Out of Control Policy Blog

Always low prices? Not at the hospital.

Wal-Mart takes a drubbing from those who say that it doesn't offer good enough health benefits, and that the rest of us have to pick up the tab for their employees' medial bills. But why do Americans spend so much on health care? Karen De Coster points to this article that suggests our health care system could learn a thing or two from the biggest box:

18th CENTURY TECH. Another reason why the Wal-Marts of the world can keep retail prices down -- but the government and big companies can't on health care -- is technology. This is a truly strange situation. You'd probably think about a big boxy store as being technologically backward -- just a bunch of stuff piled up in a huge building, right? But in fact, modern retailers use very sophisticated information technology to maintain inventories. And their suppliers use high-tech gear to make the products the retailers sell.

Hospitals may appear to be centers of the slickest technology imaginable. But in the critical links with patients, many hospitals are stuck firmly in the 18th century. Think about it: paper charts hanging from the end of a bed, prescriptions written on scraps of paper that are carried by hand to the hospital pharmacy. Only slowly are doctors using devices such as personal digital assistants.

This unwillingness to adopt advanced IT is hugely expensive, and in some cases leads to unnecessary deaths. The result is huge added expenses that are, sooner or later, built into the price.

THE X FACTOR. That's not all. For example, there's no real link between quality and price in large swaths of health care. There's no mechanism to comparison-shop. Even if you wanted to find the best price, no one would tell you. And don't forget the emotional X factor: Americans equate the best care with the most care, despite the absence of evidence that the two have much of a link. These are all very tough problems to solve.

Modern health care is many wonderful things. But it isn't a market. And until it becomes one, consumers will have little chance to enjoy the same benefits of price competition they get at their local Wal-Mart.

Ted Balaker is Producer


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