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Thursday, June 10, 2010

Price transparency and the rebar steel of health care

A colleague of mine sent me a link to a NY Times piece;

Bringing Comparison Shopping to the Doctor’s Office
Published: June 10, 2010

It highlights some important steps on the road to price transparency. However, the final line contains a telling statement which reveals just how naive the author is.
At this stage, Castlight works best for big companies that are self-insured and for outpatient doctor visits for which quality does not vary greatly.
It makes sense that shopping on the basis of price is most applicable to the realm of medicine in which patients have the most time to look for what they want and look for deals. However, to state that quality in the ambulatory medical world does not vary is hard to fathom. A more accurate assessment is that quality in the ambulatory world is not consistently measured. Castlight appears to recognize this fact since earlier in the article it is note:
Castlight plans to add quality measurements to its price information. There are already several providers of that information, though there is no standard set of quality measurements in medicine. 
This again reminds me Clayton Christensen's analysis of the entry of the mini-mills into the steel industry. They entered the markets by making rebar steel where they could compete purely on the basis of price. No one cared that the steel made was of poor quality since there were basically no specifications, no one was equipped to measure quality, and the product was buried in concrete to top all things off.

In the ambulatory medicine world, what measures that exist are at best  poor proxies for something else desirable. Few patients would recognize that these quality metrics bring any real value to them as well for the simple reason that the links to them personally are tenuous at best. Many patients may need to be treated for many years for a few to actually benefit.  Measures of immediate and consistent impact would require validated measures of diagnostic accuracy and the ability to measure whether medical encounters actually solved problems. At this point in time ambulatory measures focus on surrogate markers such as blood pressure, hemoglobin A1c, and vaccination rates. These are perhaps great interventions to decrease the rates of illnesses at some future point in time. How about measures which assess how well we are doing in alleviating problems in the here an now? They basically don't exist.

The product of this situation is starkly simple. What cannot be measured is basically ignored.  Ambulatory medicine is the rebar steel of health care. The quality of ambulatory medicine varies hugely. You can make a lot of money in the ambulatory realm. It requires volume and no particular keen eye toward quality. Make it by the ton, price it to sell,  and as long as no one can measure specifications, your business model will be robust.

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