Thursday, February 28, 2013


 "One of the saving graces of the less-monied people of the world has always been, theoretically, that they were forced to eat more unadulterated, less dishonest food than the rich-bitches."
MFK Fisher

The new bread

"We have broken bacon together,
we can safely assume we are familiar."
House of Cards

Tuesday, February 26, 2013

Doctors have two sets of books

I went to a doctor in Brooklyn this week. Since my insurance is sold to Zingerman's in Michigan I can't use it for a regular doctor visit here; the insurance doesn't work out of state. More about how that's a bad idea another time. This time I'd like to talk about prices.

Most of the time doctors are opaque about what things cost. You don't know what costs what, you aren't presented options, you may never see a bill. Not at this doctor. I was told right up front how much my visit would cost. They took my credit card when I handed in my paperwork. Before I was given a shot the doctor said it would cost an extra $25 and was that OK. ("Sounds cheap, let's have two!") This kind of this-is-what-it-costs-will-you-pay is common courtesy in the retail world but I've never had it happen with a doctor so I was kind of shocked.

I went to check out. They gave me the bill. It was laid out in a matrix, like a spreadsheet. There were three rows and three columns:

New patient  visit
 $250.00  $150.00
 $112.20  $25.00

 $362.20  $175.00

 I was confused. "What's going on with the different prices?" I asked?

The clerk answered matter of factly, "Oh, the first column of numbers are what we would charge if you had insurance. The second are what we charge you if you don't."

In other words, if I had used insurance the procedures would have cost $362.20, twice as much as the $175 I paid. They would have been the same procedures. They would have lasted the identical amount of time. They would have had the same result. So it appears that the identical product, given to the same person, has two vastly different prices depending solely on how they choose to pay. Of course we're all used to price discrimination from airlines based on when we want to travel. But this is isn't a case of priced scheduling. It's priced paying. Gas stations sometimes charge a few cents more for paying credit card instead of cash but never anything like this. If I had stopped the clerk at this point and said, "Oh, I'm sorry, I DO have insurance!" they would have said, "Great!" and promptly charged me double.

This may seem strange to the rest of us humans. But I learned it's actually normal in health care. "Normal," that is, for the worst run industry in America. There's a simple — and ridiculous, I assure you — explanation for it. I'll write about it soon.

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant.

Sunday, February 24, 2013

Recent Reading

"In 2009, The Wall Street Journal found that the average rating in a five-star system, Internet-wide, was a 4.3, suggesting a world of uniformly awesome products, services, and experiences."
What do Yelp's ratings tell us?

"Data analysis can detect when large numbers of people take an instant liking to some cultural product. But many important (and profitable) products are hated initially because they are unfamiliar."
Six problems we face when we use data to make creative decisions.

Would you miss a gorilla staring you in the face?
I'd take that bet.

"These people need a lot of things, but they don’t need a Coke."
Junk food's science, marketing and success (highly recommended).

Tuesday, February 5, 2013

How not to price a product

Our partners group held its annual retreat last week. One of the topics we discussed was health care costs. A little background first: each year Zingerman's benefits committee solicits bids from insurance companies and creates a proposal document to help us understand the menu of costs and changes. It's not typical for us to talk about the proposal at the retreat but this year we had a few more changes than usual.

It took an hour. To say that people were mildly baffled is an understatement. It was a clusterfuck. It's not that things cost different amounts—that part makes sense. It's that each insurance company offers so many different options that cover so many different contingencies you need a degree in Kafka to understand how to read the bid. Explaining it is an exercise in invented language; the health care industry has so much jargon you need a glossary to understand what they're saying.

Yet a one hour meeting explaining a financial bid to seventeen experienced partners is nothing like what happens when we have to share the costs to our crew. That meeting takes two hours—per employee. We have dozens of those meetings during the enrollment period, which for some reason that's never been explained reasonably to me, only happens once a year. (That's right folks. You have the privelege of buying health insurance at most American businesses just once a year.)

Imagine if we had to sell sandwiches this way. Imagine we had to have meetings with our customers that took an hour to explain how to buy a sandwich. Imagine we had two dozen different pricing schemes per sandwich. Imagine we only let customers get in on the sandwich buying action once per year. Imagine any other industry where service remotely this bad is inflicted upon its customers.

The Worst Run Industry In America is my look at the American health care industry, its service, prices and promises, from my view as a merchant