Health care is different

Bet you thought I was done with this topic. Actually, I did too. Then I read this in the textbook by Santerre and Neun:

As a service, medical care exhibits the four Is that distinguish it from a good: intangibility, inseparability, inventory, and inconsistency (Berkowitz et al., 1989). […]

[I]ntangibility means that a medical service is incapable of being assessed by the five senses. Unlike a new car, a steak dinner, or a new CD, the consumer cannot see, smell, taste, feel, or hear a medical service.

Inseparability means that the production and consumption of a medical service take place simultaneously. […] In addition, a patient often acts as both producer and consumer. Without the patient’s active participation, the medical product is likely to be poorly produced.

Inventory[: …] [b]ecause the production and consumption of a medical service occur simultaneously, health care providers are unable to stockpile or maintain an inventory of medical services. […]

[I]nconsistency means that the composition and quality of medical services consumed vary widely across medical events.

This isn’t so much a “health care is different” story as a “services are different” one. But within each of these categories, health care differs from other services. I think one could quibble about intangibility. I kinda feel the dentist’s drill. The key point about inseparability is made above: patients are relevant to the quality of the outcome. That’s not so for all services. Not only can’t one stockpile medical services (inventory), one can’t ramp up production very quickly either. It takes a lot of time and money to train doctors and build hospitals. It’s a capital intensive service. Inconsistency of quality of care is one of the chief problems in the US medical system and a source of a lot of excess spending.

References

Berkowitz, Eric N., Roger A. Kerin, and William Rudelius. Marketing, 2nd ed. Homewood, III.: Richard D. Irwin, 1989.

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