Tuesday, September 2, 2014

The Growing Parallels Between Health Care and Power Utilities

In some of its past musings, the Population Health Blog drew parallels between the airline industry and health care. While it knows nothing about aviation, who cares? It figures all those pundit MBAs and lawyers know nothing about medicine either: such is the standard of today's commentariat.

It knows nothing about power utilities either, but the gullible PHB sees parallels there too.  According to this Dummies chapter, utilities sell a heavily regulated commodity that requires a lot of debt-financed infrastructure. Since their customers have no where else to go, poor/low cost service can translate into it being considered a safe investment. Yet, do-it-yourself renewable energy is a growing threat. As companies go, they are not known for growth; rather they preserve capital and return profits to their investors in the form of dividends. And regulators are forcing these companies to reward customers for using less of what they're selling.

And what's the growing resemblance to health care? 

In their attack on variation, many services are being commoditized into a race to the bottom by payers and government.  Regulation is increasing. Poor/low cost service for "captive" patients can also mean greater profits.  The importance of access to capital, servicing debt and achieving savings are eclipsing top line revenue. Instead of dividends, they're "returning" surplus to the community in the form of more services. Do-it-yourself health care in the form of medical tourism, concierge physicians is a growing threat. And the system is starting to see incentives that help its customers to use less of what it's selling.

Is the PHB being naïve? You be the judge.

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