Journal of Business Ethics

, Volume 101, Issue 3, pp 459–474 | Cite as

Consumer Sovereignty in Healthcare: Fact or Fiction?

Article

Abstract

We pose the question: Is consumer sovereignty in the healthcare market fact or fiction? Consumer sovereignty in healthcare implies that society benefits at large when healthcare organizations compete to develop high quality healthcare products while reducing the cost of doing business (reflected in low prices), and when consumers choose wisely among healthcare products by purchasing those high quality products at low prices. We develop a theoretical model that encourages systematic empirical research to investigate whether consumer sovereignty in healthcare is fact or fiction. In doing so, we develop a series of theoretical propositions that may demonstrate that consumer sovereignty is more fiction than fact. Specifically, healthcare consumers lack the ability, motivation, and opportunity to choose healthcare products that are high in quality and low in price. Similarly, healthcare firms lack the ability, motivation, and opportunity to compete in ways to develop and market higher quality products at lower prices.

Key words

consumer sovereignty healthcare ethics healthcare reform healthcare policy healthcare economics 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Achrol, R. S.: 1991, ‘Evolution of the Marketing Organization: New Forms for Turbulent Environments,’ Journal of Marketing 55 (October), 77-93.CrossRefGoogle Scholar
  2. Amerson, K.: 2007, ‘Direct-to-Consumer Pharmaceutical Advertising in Men’s and Women’s Magazines,’ Dissertation of Master of Arts, Texas Tech University.Google Scholar
  3. Balsa, A. I., N. Seiler, T. G. McGuire, and G. Bloche: 2003, ‘Clinical Uncertainty and Healthcare Disparities,’ American Journal of Law and Medicine 29(2-3), 203-219.Google Scholar
  4. Beauchamp, T. L. and J. F. Childress: 1994, Principles of Biomedical Ethics 4 th ed. (Oxford University Press, Oxford).Google Scholar
  5. Bloche, M. Gregg: 2007, ‘Consumer-Directed Health Care and the Disadvantaged,’ Health Affairs 26(5), 1315-1328.CrossRefGoogle Scholar
  6. Block, L. G. and P. A Keller: 1995, ‘When to Accentuate the Negative: The Effects of Perceived Efficacy and Message Framing on Intentions to Perform a Health-Related Behavior,’ Journal of Marketing Research, 32 (May), 192-203.CrossRefGoogle Scholar
  7. Blumenthal, D.: 2006, ‘Employer-Sponsored Insurance-Riding the Health Care Tiger,’ New England Journal of Medicine, 355(2), 195-203.CrossRefGoogle Scholar
  8. Buntin, M. B., C. Damberg, A. Haviland, K. Kapur, N. Lurie, R. McDevitt, and M. S. Marquis: 2006, ‘Consumer-Directed Health Care: Early Evidence about Effects on Cost and Quality,’ Health Affairs 25, w516–w530 (published online 24 October 2006;  10.1377/hlthaff.25.w516).
  9. Caves, R. E., M. D. Whinston and M. A. Hurwitz: 1991, ‘Patent Expiration, Entry, and Competition in the U.S. Pharmaceutical Industry’, Brooking Papers, pp. 1–66.Google Scholar
  10. Chamberlin, E.: 1933, The Theory of Monopolistic Competition (Harvard University Press, Cambridge).Google Scholar
  11. Chandler, A. D.: 1990, Scale and Scope: The Dynamics of Industrial Capitalism (Belknap Press, Cambridge).Google Scholar
  12. Charkham, J.: 1995, Keeping Good Company: A Study of Corporate Governance in Five Countries (Oxford University Press, Oxford).Google Scholar
  13. Cockburn, I.M., and R.M. Henderson: 2001, ‘Scale and Scope in Drug Development: Unpacking the Advantages of Size in Pharmaceutical Research’’ Journal of Health Economics 20, 1033-1057.CrossRefGoogle Scholar
  14. Cohen, W.M., and D.A. Levinthal: 1989, ‘Innovation and Learning: The Two Faces of R&D,’ Economic Journal 99, 569-596.CrossRefGoogle Scholar
  15. Cowan, C.A., and M. B. Hartman: 2005, ‘Financing Health Care: Businesses, Households, and Governments, 1987-2003,’ Baltimore: Centers for Medicare & Medicaid Services, July.Google Scholar
  16. Cumbler, E., H. Wald, and J. Kutner: 2009, ‘Lack of Patient Knowledge Regarding Hospital Medications,’ Journal of Hospital Medicine 5:83-86.Google Scholar
  17. Daniels, N. and J. E. Sabin: 2002, Setting Limits Fairly: Can We Learn to Share Medical Resources? (Oxford University Press, Oxford).Google Scholar
  18. Darling, H.: 2003, ‘Containing Costs: Corporate Employers’ Perspective.’ Health Affairs: Web Exclusives 2002, w91-93.Google Scholar
