Inelastic request means never having to say “I’m sorry” – Twin Cities
Good economics teachers want students to see economics in everyday life. Who would guess that a bitter-faced dental receptionist could trigger a trio of painful examples and memories?
A problem tooth started it all. Anchoring of a bridge, but in too bad condition to be saved, a possible replacement of the implant by a specialist was necessary. A referred periodontist was “off the grid” so I looked for an MD “oral and maxillofacial surgeon” who provided me with excellent care eight years ago. But things have gone wrong, yesterday and now.
A brooding receptionist asked for ID and insurance cards, but then rejected the military ID that I, a retired reservist, offered. This proves that I am on Tricare, the military health program that is accepted by the major local medical providers HealthPartners, Allina, Tria and others. But isn’t that enough as insurance identification by a six-person suburban oral and maxillofacial surgery practice?
The intake form was a professional editor’s nightmare, stuck with no space for a 70-year-old man’s list of surgeries and prescription drugs. Both receptionists seemed used to never smiling or apologizing like “I’m sorry, but you can speak to my supervisor” or “Our patient rep would be happy to see you. “
The surgeon was once again superb. However, when I told her that I was dissatisfied with their forms and their refusal to accept a military ID, and asked her who I could talk to, she simply replied, “Steve. At the business office.
Ah yes, (eco lesson here) this is called “inelastic demand”. In this case, a business where the quantity purchased does not vary much with price – or implicitly with level of service. Like “love” in a 1970s movie, inelastic demand obviously means never having to say you’re sorry.
However, this is only part of the real world economy in what has been by far my least patient friendly health care provider encounter in years.
Why would a rational, profit-maximizing company sniff an ID used by 9.6 million potential patients? Anti-military animosity? Or just what economists call “imperfect information” from a poorly trained and poorly supervised receptionist? Probably the latter.
Why spend millions to rent six fancy suburban clinics for a team of doctors and tens of thousands of dollars on a website, without paying a few hundred dollars to a professional editor to revise their paper forms? Microeconomics students learn that producers who maximize their profits invest in inputs so that the marginal income produced in each area just equals the marginal cost of the input. Attention to receptionist training or paper forms should equal websites and offices.
Perhaps the practices of physicians are not maximizing profits. And perhaps the theory of “production economics” reflects the highly idealized dreams of 19th century theorists. Not the “real world”, in other words.
The degree of competition can be very important. There are probably hundreds of family dentists in the Metro Twin Cities area who rely on word of mouth from happy patients. For economists, they operate in “monopolistic competition”, almost as competitive as agriculture, but not quite.
There are several dozen orthodontists and periodontists. Still monopolistic competition, but it depends more on referrals from family dentists and less on word of mouth. The competition is a little less intense and the incentives for the graceful treatment of patients weaker, but far from having disappeared.
There are far fewer “maxillofacial surgery” practices. It is an “oligopoly” at the level of the metro. It is not a pure monopoly, but companies have substantial pricing power and fewer incentives to satisfy customers. Patients have very imperfect information about the alternatives. They depend on the good word of their own family dentist and often face a dental crisis. Such specialized practices can treat patients well, but the incentives for doing so are weaker because treatment is more specialized and patient information is less.
And that is why these lessons apply to much larger problems, in market sectors that affect millions of people. Consider such oligopolies in social media and search engines. In Congress, Democratic Senator Amy Klobuchar joined forces with her Republican counterpart Tom Cotton on the matter. The monopoly power of the meat and dairy packaging industry giants is hurting Minnesota farmers and consumers. Specialty dentists with weak client relationships are just a minor irritant. But the moral of inelastic demand is that none of these companies, big or small, are at risk of losing business because of their abuse.
There is, however, an important story. I had a chip on my shoulder eight years ago. I still have some form of PTSD as a result of a violent sexual assault by a stranger that I experienced when I was six years old. This is not an “me too” moment – I wrote an op-ed about it 30 years ago. I relate it to students when presenting Milton Friedman’s views on how economists should ignore their beliefs or personal experiences. The shame that keeps people from speaking simply strengthens the perpetrators.
This childhood experience touched me enormously, but it is also only part of who I am. But as a result, dental procedures can be extremely stressful. Coping mechanisms reduce my fear and discomfort. Informing dentists is at the top of the list. During their first visit to this maxillofacial surgeon in 2013, their form asked: “Are there particular problems that affect…? I wrote about my experience. This receptionist and an assistant walked past it. The DDS-MD walked in, scanned quickly, ignored my response and went into, “So what brings you here…”.
Since they asked the question, I have found ignoring my answer deeply disrespectful. For someone else, barely emerging from decades of silent fear, it could have been emotionally devastating. I gritted my teeth, interrupted her, had my say and we went from there. She turned out to be a superb doctor, even though empathy was put to the test.
The incident, however, refutes a conventional economic theory resembling the “Field of Dreams”. If a lot of people want something, market incentives ensure that someone will offer it. Not always !
The shame and fear of society around sexual violence creates “exteriority”. Tens of millions of survivors yearn for a better understanding of medical care. Some suppliers must realize this. Family practices display cheerful pink hippos and laughing giraffes to allay the fears of young patients, but hardly any make any effort to advertise sensitive PTSD treatment. It is a measure to which the attitudes that economists categorize as “tastes and preferences” erase the gears of idealized free markets.
St. Paul’s economist and writer Edward Lotterman can be contacted at [email protected]