The ACP Advocate Blog

by Bob Doherty

Tuesday, December 4, 2012

Why Competition May be the Wrong RX for Lowering Health Care Costs

A  staple of conservative political ideology is that free market competition  is the answer to controlling health care spending, not government mandates. The theory, of course, is that if “consumers” (patients) are given accurate information about the price and benefits of available health care services, they will choose the option that offers them the most bang for their buck.   It works in other parts of the economy, it is said, so why not health care?

But what if competition actually works to increase costs?

Health care is unlike most  other market choices that we make.   How many other choices do we make that potentially are life-and-death situations?  (Choose an incompetent barber, you get a bad hair cut.  Choose an incompetent doctor, and you die. Although I do recall a bad hair cut in 9th grade that made me want to die!). 

How many of us have the knowledge to select the medical alternative that gives us the best value?  Can we trust the information being delivered to us, much of  it from drug companies, hospitals, and device manufacturers that want us to order more care that is more expensive, not less care that is less expensive?

We don’t need to look to academic literature to understand why competition might actually increase costs by stoking demand for unnecessary care.  Just look at your own daily newspaper and favorite TV shows.

Yesterday,  as I flipped through the Washington Post over my morning cup of coffee, I came across a full-page advertisement on page A-14, touting a “Limited Time Offer” by INOVA hospital (Northern Virginia’s largest hospital system) and its partner HealthFair, to get a battery of ultrasound tests for your heart and arteries.  For only $139 I could get a stroke/carotid artery ultrasound test, plus an abdominal aortic aneurysm ultrasound, plus an EKG, plus an Peripheral Arterial Disease Test, plus a Hardening of the Arteries (ASI) test—ordinarily valued at $1800!  For another 60 bucks, I could get an EKG ultrasound test, regularly priced at $150!  And a 5 year disease risk and lipid panel—Results While You Wait!—for $99!  And if combined both packages, I would get another $20 off!

What a deal!  And, to make it convenient for me,  the HealthFair screening trucks would be coming to 17 sites throughout the region over the next month!  Happy Holidays!

Maybe I don’t need all of these tests, I thought to myself.  After all, I  saw my internist for a physical only five months ago, and he ordered some (but not all) of these tests for me.  But wait a minute . .. what if I die because I don’t get the tests?  The ad included two testimonials from individuals who say their lives were saved by getting the same tests.  Mr. Maurer was quoted as saying that “The ultrasound revealed that my right carotid artery was 75% blocked. . .  Within a few days, a vascular surgeon confirmed the health screening’s findings and I was told that I needed surgery on my carotid artery or I would not be around much longer.  The surgery solved the problem . . . I now have new outlook on life and cherish every moment.”    Linda Covey recounted how the screening for her husband found “something that needed to be checked.  We made an appointment right away at the hospital and found out that he had an ascending aorta aneurism. Surgery took place shortly after that and he is a new man again . . .Go get checked, it may save your life too.”  (Interesting that these examples led to the patient’s getting surgery in the hospital, which I am sure benefits Inova’s bottom-line).

To be clear, I have no reason to doubt that the screening tests benefited Mr. Maurer and Mr. Covey.  And I’m not a clinician, and maybe it is the standard of care for me to get all of these tests.  But if so, why didn’t my internist order them for me?  Maybe it isn’t the standard of care,  but how would I know?  Can I really afford to risk my life by not getting them, especially with such a great “Limited Time Offer”!??

Then, last night, I watched Monday Night Football. (Great win, Redskins over Giants).  Along with trying to get me to drink more beer and eat more pizza than would be good for me, there were the usual ED and “you gotta go” Direct-to-Consumer drug advertisements.   No further comment needed, other than it is pretty clear that the advertising was intended to increase demand for health care, not decrease it.  (I am not questioning that the advertised drugs have benefit—only that the millions being spent to hawk them on national  TV  clearly has one purpose, which is to increase demand for them).

A few nights ago, I was watching CNN, and I saw repeated ads for motorized scooters (tells you something about CNN’s viewer demographics) with a promise by the company that they’d even help get them covered by Medicare at “no cost”!  Too bad for them, but I am bit too young for that, and can get around just fine on my own, thank you very much.  But what about my elderly mother?
This is what health care competition looks like: millions spent to get people to spend health care dollars, either out of their own pocket or from someone else’s through insurance, to buy tests, devices and treatments that may benefit them, or may not, but that surely make money for the companies pitching them.   We can decide not to get the advertised products,  but what do we know?  Especially since if we go without them, might we end up “not being around much longer?”

There is a role for competition—provided that it is regulated and accompanied by consumer protection safeguards.  For instance, the Affordable Care Act will give millions of people a choice of health plans sold through a state—or federal exchange—but strict rules will apply to how the health plans can market themselves.

But the idea that poorly-regulated competition alone will result in people making wiser choices on health care expenditures is belied by the best evidence of all: the unrelenting newspaper and television advertisements that play on our emotions and take advantage of our lack of clinical knowledge to convince us that when it comes to health, more is always better than less.  Especially when it is 20% off the regular price!

Today’s question: What do you think the millions spent to get people to buy more health care says about the idea that market competition is the best way to lower costs?


Blogger Jay Larson MD said...

Our health care system can be summed up in 2 words...Profit and Greed.

December 4, 2012 at 2:31 PM  
Blogger Steve Lucas said...

If I were King for a day one of the first things I would do is eliminate TV DTC medical ads. The problem is like tobacco of old, there is big dollars in advertising these products.

Steve Lucas

December 4, 2012 at 4:04 PM  
Blogger Harrison said...

Google 'Know Your Chances'
It is a book by Steven Woloshin MD.
It is available free online.
It is very helpful for understanding risk.
It will take all of about 90 min to 2 hours to read it.
It does not require much in the way of math knowledge.


December 4, 2012 at 8:11 PM  

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Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

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