By KIM BELLARD
If you’re anything like me, you already know that food costs are on the rise. Whether it’s food from a grocery store or a restaurant, the bill can be eye-opening compared to a few years ago. Blame the pandemic, blame corporate greed, blame the President – take your pick. But the bottom line is, you have to eat. You can buy low price options, you can go out less often, you can skimp on non-food spending, but you want to buy food. Another thing you can do is complain.
Well, the fast food industry, for one, is listening to these complaints, and many famous fast food companies have launched a variety of “healthy foods” to ease the pain consumers feel. Obviously they can still feel shame, or at least not understand that consumers have a choice.
I just wish the healthcare industry could do the same.
Let’s be clear: the fast food industry has brought this upon itself. The Wall Street Journal reported that the price of take-out meals rose 30% from 2019, according to Labor Department statistics, and the price of a Big Mac rose 21% during the same period. McNugget meals are up 28% over the same period.
McDonald’s acknowledges the problem. It announced the $5 meal plan in mid-May, targeting a June 25 launch date. For those of you looking for your McD’s fix, the deal includes a McDouble or McChicken sandwich, small fries, a small soft drink and Chicken McNuggets. “I’ve been in our restaurant. I’ve sat in focus groups,” Erlinger said Today shows, touting new offers.
It didn’t take long for other fast food chains to offer their own versions. KFC introduced its $4.99 menu in April, even before McDonald’s announcement. Wendy’s has a $3 breakfast deal, Burger King has a $5 Your Way Meal, Taco Bell has something called a Luxe Craving Box for $7, Starbucks has a new Pairing menu that costs between $5-$7, Jack in the Box has a $4 munchies Meal , and Sonic is now offering a $1.99 menu called “Fun.99,” which will be permanent, not a time-limited promotion. I’m sure there are more.
“It’s still true that imitation is the most sincere form of flattery,” Burger King North America President Tom Curtis said in a May email to restaurant operators. “We know the competition is doing this. So we’re going to be in the game,” said Jack in the Box Chief Executive Darin Harris.
For those who are worried about damaging the margins of fast food companies, RJ Hottovy, head of analytical research at Placer.ai, told Yahoo Finance: “It really comes … repeat visits after the fact. You don’t make money on the Value menu. You make money on the menu on other products, other premium products, dessert products, beverage products that go along with that.
Health care is like food which is almost everywhere you can find it. There are fast food restaurants on every corner, but there are also drug stores and doctor’s offices everywhere near those fast food restaurants. Health care may not be everywhere, but it is enough for now.
Unlike food, you may not need health care every day – but you will. It may be a simple visit, maybe a pill a day for a few days, but it can be a mind-boggling array of tests, treatments and procedures that you never imagined or care for a lifetime.
In a fast food restaurant, you look at the menu, choose what you want and how much you are willing to pay, but with your health you do not have such a menu. Others usually tell you what you need and dictate how much you will pay. After many attempts at “price transparency” over the last few years, you may be able to find some set of prices, but if anyone has successfully used them for anything but the simplest of interactions, I’d like to know. about that.
Fast food is very competitive, and you would think that health care, with all our options, would be a competitive market as well. Most health care organizations will tell you that. But most healthcare markets have become highly concentrated. Such consolidation leads to higher prices, and higher prices lead to job losses and lower wages in the local economy. “The fallout from this merger is really falling on Main Street,” said Zack Cooper, an economics professor at Yale University.
Professor Cooper added: “That’s one of the, I think, incredibly subtle but bad consequences of rising health spending. It’s causing people to lose their jobs.
Consumers have been complaining about the price of health care for as long as I’ve been in health care, which is longer than I care to admit (hint: I remember when health care spending was under 10% of GDP). What I don’t recall is any health care organization ever lowering prices, even temporarily.
Look at insulin. It is critical for those who need it. It was invented decades ago, and it’s supposed to be very cheap. But it took a federal law to limit what consumers would have to pay — against the drug companies’ powerful lobbying efforts. And, of course, the only thing reduced is the amount the consumer pays – not the total price.
The same law that imposed limits on out-of-pocket insulin costs also allowed Medicare to negotiate some prescription drug prices, again against pharmaceutical companies. The only way, it seems, for healthcare organizations to lower prices is to legislate (and if you think healthcare organizations will suffer in these negotiations, look at pharmaceutical stocks).
Maybe I don’t want healthcare organizations trying to lure more customers through “value” pricing offers (especially knowing they’re just trying to create more services). Maybe health care is too complex for a simple solution. Maybe the fast food industry isn’t a good model for health care.
But I’m sure it won’t mind if I see more evidence that health organizations feel the pain of consumers from high health costs, and seek to do their part to reduce it.
Kim is a former emarketing executive at the main Blues plan, editor of the late & lamented Tincture.ioand now a regular THCB contributor
