from glamorous. Huge cinder block buildings with florescent lighting. No mistaking it for a Neiman Marcus. Lastly, service. Buy jewelry or perfume from an upscale store and you are helped by a young, attractive, solicitous employee. At Walmart you need to find the employee, wait until they are available, and they are usually just as gray and fat as the rest of us. America’s store.
Given these downsides, why hasn’t a WalMArt in health care come along? Health care would seem to be an obvious service that could fit into a discount model. First, it has become very expensive. There is a crying ned for lower costs alternatives. Next, just like restaurant chains, there is advantage to providing the same product at every franchise. Best practice medicine has been shown to be, usually, cheaper. The people at Kaiser and the Mayo Clinic have demonstrated this for us. Wouldn’t it be reassuring to know that when you walk into a health care facility you will be getting the same care no matter where you go? Wouldn’t most people be willing to give up fountains and flat screen TVs in hospital lobbies in exchange for lower costs?
Maybe not. Ours is the closest thing, arguably, to a free market economy in the developed world. Profit is the driving motive in our economy. In our free market economy signaling becomes very important. A lavish facility signals quality in our system. Getting a lot of tests, especially the expensive ones like an MRI indicates quality. (Nothing says “I care” by a doctor like an MRI.) Has it become necessary to send these signals to succeed in health care?
It is possible to form large health care groups across state lines, lest you think regulations keep us from having WalMart type health care. Kaiser is the largest managed care organization in the U.S. It is known for its lower costs. Kaiser may eventually become the WalMart of health care as it already operates in nine states, but it has had its share of management problems. With Kaiser having broken the ground, where is the competition that produces a more effective, efficient entity? Maybe health care is unique and there is a very limited market for low cost products.
A very good observation. I suspect the costs for market entry is so high for newcomers that it represents an almost insurmountable hurdle, or the government regulatory structure is such that it, too, represents an insurmountable hurdle.
I suspect part of the problem with that model is labor costs.
On the other hand, WalMart seems to have done pretty well entering the pharmacy business.
I have often wondered this same thing, but instead of a WalMart-style discount health care plan, why haven’t people gotten together yet for a health care co-op?
I know this is how some of the insurance companies started back in the day, but I just can’t figure out why some religious or non-profit organization has yet to spring up and create a health care plan where care (not profit) is the main concern.
I reckon it is because, as EL Beck says above, the costs of entry level are too high.
Walmart does have some walk-in clinics. CVS and Walgreen’s also. Johneden probably has a point with labor costs, plus liability probably is a problem.
Liability would be the same for a high cost or low cost provider. How does WalMart get people to work for less than people at Nordstrom’s?
Entry level costs would be an issue, so you would need some real capital to start with. I would think you would start with a chain of doc in the boxes or surgicenters and work up to hospitals. Given that co-pays and deductibles are getting to be so large, I would think even people with insurance would like to have the option of cheaper care.
Steve
How does WalMart get people to work for less than people at Nordstrom’s?
Visit both stores. The people at Nordstrom’s are better trained, more knowledgeable, etc.
We’d all love the option of cheaper care.
I’m with Cousin Pat, in that co-ops would be an excellent option… at first blush. The devil is in the details. And as I have casually observed on one of Janice’s posts, it seems that co-ops with medical staff fair better in the marketplace. Those without staff appear to be competing with the insurers using their model.
The trick in the medical-staff co-op model is this: Would medical personnel be willing to work for a co-op at lower income levels?
I don’t believe any version of the various health-care reform bills being bandied about in Congress will substantively address the number one problem: health-care costs, and such costs directly affect health-care insurance premiums. At some point, as the rolls of uninsured grow (and threats of fines will not correct this, but only exacerbate the anger), our health-care system will reach a tipping point that, regardless of profits, it will not be able to withstand the brunt of the losses.
I think the tipping point is nearer than that. See “Ready, Willing and Unable to Serve,” at http://d15h7vkr8e4okv.cloudfront.net/NATEE1109.pdf. One of the main factors that pushed the UK into National Health Service was the very high flunk rate on the military physical exam among the youth of that time, or so I’ve heard (I’ll research it further just to be sure.)