Health Care and the Auto Industry

If You Don't Know The Price, You Can't Calculate Value

Marh 09, 2009

Based on my experiences over the last year, clinical healthcare quality bears a lot of resemblance to the auto industry of 25‐30 years ago. If you are old enough to have experienced that low point of process capability, customers expected, and received, poor quality almost without exception and in great abundance.

Anybody who owned a car could tell you an automotive horror story about multiple trips to the dealership to fix myriad defects on a new car. It was not uncommon to experience missing parts and functional defects right off the lot. Sadly, low expectations were almost baked into the car buying experience.

To our collective benefit, the industry woke up, and has made significant and sustained quality progress over the intervening years — notwithstanding the current financial woes of GM and Ford. I just don't ever hear those horror stories about cars any more.

Now, everyone I talk to has a healthcare horror story from their personal experience. It seems that everyone has a story about wrong procedures, procedures performed on the wrong body location, incorrect drug dosages, missed drug interactions, missed diagnoses, and gross billing errors, not to mention the endemic missed appointment times, lost information, rude practitioners, and overall crummy service.

The odds of receiving a wrong dosage or the wrong medicine entirely during a hospital stay are 1 in 20. Scary. In spite of genuine positive attitudes and efforts toward patient care expressed by most participants in the delivery value chain, the process is broken.

In my opinion, one of the reasons for poor healthcare quality is that there is so much specialization, compartmentalization, and fragmentation that the process is obscured. Participants don't SEE the process as a process. Prices are not even transparent.

I had an MRI procedure recently, and when I showed up for my appointment I asked how much it would cost. The rep. at the front desk looked at me like I was crazy, then said she had no idea — she had to go ask a couple of people. She came back five minutes later and told me that the MRI itself would be $1,800, but there would be an additional diagnostic charge from a third party radiologist, and she had no idea what that would be. I can't think of any other service where the provider would expect customers to make a $2,000 purchase without even asking the price.

Transparent pricing would be a good first step to allow customers to establish a closer association between what they are paying for service, and what they are actually receiving. Health savings accounts and similar payment structures that give customers an incentive to manage costs will also lead to more accountability for service. It would be a good first step.

Maybe healthcare customers will even start to see quality surveys from healthcare providers — something I have yet to experience.