Boutique & Box Store

Home DepotA recent article in the Wall Street Journal (subscription required) addressed an interesting new phenomenon in medical practice: the micro-practice. Physicians, weary of being forced to see large volumes of patients because of HMO requirements or financial pressures, coupled with high practice overhead and burgeoning paperwork, are striking out in a very different direction. Some physicians — especially in primary care — are opening small offices without office staff, seeing far fewer patients with much lower overhead, using technology to bridge the gap. As of now, these practices are quite rare, and represent a significant risk to the physician, generally resulting in substantial reduction in income. Nevertheless, it allows these physicians to practice a simpler form of medicine, spending far greater time with patients, having more free time for themselves, and returning to some of the priorities which brought them into medicine in the first place.

Now, I am skeptical that this particular model for medicine will gain wide acceptance. Nevertheless, I believe it represents a trend toward alternative practice models outside the standard framework of large-volume, federal and third-party insurance-driven enterprises. Another similar trend, also small in numbers, is the so-called boutique practice, where patients pay cash, often subscribing on an annual basis to a practice which then provides full services, including appointments on demand, greater access to the physician by phone, routine preventive care, longer appointment times, and other amenities.

I expect to see an increasing divergence in healthcare along similar lines. One analogy would be the box-store versus the boutique. The box store is large, has everything you might need at low prices, provides little in the way of services or amenities — think, Costco or Home Depot-healthcare. For those unwilling to partake of such Wal-Mart style health care, and who have the means to seek alternatives, there will be health care services provided with excellent service and benefits not available in the box store, such as plenty of time with the physician and short waits in the waiting room.

When talking about the social economics of providing health care, it is useful to think of it as a triangle: at one point is quality, and a second point, affordability, and a third point, access. There’s only one problem with this unlovely triangle: one can only have two of the three points at one time. Hence, if you have widespread access to health care which is very high quality, it will not be affordable; if you have broad access and affordability, quality — perhaps not necessarily medical quality, but service quality and access to more expensive or optional medical services — must be constrained. We are currently seeing in large measure the third side of the triangle: we are providing very high quality healthcare, which while expensive, is still relatively affordable — but the cost we are paying is limited access. There is simply no way to have all three points of the triangle.

There is a huge and growing access problem in American health care today, with tens of millions of Americans without insurance, and many more — especially those at or below the poverty level on Medicaid — who cannot find access to physicians because of their own limited financial resources, or the inability of physicians to accept reimbursement from federal programs which pay below the costs to provide the services. The pressure to resolve this dilemma at the political level is very large, and some form of universal coverage seems inevitable in the relatively near future.

In order to provide such broad-based coverage, however, the necessary limit on financial resources — whether federally financed, or paid for through employer-funded or personal-based insurance — must by nature result in a reduction in quality. This is not to say that substandard medicine will be practiced, although there is an increased risk of this; more importantly, there will be significant restrictions in access to optional, high cost technology, and an inevitable decline in service. Universal health care coverage, while critically important, will invariably lead to long waits for an appointment, very little time with the physician, seeing a different doctor at each visit, and having to wade through many levels of support staff to communicate with your doctor. This is already becoming far too common even under our current system due to intense cost-cutting pressures.

While such a universal coverage arrangement may prove very functional from the standpoint of providing basic care for large numbers of people, it will not prove satisfactory to many Americans who have become accustomed to a far more personal and consumer-driven model of health care delivery. There will, therefore, be strong financial incentives to provide alternatives to box-store medicine — and in fact, we are already beginning to see this.

