The Competitive Advantage

Sept. 14, 2007 — -- In every area of our economy, when people compete for your business, consumers win. Prices drop and quality improves. And now there's good news: A little competition has begun to improve health care.

There are some doctors' waiting rooms in America that are elegant … and open on Saturdays. Some doctors even take e-mail from patients and give out their cell phone numbers.

Of course, those doctors usually work in fields that insurance rarely covers, like laser eye surgery and cosmetic surgery.

Dr. Brian Bonanni is a laser eye surgeon who reshapes eyes so that people can see without glasses. He knows he has to please his patients -- not some insurance company or the government -- because he is paid by his patients.

"I need to be available 24 hours a day," Bonanni said. "I want to be there when a patient has questions, and I want to be reachable."

Bonanni's patients often meet with several doctors before deciding on a surgeon, and they demand to know exactly what it will cost.

Competitive Prices

"I can't get away with not telling the patient how much exactly it's going to cost. No one would put up with it," Bonanni said. "And the difference of a hundred dollars sometimes makes their decision for them."

Laser eye surgeons have to compete for their patients' business. And a result of that competition is lower prices.

"In every other field of medicine, the price is going up faster than consumer prices in general," said Dr. John Goodman, president of the National Center for Policy Analysis.

"[But] the price of Lasik surgery, on average, has gone down by 30 percent."

Prices dropped even though doctors pay for advertising. And while the procedure got cheaper, it also got better.

"When the lasers first came out, all they could treat was nearsightedness," Bonanni said. "[Today] the lasers are faster, more precise."

We see better quality, and lower prices in medical fields where most people pay for care themselves -- cosmetic surgery is another example. The average price of cosmetic procedures has fallen, because doctors compete for patients' business, and if doctors want to get repeat business, they have to offer patients a good deal. It's what happens when doctors respond to you, not your insurance company or the government. And it's happening now, and not just with elective surgery. We're starting to see providers offer everyday health care even in … shopping centers.

Cheap, Convenient Care

A new kind of medical clinic, staffed by nurse practitioners, is popping up in stores like Wal-Mart, in pharmacies and grocery stores. They offer people with sore throats and ear infections convenient care … cheap. Most everything costs $59 or less.

But how can they make money charging so little?

"They're figuring how to do something faster, better, cheaper," said Grace-Marie Turner of the Galen Institute. "They're responding to consumer demand, because they see that they might make some money on this. Profit! And, look who's winning. Moms and dads and kids. Because they now have … easy access to routine health care."

And some doctors are finding that dealing directly with patients changes their practice for the better.

Dr. Robert Berry had enough of the hassles of insurance companies and Medicare and Medicaid, so he decided to stop taking insurance. Instead, he offers his patients a price list, with low prices. How often have you seen that in a doctor's office? With visits often as low as $40, it's hard to see how he makes any money off it.

But Berry said, "Last year I made about the average of what a primary care physician makes in this country."

Competition, Choice, Power

Berry said eliminating insurance paperwork saves him time and money.

"I don't have to hire billers. I don't have to fight the insurance companies to get the money."

And that lets him keep his prices low, which saves money for his mostly uninsured patients. Knowing that his patients pay with their own money, Berry works with them, trying to find ways to save them money.

"They're afraid. They don't know how much it's going to cost," Berry said. "So I can tell them, OK, you know, you have heartburn. Let's start out with generic Zantac, which costs around five dollars a month. But [they say] 'I see Nexium on TV, I see Prevacid.' Yeah, but that costs about $130 a month. They're great medicines, but why don't you try this one first and see if it works."

And sometimes, he said, the $4 pill at Wal-Mart is just as good as the $100 pill.

So when consumers pay for things themselves, saving insurance for the big stuff, doctors deal directly with customers directly and compete by posting prices and working to keep them low.

That way, instead of having governments or insurance companies make decisions for consumers, consumers decide for themselves. Competition gives consumers more choices.

And choice gives them power.