Xpectives News

DTC in Perspective: Repeal, Replace and DTC Growth

January 26, 2017 by Bob Ehrlich0

DTC will be much more important in the new health care era post Obamacare. This is not just for drug companies but for all health care goods and services. The Trumpcare plan will be shifting more decisions on health care to consumers based on free market competition. Americans will be given greater control over spending a pot of dollars allocated to them by government. Although we have not seen a final replacement plan we do know it will likely contain health savings accounts, tax credits, wider choices for insurance coverage, and some minimum affordable coverage for people with pre-existing conditions.

Bob Ehrlich
“A free market will rely even more on advertising…”
-Bob Ehrlich

Americans will be encouraged to shop for health care like they do for all other products they buy. Yes I know the critics of free markets say health care decisions are different from other types of products and more important than choosing a dishwasher or cell phone. What consumers will do is give health care decisions much more consideration. Consumers probably spend a lot more time shopping for a car than for a heart surgeon. To evaluate health care decisions they will need transparency on prices and good information on pros and cons of their choices.

Health care information on products and services will become a boom industry. Rating services will spring up that tell consumers what health care services should cost and provide reviews on providers price/value. A free market will rely even more on advertising to pitch and justify services and this is where DTC will grow. We already have hospitals and physician advertising to consumers. What will change is a much more explicit price/value oriented advertising approach. As consumers are given more control over their limited health care spending, they will need more convincing on where to spend those scarce funds.

In today’s someone else pays system, we do not usually question the need for what our doctor recommends. We do not ask if that CAT Scan is essential because we never see the full bill. We do not ask for generics if a new branded drug is covered. We do not push back if the dermatologist asks to take a piece of our skin to biopsy as long as it is covered. Once we have the limited pot of dollars under our control we will be much more involved in making the go/no go decision on treatment. We all know doctors err on the side of over treatment because they do not want to be sued. That defensive medicine will be reduced as we pay more of the bill.

The critics of consumer controlled free market health say people will avoid important tests and treatments to save money. This may in fact be a problem and under treatment could be an issue with consumer controlled limited dollar plans. What we hope for is that good health care information will tell consumers what are the best investments to keep them healthy. In other words which tests/services are critical and which are just nice to do. Like it or not all health care decisions are a cost/benefit calculation. We do not, as a society have unlimited resources. Trumpcare will place more burdens on us to decide how and how much to spend on health care.

One would hope that essential health care services become more easily available at lower prices. Competition should do that. We can expect more chain medicine as big providers will emerge who can use volume to offer lower priced services. That means many smaller, inefficient providers will be forced out. Clearly when price/value becomes the main concern of consumers the market will change significantly. Advertising will become critical to tell that price/value story as consumers will push back on providers to justify the recommended service or product.

Bob Ehrlich

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