January 5, 2005

Time is money...

I stumbled on this in a post by Alex Tabarrok:

...Laser eye surgery has the highest patient satisfaction ratings of any surgery, it has been performed more than 3 million times in the past decade, it is new, it is high-tech, it has gotten better over time and... laser eye surgery has fallen in price. In 1998 the average price of laser eye surgery was about $2200 per eye. Today the average price is $1350, that's a decline of 38 percent in nominal terms and slightly more than that after taking into account inflation.

Why the price decline in this market and not others? Could it have something to do with the fact that laser eye surgery is not covered by insurance, not covered by Medicaid or Medicare, and not heavily regulated? Laser eye surgery is one of the few health procedures sold in a free market with price advertising, competition and consumer driven purchases. I'm seeing things more clearly already...

Yes. And that's what HSA's are all about. If you are spending your own money on medical care, you spend it carefully. And providers have a big incentive to merit your trust and to keep prices down.

There is another area where medicine has become more efficient because it is market driven. I have several times heard of hospitals that specialize in just one type of operation. I remember reading about one that only repairs hernias. Busy people, especially businessmen, find it worthwhile to travel large distances to use that hospital because recovery time is much shorter than average. I don't remember if it was actually cheaper, but the savings in time is worth money to high-paid individuals.

One of the ways most medical care is costly is in the infuriating amount of our time it wastes. They is no incentive to do otherwise, so the simplest procedure takes hours. I predict that as HSA's become more popular, we will see medical providers coming up with new ways to save our time, and then advertising that to bring in more customers.

Posted by John Weidner at January 5, 2005 1:21 PM
Weblog by John Weidner