Where Are Health Care’s Value Meals? – The Health Care Blog


By KIM BELLARD

If you’re anything like me, you’ve noticed that food costs have been increasing. Whether it is food from the grocery or at a restaurant, the bill can be eye-opening compared to a few years ago. Blame the pandemic, blame corporate greed, blame the President – take your pick. But the bottom line is, you have to eat. You can buy lower priced options, you can go out less often, you can skimp on non-food spending, but you’re going to buy food. The other thing you can do is to complain.

Well, the fast food industry, for one, is listening to those complaints, and many leading fast food companies have launched a variety of “value meals” to reduce the pain consumers feel. Evidently they are still capable of feeling shame, or at least of recognizing that consumers have choices.

I just wish the healthcare industry was capable of doing the same.

Let’s be clear: the fast food industry has brought this on themselves. The Wall Street Journal reports that prices of food eaten away from home rose 30% since 2019, according to labor Department statistics, and that prices for a Big Mac increased 21% over the same period. McNugget meals were up 28% over the same period.

McDonald’s recognized the problem. It announced a $5 meal bundle in mid-May, targeting a June 25 launch date. For those of you craving a McD’s fix, the deal includes McDouble or McChicken sandwich, small fries, small soft drink and a four-piece Chicken McNuggets. “I’ve been in our restaurants. I’ve sat in focus groups,” Erlinger said on the Today show, touting the new deals.

It didn’t take long for other fast food chains to offer their own version. KFC introduced its $4.99 value menu back in April, even before McDonald’s announcement. Wendy’s has a $3 breakfast deal, Burger King has a $5 Your Way Meal, Taco Bell has something it calls a Luxe Craving Box for $7, Starbucks has a new Pairing Menu priced between $5-$7, Jack in the Box has a $4 munchies Meal, and Sonic now offers a $1.99 menu it calls “Fun.99,” which it says will be permanent, not a time limited promotion. I’m sure there are others.

“It still holds true that imitation is the sincerest form of flattery,” Burger King North American president Tom Curtis said in a May email to restaurant operators. “We know the competition is doing that. So we will be in that game,” Jack in the Box Chief Executive Darin Harris said

Lest anyone be worried about hurting the fast food companies’ margins, R.J. Hottovy, head of analytical research at Placer.ai, told Yahoo Finance: “It really comes down to … repeat visits after the fact. You’re not making money on the value menu. You’re making menu money on the other products, the more premium products, the dessert products, the beverage products that go along with that.”

Health care is like food in that almost anywhere you go you can probably find it. There are fast food restaurants seemingly on every corner, but there also are drugstores and doctors’ offices somewhere near those fast food restaurants. Health care may not quite be omnipresent, but it’s pretty present.

Unlike food, you may not need health care every day — but you are going to need it at some point. It may be a simple visit, it may be a pill a day for a few days, but it could be a mind-boggling array of tests, medications and procedures you never imagined or lifelong care.

In a fast food restaurant, you look at the menu, pick what you want and how much you are willing to pay, but with health care you don’t have such a menu. Someone else is usually telling what you need and dictating how much you’ll pay for it. After numerous “price transparency” efforts in these last few years, you might be able to find some set of prices, but if anyone has ever successfully been able to use them for anything other than the simplest of interactions, I’d like to know about it.  

Fast food is extremely competitive, and you’d think that health care, with all of our options, would be a fiercely competitive market as well. Most health care organizations would tell you that it is. But most healthcare markets have become highly concentrated. Those consolidations lead to higher prices, and those higher prices lead to lost jobs and lower wages in the local economy.  “The harm from these mergers really falls squarely on Main Street,” said Zack Cooper, an associate professor of economics at Yale University.

Professor Cooper added: “That’s one of the, I think, incredibly subtle but sinister consequences of rising health spending. It leads individuals to lose their job.”

Consumers have been complaining about health care prices for as long as I’ve been involved in healthcare, which is longer than I care to admit (hint: I remember when health care spending was under 10% of GDP). What I don’t remember is health care organizations ever lowering prices, even temporarily.

Look at insulin. It’s absolutely critical for those who need it. It was invented decades ago, and should have been cheap long ago. But it took a federal law to limit what consumers had to pay for it – against the drug companies’ vigorous lobbying efforts. And, of course, the only thing that was actually reduced was how much consumers paid out-of-pocket – not the total price.

The same law that enacted the limit on insulin out-of-pocket costs also allowed Medicare to negotiate some prescription drug prices, again against the continued opposite from pharmaceutical companies. The only way, it seems, to get healthcare organizations to lower prices is to legislate it (and if you think those healthcare organizations are going to suffer from such negotiations, look at pharmaceutical stocks).

Maybe I shouldn’t wish for healthcare organizations to try to lure in more customers through “value” pricing offers (especially knowing they’d just try to make it up on other services). Maybe health care is truly too complex for such simple solutions. Maybe the fast food industry is never a good model for health care.

But I sure wouldn’t mind if I saw more evidence that health care organizations felt consumers’ pain from high health care costs, and sought to do their part to reduce it.

Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor


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