The best contemporary examples of this alternative system of boutique medical care can be seen today in plastic surgery clinics, LASIK eye centers, and the growing trend toward high-end specialty hospitals catering only to orthopedics or other subspecialty care. While social engineers tend to decry such two-tiered healthcare systems, in fact, these alternatives respond far better to true market forces then does the lumbering dinosaur of federally-funded or third-party insurance-controlled health care. Plastic surgery clinics compete on price, service, and quality for a facelift, tummy-tucks, or a breast augmentation; high-end clinics charging more must be a higher standard of quality as well as provide extraordinary service. Consider the dramatic decrease in cost for elective corrective eye surgery with LASIK: prices have dropped dramatically over the past few years as high-volume LASIK clinics compete for patients. Hospitals, faced with a drain of better-paying patients toward specialty hospitals which provide a higher quality of service and a more satisfying patient experience must now re-examine their own quality issues, and are pressured to provide nicer facilities, better food, more nurses per patient, and other service-oriented improvements.

Beware of those — especially of the political persuasion — who promise unlimited, high-quality health care which is affordable. It does not, and cannot exist. We clearly need to address coverage for those in need of health care who cannot currently afford it, for health care, while not a right, is most certainly a very large part of our quality of life and well-being. The boutique model of health care service will not address this problem, in spite of the pipe dreams of libertarians who believe that free market solutions can solve all problems. This two-pronged approach may well provide a uniquely American solution to the worldwide dilemma of providing high-quality care, excellent service and access, and affordability Virtually all countries providing socialized, government-funded health care are struggling with the box-store problem. Poor service, long waits for care and “elective” surgery (like heart bypass and cancer surgery), and spiraling costs are the rule. But we in America have become accustomed to the highest quality of health care in the world, delivered quickly — for those who can afford it.

Perhaps it is time we abandon a utopian vision for health care, and settle on something, though imperfect, which may end up working quite well in the American healthcare system. It may well come from the ground up rather than from the top down.

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5 thoughts on “Boutique & Box Store

  1. This post makes me feel old. It brought back a memory of something I came across six years ago regarding the food business.

    There was a sign in a business that said “Speed, Quality, Price: Pick Two”. The first rule of the marketplace is that you don’t get something for nothing.

    I suppose some principles are universal. Kinda like the laws of physics. Your “unlovely triangle” echoes the same idea for medicine that the restaurant sign did for the food business.

    After slogging out a pretty good living in the cafeteria business I have watched helplessly as the old ways of cooking and doing business have been displaced by newer ideas. Often they are less expensive (economy of scale), safer (better sanitation with cutting boards not made of wood, pasteurized eggs, etc.) and even better for you (no MSG, trans-fats, etc.). But there is no way that a factory-made strawberry pie made two or three days ago can compete with its less glamorous, made from scratch cousin put together this morning about three hours before lunch. Especially if the berries are selected for perfection and the topping is made from real whipped cream.

    In the case of health care, I don’t worry too much that those with enough financial resources will get a lot of bang for their buck. The marketplace will take care of them. My concern is for those who endure treatable medical and dental conditions and never seek treatment because they are too proud to do so at the price of personal dignity. Some people, those we call the “working poor,” don’t want to admit they cannot afford medical care and delay or deny the need, often to everyone’s expensive peril. (Needless to say, insurance is out of the question for the unemployed, and we are led to believe that any unemployment figure under five percent is considered “good.” For this reason I am in favor of the president’s proposal to uncouple employment from insurance. Only a lame duck administration could advance such an idea, but in that regard he is taking a high road toward resolving this problem.)

    At some point some hard decisions must be made and harsh guidelines put into place regarding what will and what will not constitute a universal safety net. Somewhere between elective cosmetic procedures and life-saving emergency care a lot of hard decisions must be made. The time is past due for a spirited public debate about the specifics of what we want to be paid for by individuals (including their many insurers) and what will ultimately be paid for by tax dollars.

  2. Dr. Bob:

    I am a boutique. A solo practice psychiatrist with a home office, and I am on no insurance plans, including Medicare. A secretary/book-keeper one day/week who needs to know nothing about coding, etc. It works for me. And if patients without money pay me in tomatoes from their gardens, it’s fine with me. It is a kind of freedom, and I love it.

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