Health Care's Juicero Problem

by Kim Bellard, September 8, 2017 Bad news: if you were still hoping to get one of the $400 juicers from Juicero, you may be out of luck. Juicero announced that they were suspending sales while they seek an acquirer. They'd already dropped the juicer's price from its initial $700 earlier this year and had hoped to find ways to drop it further, but ran out of time.  Juicero once was the darling of investors. They weren't a juice company, or even an appliance company. They were a technology company! They had an Internet-of-Things product! They had an ongoing base of customers! The ridicule started almost as soon as the hype. $700 -- even $400 -- for a juicer? The negative publicity probably reached its nadir in April, when Bloomberg reported people could produce almost as much juice almost as fast just by squeezing the Produce Packs directly. Moral of the story: if you want to introduce products that have minimal incremental value but at substantially higher prices, you're better off sticking to health care. Take everyone's favorite target, prescription drugs. As Donald W. Light charged in Health Affairs, "Flooding the market with hundreds of minor variations on existing drugs and technically innovative but clinically inconsequential new drugs, appears to be the de facto hidden business model of drug companies." As with prescription drugs, we regulate medical devices looking for effectiveness but not cost effectiveness -- and we don't even do a very good job evaluating effectiveness in many cases, according to a recent JAMA study.  Take robotic surgery, hailed as a technological breakthrough that was the future of surgery. A robotic surgical system, such as da Vinci, can cost as much as $2 million, but, so far, evidence that they produce better outcomes is woefully scarce.  Proton beam therapy? It's one of the latest things in cancer treatment, an alternative to more traditional forms of radiation therapy, and is predicted to be a $3b market within ten years. The units can easily cost over $100 million to buy and install, cost patients significantly much more than other alternatives, yet -- guess what? -- not produce measurably better results.  Last year Vox used 11 charts to illustrate how much more we pay for drugs, imaging, hospital days, child birth, and surgeries than other countries. Their conclusion, which echoes conclusions reached by numerous other analyses: "Americans spend more for health care largely because of the prices." We not only don't get a nifty new juicer from all of our health care spending, we don't even get better health outcomes from it.    Health care's "best" Juicero example, though, may be electronic health records (EHRs). Most agree on their theoretical value to improve care, increase efficiency, and even reduce costs. But after tens of billions of federal spending and probably at least an equal amount of private spending, we have products that, for the most part, frustrate users, add time to documentation, and don't "talk" to each other or easily lend themselves to the hoped-for Big Data analyses.  Many physicians might, on a bad day, be willing to trade their EHR for a Juicero.  Jonathon S. Skinner, a professor of economics at Dartmouth, pointed out the problem several years ago: "In every industry but one, technology makes things better and cheaper. Why is it that innovation increases the cost of health care?"  So we can make fun of Juicero all we want, but when it comes to overpriced, under-performing services and devices: health care system, heal thyself first. This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting