Is the healthcare industry a business

¶ … healthcare industry a business?

The healthcare business industry is not a business or, at the least, certainly isn't managed like one. A true business creates value for their customers and has intelligent consumers who understand the products and services they are buying and who shop around for the best value. In contrast, the healthcare industry doesn't create services that offer unique value; they offer as many services as they possibly can. Consumers don't have much information to compare medical services and prices. and, even if consumers were informed, payment of medical services and coverage by intermediaries such as insurers, employers, or government provide a disincentive for consumers to take the same care when purchasing medical services as they do when buying other products and services they most directly pay for.

Successful businesses focus on creating value for their customers, but healthcare institutions define their businesses in a way that is misaligned with customer value. According to business management experts Porter and Teisberg (Mullen, 2006), competition should focus on specific medical conditions. Instead, institutions define their businesses too broadly, obscuring the differences in competencies they offer. Health plans see themselves as health insurance providers, but they should be aiming to add value by overseeing care for a series of medical conditions. Further Porter and Teisberg (Mullen, 2006) argue that competition is too narrow in that the system takes place at the level of discrete services, interventions, or specialties, or acute care vs. chronic care. To drive the value of care, it should address medical conditions over the full cycle of care in an integrated way that considers monitoring and prevention, diagnosis, treatment and the ongoing management of the medical condition. and, care is too local with providers offering too many services. Porter and Teisberg (Mullen, 2006) recommend a system where providers manage networks of services across geography.

Unlike conducting a transaction with a business, a consumer in the healthcare industry does have easy access to information and the quality and cost of services (Porter and Teisberg, 2004). Often, there isn't publicly available data on the best-rated physicians or hospitals for treating specific conditions. Prices aren't readily available and vastly differ according to the patient's health plan affiliation. and, unnecessarily complex billing contributes to cost shifting, drives up administrative costs, and makes price and value comparisons very difficult.

Consumer-driven health plans with higher deductibles and a savings account for health expense are emerging in an attempt to make consumers more cost conscious in their healthcare decisions just as they are in other buying decisions. In a recent Kaiser Family Foundation study (Andrews, 2006), more than 70% of people in these new plans said they consider price when deciding to see a doctor or fill a prescription, compared with just under half in traditional plans.