Thursday, September 7, 2017

Demand Driven Pricing

One of the things we've seen from early warnings about Hurricane Irma is a significant increase in prices in airline fares from some airlines.  Some of this, I'm sure is due to automated pricing algorithms on fares based on demand, for which there may very well be little or no human intervention.

That got me to thinking about how demand driven pricing AND demand driven reimbursement could have an interesting impact on prices for healthcare services IF it were possible to apply them more interactively and faster.

In the battle of algorithms, the organization with the best data would most likely win.  I see four facets to that evaluation of "Best": Breadth, Expression, Savvy, and Treatment (see what I did there?).

  • Breadth
    More bigger data is better.
  • Expression
    If your data is organized in a way that makes correlations more obvious, then you can gain an advantage.
  • Savvy
    If you know how A relates to B, you also gain an advantage.  Organization is related to comprehension.
  • Treatment
    Can you execute?  Does the data sing to you, or do you have to filter signal from a vast collection of white noise?
In the 5P model of healthcare system stakeholders, Polity (Government), Payer, Provider, Patient, and Proprietor (Employers):
  1. Who has the largest breadth of data? The smallest?
  2. Who has the best expression of data? The worst?
  3. Who has the greatest savvy for the data? The least?
  4. Who will be most able to treat the data to their best advantage? The least?

It seems pretty clear that the patient has the short end of the stick on most of this, except perhaps on their "personal" collection of data.

Payers are probably in better shape than others with regard to breadth, followed closely by Polity. The reason I say that is because government data is dispersed ... the left hand and the right hand can barely touch in some places.  Providers rarely have the breadth unless they begin to take on the Payer role as well (e.g., Kaiser, Intermountain, et cetera).

Providers have a better chance of having better expression, being able to tie treatment to condition in more detail, and have some chance at understanding outcomes as well.

It's not clear that employers are THAT much better off than patients, although frankly I honestly don't know how much information they really have.

Treatment is where it all comes together, and right now in the US, it seems that nobody has yet found the right treatment ...

Anyway, it's an interesting place to explore further.

   Keith


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