Traditional health care: Going once, twice... gone?

October 1, 2004

San Francisco--As trade and information flow more freely, health care may become a commodity, auctioned like crude oil and pork bellies on world markets, according to William J. Cromie, MD, MBA, a urologist and CEO of Capital District Physicians Health Plan of Albany, NY.

San Francisco-As trade and information flow more freely, health care may become a commodity, auctioned like crude oil and pork bellies on world markets, according to William J. Cromie, MD, MBA, a urologist and CEO of Capital District Physicians Health Plan of Albany, NY.

Americans spent 14% of their income on health care last year, Dr. Cromie said. The per capita cost of $5,440 was twice that of the Swiss, the second biggest spenders.

Similarly within the United States, Wal-Mart, with its meager health benefits, has topped Kroger and Albertsons to become the largest grocer in the country.

"This can happen to a company," Dr. Cromie said. "And this can happen to a country."

Bidding on health care Already the discrepancies in health care costs have led patients to cross international borders, forcing physicians in North America to compete with physicians in other parts of the world.

Dr. Cromie gave the example of a Vancouver patient, described in the Wall Street Journal last year, who got tired of waiting for a partial hip replacement and flew to Madras, India, to have the procedure done at one-fourth of what it would have cost in the United States or Europe.

"This could get personal," Dr. Cromie predicted. "This will lead to job losses."

Closer to home, Dr. Cromie pointed out that Glendale, CA-based Health Allies has created a kind of "eBay for health care." The company bills itself as a "consumer-driven health care company" that enables employees to compare discounted rates on a wide range of health care services from 350,000-plus providers across the country.

Recently, a California woman put her hip replacement out to bid through the Health Allies web site. She specified that the procedure should be done within 15 miles of her home and that the physician had to have done at least 50 hip replacements per year. The patient then took bids from physicians. The final price was $8,000.

"This is an extreme but real example of consumer-driven health care," Dr. Cromie said, noting that some medical practices have already started advertising their fees on web sites.

Urologic commodities To urologists who think they are immune from the trend, Dr. Cromie pointed out that many in-patient procedures have become outpatient procedures in recent years. BPH, for example, is now often treated by primary care physicians. Even patients with prostate cancer can be referred directly by general practitioners to oncologists and radiologists without seeing a urologist.

"Like it or not, some aspects of our specialty are being commoditized," he said. "What happens with commoditization? Standardization, measurement, and discounting."

In the health care marketplace, this can mean rating physicians according to their efficiency. Some health care plans are carefully tracking primary care physicians' outcomes and costs, and sorting them into four tiers. The difference between tier one and tier four physicians can exceed a half million dollars a year in costs to the health plan, Dr. Cromie said.