eBay for Health Care? NBD.

From John Goodman, a piece celebrating the advent of a website called MediBid, which apparently acts as—to use the elevator pitch shorthand—a sort of eBay for medical services. Patients put out a request for a service, along with the medical records, questionnaires, etc.—and they have to pay in cash. It’s Goodman’s belief that the implications are “staggering” but I find it hard to agree with him.

Here’s what Goodman describes as key:

…the willingness to travel. If you ask a hospital in your neighborhood to give you a package price on a standard surgical procedure, you will probably be turned down. After the government suppression of normal market forces for the better part of a century, hospitals are rarely interested in competing on price for patients they are likely to get as customers anyway.

A traveling patient is a different matter. This is a customer the hospital is not going to get if it doesn’t compete. That’s why a growing number of U.S. hospitals are willing to give transparent, package prices to out-of-towners; and these prices often are close to the marginal cost of the care they deliver. Interestingly, a lot of the out-of-towners getting the cut-rate prices are foreigners.

Goodman cites a lot of successful examples of low-price care being delivering via the MediBid system. Of course there’s the very relevant issue of how much selection bias there is in this particular system: the population of people who know about MediBid, who are willing to trust in such a newfangled system, who have the spare cash and inclination to travel for whatever piece of care it is, is an exceedingly idiosyncratic one—and one that’s hard to draw many conclusions from, let alone the possibility of “staggering” ones.

This particular system is biased towards episodes of care rather than a longterm relationship; it raises questions of follow-up afterwards, for example. Given what we know of demography, health trends, and what the health care system is currently good (and bad) at, we would expect any particular solution to the health care system to be biased towards solving long-term care rather than episodes of care.

Any “staggering” implications of this particular system are predicated on people having large reserves of cash to use in for their health care. Of course this is a rather optimistic reading of our economic system, which hasn’t been producing wage growth or savings at anything resembling a satisfactory rate (without the apparently-staggering implications of health care becoming a cash system):

I wouldn't necessarily say MediBid is a bad thing, only that it's more likely to remain a niche service than anything else.