Pay for Performance LO21066

Doug Merchant (dougm@eclipse.net)
Tue, 30 Mar 1999 00:16:35 -0500

Replying to LO21051 --

(snip!)

>We had much the same discussion in class over the weekend in the context
>of healthcare. One student noted that the word customer describes someone
>(or some group) "without peer". In healthcare today there are a number of
>people/groups all competing for the "prize" of being called the customer.
>From a hospital systems point of view, the patient, the physician, the
>employer and the insurance company all were candidates for Customer
>status.
>
>After discussion (and it wasn't a relaxed chat, either) the group seemed
>to land on the position that the word has no place in healthcare. They
>proposed two substitutes: Consumer is the direct beneficiary of healthcare
>or wellness services (commonly called the patient) and Stakeholder (or
>Constituency) describes every other individual or group in the system.

Market mechanisms and the customer-supplier model are wonderful to govern
the production and distribution of Private Goods (individual consumption,
easy exclusion). However, this sounds like those cases where the
customer-supplier model is not up to the task of distributing Toll, Common
Pool Resource, Public or Worthy Goods: Toll Goods (joint consumption,
easy exclusion, e.g., turnpike); Common Pool Resource Goods (individual
consumption, difficult exclusion, e.g., fish in a river); Public Goods
(joint consumption, difficult exclusion, e.g., lighthouse); or Worthy
Goods (e.g., Public Education).

For these "non-Private Goods" the costs and benefits don't line up nicely
to the customer and supplier. A richer model is required, for example,
"user", "chooser", "payer", "provider".

Doug Merchant

-- 

"Doug Merchant" <dougm@eclipse.net>

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