[ Friday, March 26, 2010 ]


OT - Healthcare Reform: Excellent article highlighting the basic problem with health care, and health care reform efforts, in America: OPM. No, not the Office of Personnel Management, but "other people's money." The biggest problem with American healthcare service is the lack of an effective governor on spending and the unrealistic expectation of healthcare consumers regarding price. There are areas of healthcare where these issues do not exist; two I can think of off the top of my head are Lasik eye surgery and cosmetic surgery, both of which are profitable services with substantial technological advance. Both of those areas mainly require people to pay with their own money, which is a very effective governor on costs and leaves consumers with the realistic expectation of what the service costs and what they'll have to pay to get it.

When I was a pimply-faced kid, I got a job at a McDonald's restaurant that was opening in my little Texas town. We had had a couple of mom-and-pop type restaurants, and our only "fast food" place for years was a Chicken Shak (a great place to pick up fried chicken after at Sunday trip to Galveston). Then we got a Jack in the Box, and learned what fast food really was. But it wasn't until McDonalds came to town that we felt we were really on the map.

Since the crew was hired before the restaurant was open, we had to work a few shifts in a McDonalds in a neighboring town 20 miles away to learn the drill. If you don't know it, McDonalds is pretty famous for its standardization, so that the Quarter Pounder with cheese you get in Paris, Texas is the same as the Quarter Pounder with cheese (or "Royale" with cheese, if Travolta was right) in Paris, France. So working in one McDonalds is good practice for working in another one.

The night before the grand opening, we ran the restaurant through a test dinner, a restaurant version of a "shake-down cruise." All of the crews were there working part of the night, and we also got to be customers as well. We were allowed to invite family and friends to be customers as well, and the evening went just like a real live restaurant operation would, with one small difference. Customers stood in line and made their orders, grill and fry cooks dropped frozen patties on hot grills, buns in toasters, and fries and apple pies in hot grease, and managers tried to keep the kitched ahead of the customers. My edge of the kitchen was mostly buns, fries, fried fish filets, and apple pies. Cashiers took orders, called out for more of whatever was needed, rang up the customers, and told them what their meal cost. As they were trained, the cashiers tried to push the ancillaries: "would you like fries with that?" (this was before value meals, when you separately ordered burgers, fries and drinks), or "would you like a hot apple pie with that?" But here's where reality left the scene -- the customers only had to pretend to hand over money, and the cashiers pretended to make change. And just about everyone said "yes" when asked about that hot apple pie.

The idea was to simulate a real day in the restaurant. And in many ways, it did. But in one way, it was far from reality. I fried up more hot apple pies that shake-down night than I did in the remainder of my McDonalds career combined. My first night of working in the open-to-the-public restaurant, my first check was to make sure we had enough pies cooked and ready to go (the lunch crew had them stocked up). All night, I kept expecting the manager to call out, "drop 8 pies please," a phrase I heard repeatedly the night before. But he never did. All the pies that were there when I got there were still there at the end of the evening.

Why the steep decline in pie popularity? There was only one reason: OPM. When the apple pie is free, there's still a minor cost is asking for it. It may slow down your order at least a second or two (for the cashier to grab the pie), you've got to carry it to your table, it takes up space on your tray, you've got to throw away the box and the remnants, etc. But that's a tiny cost, and you might like a bite of pie; not that you really want pie, when you're after two all beef patties special sauce lettuce cheese pickles onions on a sesame seed bun. But if it's free, you'll take one.

But if it's not free, you don't. It's not that the pies were expensive, just that the cost was not negligible.

And that's the problem with healthcare. It costs money to provide healthcare. Someone has to pay that money (which is why the "right" to healthcare is a bogus argument). But if the recipient doesn't have to pay anything, or has to pay a tiny portion for it (like the carrying cost of taking the free pie), there is no limit on what the recipient will demand and expect. If it's OPM that's paying, there's no limit on my wants (and since it's healthcare, all my wants are automatically transformed into needs).

Jeff [11:14 AM]

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