Health Care and "the Market"

Goodness! Has it been a week?

Have I written yet about marketing in health care? Well, then, it's about time.

I worry (actually, I usually snort and grumble) when influential people, whether government officials or "talking heads," or even academics, start talking about health care and "the Market." To some extent that reflects my belief that for-profit health care is a sin. However, it also reflects my conviction that most of those folks don't understand how "the Market" really works in health care.

Between our general experience of living in a retail market economy (remember, don't save that government rebate; we need you to spend it!) and our specific experience of autonomy-oriented health care ethics, we perhaps might expect that we would be the target of health care marketing. And of course we would be wrong.

We would be wrong because the marketing efforts all too frequently aren’t oriented to us as individual patients at all. Instead of being the customers to be attracted, we are the commodity to be negotiated. Health care institutions put their best efforts into attracting insurance plans and physicians. That’s because we as patients don’t really make our decisions about where to get health care in an unconstrained market. We go where our health insurance plan tells us we can. That’s certainly true for those of us with employer-provided health plans; but it’s also true for others. Between decisions of physicians to refuse new Medicare or Medicaid patients, or restrictions because Medicare or Medicaid patients have chosen to participate in a specified HMO plan, many of those on government-funded plans are also constrained in their choices. For those who have a relationship with a physician, most will choose to seek care where that physician recommends, or at least where that physician practices. So, we don’t make those decisions without some limitations.

For the health care institution, it is the insurance plan and the physician who can deliver patients, so that’s where the institution focuses energy in marketing. The more and bigger the health plan contracted, the more physicians credentialed to practice in the institution, the more potential patients available, and the more actual patients who will come for care. With health plans, institutions negotiate on price and patient outcomes. With physicians, institutions negotiate on resources available for patient care and on resources available to the physicians. (Note that nobody actually negotiates with Medicare or Medicaid. Government officials determine what the plans will pay – usually a percentage, well below 100%, of what they think the institution’s costs ought to be, whatever they might actually be – and then say, “Take it or leave it.”) So, institutions get caught in a bind: they have to pay for newer and better equipment and systems to attract physicians, and somehow pay for them with lower reimbursements from health insurance plans. Now, patients might be benefiting in some sense, both from the latest equipment and from arguably lower insurance premiums; but institutions don’t market to patients on that basis. (And let’s face it: “arguably lower insurance premiums” begs the question of “lower than what?” They seem only to go up.)

Since most, and the best paying, insurance plans are provided by employers, insurance plans and institutions both market to businesses. Insurance plans tend to market to them on cost, and to some extent on outcomes. Institutions tend to market to them on quality of care and of patient outcomes.

Health care industries, both pharmaceutical companies and equipment manufacturers, market to physicians and to institutions. They market to both on the basis of quality of patient outcomes (at least according to the information they provide, which is largely accurate but limited only to their products), and to some extent on costs. In recent years some of the more egregious marketing techniques, especially food and travel provided to physicians and other professionals, have been questioned and significantly reduced. Industries also market to insurance plans to argue that the plans should include their products on their lists of approved drugs and procedures.

So, if we’re not the primary target for marketing in health care, why do we see so many ads? Why all those ads on television or in magazines for medications? Why all those ads on television or in newspapers for health insurance plans? The answer is clearest in those pharmaceutical ads. Somewhere the sentence will come up, “Ask your physician is this medication would be good for you.” The ads are not so much to encourage our decisions as to get us to influence the decisions of others. Physicians really hate being asked about drugs that are utterly inappropriate for the patient in front of them, and will resist giving meds that wouldn’t be necessary. On the other hand, when deciding between reasonable Medication A and reasonable Medication B, they might well follow the patient’s request. After all, they want to keep the patient’s trust. They might well consider interactions with other drugs. On the other hand, they might not be aware that one is significantly more expensive than the other, or that one is measurably more effective than the other. After all, they can’t keep up with the formularies of 400 different health insurance plans, and they have precious little time for continuing education. The drug companies know that if enough patients ask, doctors’ prescribing practices can change.

By the same token, insurance plans and healthcare institutions know that if enough employees ask, employers will consider that in deciding on what health plan to purchase. Both know that, by and large, patients will go to institutions “in plan” for care; but if enough patients tell their employer that they’d prefer to get their care in one institution instead of another; or if there is an attractive program offered by one institution instead of another; or if one institution asserts it can get sick employees back to work sooner than another; employers are going to pay attention.

Now, some institutions do “market” to patients in a sense. However, the most important means for doing that is in fact the care the institution provides. They know well that patients who feel they’ve been well cared for and treated with respect will return, and will also recommend the institution to others. Those who feel they’ve been treated poorly will not only not return, they will also tell others of their experiences – indeed, they will tell more people about a bad experience than they will about a good one. And this is about feeling that people care and that respect them much more than about outcomes. Patients and families who feel compassion even in the midst of tragedy will think well of the institution. Patients who feel neglected will dislike the institution even in the best of circumstances.

So, I continue to be wary of those who want to wax eloquent about “the Market” for healthcare, and especially those who seem to think that “the Market” operates around the decisions of the individual patient. I fear that either they don’t understand how the market actually works in health care, or they don’t want us to understand.