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Chapter 7: Problem 13

(Related to the Apply the Concept on page 243) \(A\) column in the Wall Street Journal observed, "Independent websites like Edmunds.com, AutoTrader.com and Kelley Blue Book publish detailed pricing information [on automobiles] for consumers and do so for free. Consumers want such information and businesses see opportunity in providing it, even for free, in order to attract eyeballs for advertising..... Such information doesn't exist in health care." Why aren't there Web sites that offer pricing data on health care and make a profit from selling advertisements?

Short Answer

Expert verified
There are no websites that provide pricing data on healthcare and generate profit from advertisements due to the lack of standardization and transparency in healthcare pricing. Factors such as different insurance contracts, individual health status, and geographical location lead to a wide range of potential costs for the same service. Because of this complexity, it'd be challenging for a website to provide accurate information, and to attract a sufficient level of traffic necessary to generate ad revenue.

Step by step solution

01

Understand the State of Automotive Websites

Understand that websites like Edmunds.com, AutoTrader.com and Kelley Blue Book offer free information about automobile prices. They profit from attracting a large volume of visitors (eyeballs) who are likely to see and engage with advertisements on their platform.
02

Consider the Differences between the Automobile and Healthcare Industries

Acknowledge the fact that unlike automobiles, pricing information for health care services is generally not readily available, and no major websites publicly provide that information. Consider the possible reasons for this which might include varied prices due to different insurance, unpredictability of service cost due to individuals health status, and lack of standardization in pricing.
03

Analysis of Profit Potential

Contemplate whether or not a similar business model (providing free information and generating profits from advertisements) might work for a website providing pricing data on health care. Crucially, one would have to consider whether such a website could generate a sufficient volume of traffic to attract advertisers.

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Most popular questions from this chapter

Briefly discuss the most important differences between the market for health care and the markets for other goods and services.

What is the Patient Protection and Affordable Care Act (ACA)? Briefly list its major provisions.

A report from the American Council on Competitiveness noted that "there has been some recent progress in the digital health sector, which aims to better integrate information and software technologies into all aspects of healthcare." The report also concluded that "the U.S. has rather poor health outcomes relative to other developed countries and stands out as having exceptionally low healthcare productivity when measuring outcomes against spending." a. Briefly discuss the evidence for and against U.S. health care performing poorly relative to other countries when comparing outcomes to spending. b. If the U.S. health care sector makes increasing use of information technology, will it be likely to employ more workers or fewer workers than if it fails to widely adopt this technology? Briefly explain.

The late Nobel Laureate Robert Fogel of the University of Chicago argued, "Expenditures on health care are driven by demand, which is spurred by income and by advances in biotechnology that make health interventions increasingly effective." a. If Fogel was correct, should policymakers be concerned by projected increases in health care spending as a percentage of GDP? b. What objections do some economists raise to Fogel's analysis of what is driving increases in spending on health care?

An article in the Economist on evaluating health outcomes is subtitled "To Improve Health Care, Governments Need to Use the Right Data." Among the data not currently being collected in most countries, the article mentioned "how soon after surgery patients get back to work." Why don't governments currently collect such data? Why might such data be important in evaluating the effectiveness of a country's health care system?
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