Rent Seeking PPOs

Do we need to pay a premium to access healthcare services? By premium, I mean do we place a financial value on the mere access of healthcare services? If we take this prima facie, how much margin is fair and who decides?

 In the largely opaque supply chain of healthcare in the U.S., we’ve developed the roles of (quite large) middle-men to facilitate everyday transactions. One of the most ubiquitous would be the advent of the PPO or Preferred Provider Organization. The idea that a third party would sit in between the patient and doctor to facilitate the cost of that care and the movement of money. PPOs develop contracts, hidden from view of the consumer, presumably at the benefit of the patient and employers that are by-large the funders of healthcare in the U.S. As we’ve moved away from the indemnity contracts of old, we’ve lost sight of what healthcare services should cost thus, allowing PPOs to tout incredible discounts off of prices that have ballooned to extraordinary levels.

For what good is a 60% discount if the retail price was inflated 6x or even 10x cost?

Alas, this is where PPOs have evolved and remain today. It is classic rent-seeking behavior. There is nothing productive about the PPO. They have made no improvements to the level of care provided nor have they simplified the flow of funds between the two parties. Yet due to their predominance in the marketplace and perceived brand-value, very little are they questioned or held accountable.

If the United States is to survive economically, disintermediation of the healthcare supply chain is the only solution. The good news is that common-sense solutions already exist and forward-thinking employers like Rosen Hotels, Walmart, and the state of Montana have been doing it for years with tremendous success. These companies are spending nearly half the cost on health care as everyone else which means more money back into R&D, restored wages, restored pensions and 401(k)s, and investment back into local communities.

We’re on a journey, along with Health Rosetta and the certified pros across the country, to restore wages and hope. We hope you join us.