Last Word: Shoplifting? No, reimbursement

May 23, 2003

With tongue in cheek, the author tries to explain modern health care economics to a local store manager.

 

LAST WORD

Shoplifting? No, reimbursement

By Michael W. Weiss, MD

I'm writing from the headquarters of the local police station, where I've spent the last several hours waiting for the clerk to finish typing up the paperwork for my arraignment. I'm still not sure why I'm here.

It all started this morning when I drove over to the mall to pick up a few things I needed. I selected $100 worth of merchandise, handed the cashier $40 in cash, tossed my stuff in a bag, and walked out to my car.

As I popped the lid on the trunk, a security guard tapped me on the shoulder, and said the store manager wanted to see me. The guard escorted me back into the store.

"Is there something I can help you with?" I asked the manager.

"Yes Sir," he replied. "You can tell me why you left the store without paying for your merchandise."

"Are you sure you have the right guy?" I asked. "I gave the cashier exact change—$40."

"Dr. Weiss," the manager said, "the problem is that the total for your merchandise came to $100. Didn't you see the price tags?"

"Of course I did," I replied. "But you didn't really expect me to pay the full charge, did you?"

The manager seemed confused, so I kept talking. "In my field of medicine," I said, "prices are meaningless formalities, just symbols of wishful thinking by the business owner."

"Come again?" the manager asked.

"Look," I explained, "you're a business-person like me, so you know how it is. You can say that your products are worth a certain amount based on your costs and expected profit margin. And you can even write that amount on the price tag. But that doesn't mean the customer actually has to pay it. He can pay whatever he feels like paying."

"That's an interesting theory," the manager said, interrupting for a moment to call the police.

"Okay," I said, "I'll try to explain. Here's how it works in the medical business. You incur certain costs associated with selling your goods, or in my case, delivering a service. You have to lease your facility, pay your workers, buy supplies, etc. You try to keep these costs low, but they always seem to go up.

"You think, 'No problem. I'll just pass them along to my customers in the form of higher prices.' But there's the problem. Your customers know your costs are irrelevant, so they pay whatever they darn well please—which today is about 40 cents on the dollar.

"So now I hope you understand how the system works, and why I paid you $40."

"I don't know what planet you come from, space cowboy, but it doesn't work like that in the real world," the manager told me.

Just then the police chief arrived, and put a pair of handcuffs on my wrists.

"Real world?" I asked, as I was led to the door. "I'm not sure I've ever been there."

"Don't worry," the manager said, "the chief will be happy to show you the way."

 

 

The author is an orthopedic surgeon in Pittsburgh. This article is adapted from one that originally appeared in Pittsburgh Hospital News.

 

Michael Weiss. Last Word: Shoplifting? Medical Economics May 23, 2003;80:110.