Fee-for-Fire?
When competition goes up in flames
How much would you pay to save your house if it was on fire?
How much is too much if your child was inside?
The absurdity of even asking those questions is at the heart of what’s wrong with American health care finance.
What if the fire department charged whatever the market will bear to put out fires? Wealthy people with expensive houses could and would pay much more than poor people. The fire department would likely cater to the wealthy.
Fire stations in wealthy neighborhoods would have gleaming new trucks with the latest technology while fire houses in poorer neighborhoods had old broken-down trucks with leaky nozzles and patched hoses…or no trucks at all.
What if local fire departments competed to gain “market share”?
Imagine the sight of two trucks, one from each of two competing fire departments, hurtling down a city street at 70 mph, racing side by side…first to the fire gets paid for putting it out.
Local fire departments would build additional stations in other towns, sometimes right across the street from another firehouse.
What if your fire department merged with another with the promise of economies of scale…the added size arguably affording both departments the ability to be more efficient than either could be alone? Now imagine that instead of the cost per fire going down, the amount they charged per fire actually went up?
Are you any safer if your local fire brigade merges with another department 200 miles away? How about 1,000 miles away?
What if your property taxes were increased to allow your local fire department to buy new trucks to replace a far away town’s aging fleet?
If fire departments competed, they’d likely hire armies of MBAs from prestigious business schools to develop marketing plans and to plot strategy, not to improve fire prevention, but to maximize revenue.
By setting prices as high as the market will bear.
By prioritizing investments in the most profitable geographies while limiting investments in the least.
By maximizing operating margin.
By treating fire suppression as a business.
Why don’t fire departments compete? Wouldn’t costs be lower and quality higher if there was competition?
Isn’t that what we assume about health care? We’ve made health care big business under the assumption that competition drives efficiency and effectiveness.
But should it be?
Should prices be as high as the market will bear or as low as optimal efficiency would support?
Should health systems compete over market share or collaborate around social wellbeing, like neighboring fire departments responding to multiple alarm fires?
Have health care prices come down as a result of competition? Has quality increased?
Do patients even understand quality?
Should we let the market determine the price and distribution of medical services? Or should health care be treated as a common good, the way we view clean water or fire protection?
How much would you pay to save your house if it was on fire?
Is that a question we should ever ask?