Healthcare

Daniel J Cross

Dr. Virginia Rae

BUS 100-100F

10/25/2015

Healthcare

Demographic segmentation: “Dividing the market into smaller groups based on measurable characteristics about people such as age, income, ethnicity, and gender.” (Kelly & Williams, 2015 p. 179).

Target Market: “The group of people who are most likely to buy a particular product.” (Kelly & Williams, 2015 p. 179).

Cognitive Dissonance: “Consumer discomfort with a purchase decision, typically for a higher-priced item.” (Kelly & Williams, 2015 p. 185).

Healthcare in America is a massive business. While some people may think that the business aspect of healthcare is the inherent problem in it, it is still an undoubtable large and profitable business. This is a massively expansive topic and it’s actually a struggle to not over write this paper. The healthcare system is no longer patient based, only check based. Big Pharma takes advantage of uneducated consumers and eager patients that want to self-diagnose. Alongside doctors who take advantage of patients and over book them. The medical field in America is a big business, even though it shouldn’t be.

        One of the most notable thing about the American healthcare system is the profit margin. These doctors are making money hand over fist off their patients. Not only the doctors but the pharmaceutical companies and hospitals are as well. There is not a step in our medical system where someone does not cash in. There is a theory that our medical system is no longer based on the patient outcome but is instead based on how many procedures and scans a doctor can give to a patient, therefor driving up the cost of the bill. Doctors get bonus checks in affiliation with the surgeries and procedures that their patients undergo. There was a study done in McAllen Texas called the cost conundrum. This study was about the cost of healthcare in the town of McAllen. The town of McAllen is a pretty average border town, this border city has one strange attribute, it is the most expensive healthcare market in the country. Only Miami, which has higher labor and living costs spends more on healthcare per person. In 2006 Medicare spent 15,000 dollars per patient, about twice the national average. After crunching some numbers Medicare spends on average 3,000 dollars more on a patient than that person earns. Now most would think, quite logically, that they probably are delivering a higher quality of healthcare. Although this study says the opposite. (Gawande, 2009)

        This study is an index for healthcare in America. Doctors today no longer worry about the outcome of patients, they worry about how that patient can benefit them. The fact that I could write this paper about healthcare is proof of this theory. Doctors are now benefited from sending their patients to countless MRIs, CAT scans, or any other expensive procedure regardless of how relevant the procedure is to their patient’s illness. Healthcare is now a business and the sick populate the target market. Doctors also have access to their patient’s insurance plans and use Demographic segmentation to rack the bill up especially high, because with high payer insurance, expensive bills are sure to be covered with good insurance.

Although the problems are not entirely at the fault of the doctors. Pharmaceutical companies are also cashing in big time. The leading pharmaceutical company posted 74.3 billion dollars in sales in 2014. (Big Pharma, 2015) These huge sales numbers are thanks to and rebranding that these companies do. For example, company “A” sells prostate medicine, for the sake of the example let’s call it medicine “A”. Company “A” files for a five year patent on medicine “A”. At the end of the five years right about when their patent expires and anyone else could start making the drug, company “A” suddenly makes a miraculous breakthrough in the medical field of prostate medicine. They launch a new campaign for their new medicine, medicine “B”. Then they file for a five year patent on medicine “B”, right in time for the patent on medicine “A” to expire. So as a result of the patent expiring on medicine “A” the price in turn drops because anyone can now produce it. But that’s okay because there is this new medicine “B”, advertised directly to the consumer as better than medicine “A” and more efficient than medicine “A”. So as the price of medicine “A” drops, the new medicine, medicine “B” hits the sales floor for what medicine “A” cost originally. Through direct advertising to the consumer the company can ensure that the current users of medicine “A” will see this advertisement and hear that this new medicine “B” is better and just a whole new drug. So promptly, as any wise consumer would, they schedule a meeting with their doctor and get their prescription switched to medicine “B”. When in reality, medicine “A” and medicine “B” are chemically exactly the same, just labeled differently and in a colored capsule. But through this trick pharmaceutical companies can keep you, the consumer, paying more for the exact same medicine that they have been peddling to you for years at that inflated price, all while the exact same medicine is available for dirt cheap. Simple education of this tactic could cause mass cognitive dissonance towards all pharmaceutical companies, but the information is not so easily found.