Are The Economics Of Healthcare Delivery Consistent With Classic Theories Of Supply And Demand? It Seems Not When Consumers Are Not The Payers.

A | WHILE I’M NOT AN ECONOMIST, one of the fundamental challenges of our healthcare system is that the economics are not consistent with classic theories of supply and demand. This is mostly due to a highly fragmented system with several middlemen and adjacencies with misaligned incentives. One classic example would be PBM rebates being paid off of high list prices in exchange for formulary status, often having no connection to supply or demand. Hopefully, as we continue to see deeper integration of our healthcare system with such vertical combinations as Express Scripts and Cigna, we can keep working toward greater transparency and alignment on healthcare economics.

JEFF BERKOWITZ is CEO and director of Real Endpoints, a data/analytics advisory firm. He has served in multiple senior executive roles spanning the healthcare continuum and presently serves on several biopharmaceutical company boards.