From: stank@cbnewsl.cb.att.com (Stan Krieger)
Newsgroups: misc.consumers
Subject: Re: Complaining about a hospital bill...
Date: 14 Apr 92 17:10:30 GMT
Organization: Summit NJ

>|> Finally, I think the real problem is that costs aren't questioned.  For
>|> example, I see on the news about some new AIDS drug, but the item then
>|> points out the high cost (e.g., $115 a week).  At this point, I am
>|> just about screaming "WAIT A MINUTE!  This "cost" wasn't set by the
>|> government or some consumer medical counsel.  It's a combination of
>|> charges set by the manufacturer, distributor(s), and retailer(s)....
>|>
>|> A similar situation occurs when someone is desparately trying to get
>|> donations to pay for a child's liver transplant.  When the news talks
>|> of a cost of $150,000 or so, they quote that number as some sort of
>|> gospel instead of analyzing how it was arrived at.  I mean, is a huge
>|> chunk of it some doctor(s) lining his pocket.....
>
>Did I miss something?  Pricing is not determined by cost.  It is determined
>by value, a euphemism for "what the market will bear."  There is no
>difference between surgeons, drug companies, baseball players, or
>computer programmers.  Your services are worth what someone feels they
>are worth and is willing to pay.  By bargaining over the cost of medical
>procedures, you are supporting the free enterprise system and helping
>set the value of the product.
>
>Keep up questioning, but don't expect the cost of the product and it's
>delivery to have anything to do with pricing.
>
>#1 Rule of Marketing:  Cost does not drive price.  Price drive cost.  If you
>                       can't make it inexpensively enough to sell it for
>                       what people are willing to pay, get out of the
>                       business.

Now this gets to the area of employer and government medical programs, and
of sympathy donations.  In my example, one of the reasons that the
AIDS medicine is so costly is either an insurance company is paying
for it, or the person has been impoverished by all the other medical
bills that Medicaid is paying for it.  If there were no gummint or
boss' insurance money, the stuff would never make it in the market,
or at least not at that price.

But of course, there's the sympathy donations.  Because, like the
liver transplant, it's a life-or-death issue, there's always community
bake sales, etc.  The bottom line is that the amount of money that a
person controls when it comes to getting medical care is far in excess
of the cost to that person, thus the iron economic law of greed and demand
comes into play.

Finally, here's a book answer of mine.  After the guy who drives a
BMW while I drive a Chevy or whose kid goes to a prestigious high-priced
college while mine goes to a state college charges me more than what
the insurance considers "reasonable and customary", and who gives me
a lecture about Travelers not setting his prices, my response is simply
that if it weren't for the boss' medical plans, he'd be lucky to do
half the business he's doing, because nobody could afford his prices
if they had to pay for it themselves.  Unfortunately, I've never said
that directly to a doctor, but only to his front desk or bill collector,
and that argument goes over their heads (or is deflected because it
contradicts the agenda they're supposed to maintain).
-- 
Stan Krieger                     All opinions, advice, or suggestions, even
AT&T UNIX System Laboratories    if related to my employment, are my own.
Summit, NJ
smk@usl.com
Newsgroups: misc.consumers,alt.privacy