  19. Davis, K. 2004: ‘Consumer- Directed Health Care: Will It Improve Health System Performance?’ Health Services Research 39(4, Part 2), 1219-1234.CrossRefGoogle Scholar
  20. Day, G. S.: 1990, Market Driven Strategy (The Free Press, New York).Google Scholar
  21. DeNavas-Walt, C., B. D. Proctor and C. H. Lee.: 2007, ‘Income, Poverty, and Health Insurance Coverage in the United States: 2005’, Current Population Reports: Consumer Income, August 2006, http://www.census.gov/prod/2006pubs/p60-231.pdf. Accessed 13 April 2007.
  22. Dickson, P.: 1996, ‘The Static and Dynamic Mechanics of Competition: A Comment on Hunt and Morgan’s Comparative Advantage Theory,’ Journal of Marketing 60 (October), 102-106.CrossRefGoogle Scholar
  23. Dongre,Y., B. Mahadevappa, and R. Rohini : 2010, ‘Building Access to Healthcare in Rural India: Possibility and Feasibility of Low-Cost Medicine’, International Journal of Pharmaceutical and Healthcare Marketing, 4(4), 396-407.CrossRefGoogle Scholar
  24. Gagnon, M. A. and J. Lexchin: 2008, ‘The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditure in the United States’, PLoS Med 5(1), 1–6.Google Scholar
  25. Galbraith, J. K.: 1992, The Culture of Contentment (Houghton Mifflin Company, New York).Google Scholar
  26. Galvin, R. S. and S. Delbanco: 2005. ‘Why Employers Need to Rethink How They Buy Health Care’, Health Affairs 24(6), 1549-1554.CrossRefGoogle Scholar
  27. Galvin, R.S. and A. Milstein: 2002. ‘Large Employers’ New Strategies in Health Care’, New England Journal of Medicine 347(12), 939-942.CrossRefGoogle Scholar
  28. Gannes, S.: 1987, ‘The Riches in Market Niches,’ Fortune (April 27), 227–230.Google Scholar
  29. Gleckman, H.: 2006, ‘A New Twist on Retiree Health Care’, Business Week, July 31, p. 68.Google Scholar
  30. Gold M. R., J. E. Siegel, L. B. Russell, and M. C. Weinstein: 1996, Cost-Effectiveness in Health and Medicine, (Oxford Press, New York).Google Scholar
  31. Goldstein, S. Z.: 2008, `How to Pay for Health Care', Washington Times, February 4, p. A19Google Scholar
  32. Goyder, G.: 1993, The Just Enterprise: A Blueprint for the Responsible Company (Adamantine Press, London).Google Scholar
  33. Grabowski, H. and J. Vernon: 1992, ‘Brand Loyalty Entry and Price Competition in Pharmaceuticals after the 1984 Drug Act,’ Journal of Law and Economics 35, 331-350.CrossRefGoogle Scholar
  34. Hall, M.: 1997, Making Medical Spending Decisions: The Law, Ethics, and Economics of Rationing Mechanisms. (Oxford University Press, Oxford).Google Scholar
  35. Henderson, B. D.: 1983, ‘The Anatomy of Competition’, Journal of Marketing 45 (Spring), 7-11.CrossRefGoogle Scholar
  36. Henderson, R. and I. Cockburn: 1996, `Scale, Scope, and Spillovers: The Determinants of Research Productivity in Drug Discovery', RAND Journal of Economics 27(1), 32–59Google Scholar
  37. Herzlinger, R. E.: 2002, ‘Let’s Put Consumers in Charge of Health Care’, Harvard Business Review 80 (7), 44-55.Google Scholar
  38. Hunt, S. D. and R. M. Morgan: 1995, ‘The Comparative Advantage Theory of Competition,’ Journal of Marketing 59 (April), 1-15.CrossRefGoogle Scholar
  39. Jacobs, M.: 1991, The Green Economy (Pluto, London).Google Scholar
  40. Jacoby, J., D. E. Speller, and C. A. Kohn: 1974, ‘Brand Choice Behavior as a Function of Information Load’, Journal of Marketing Research 11 (February), 63-69.CrossRefGoogle Scholar
  41. Jones, T. O. and W. E. Sasser: 1995, ‘Why Satisfied Customer Defects?’ Harvard Business Review 71, 88-99.Google Scholar
  42. Kay, J.: 1995, Foundations of Corporate Success: How Business Strategies Add Value (Oxford University Press, Oxford).Google Scholar
  43. Kohli, A. K. and B. J. Jaworski: 1990, ‘Market Orientation: The Construct, Research Propositions, and Managerial Implications’, Journal of Marketing 55 (2), 1-18.CrossRefGoogle Scholar
  44. Kohn, A.: 1986, No Contest: The Case against Competition (Houghton Mifflin Company, Boston).Google Scholar
  45. Lagnada, L. and E. Tanouye.: 2001, ‘Are Outrageous Prices Inhibiting Consumer Access to Life-Sustaining Drugs? Yes (Lucette Lagnado) No (Elsye Tanouye)’, in Barton, M. and Abhijit, R. (Eds), Taking Sides: Issues in Marketing, McGraw-Hill, New York, NY, 128-145.Google Scholar
  46. Levin-Scherz, J.: 2010, ‘What Drives High Health Costs and How to Fight Back’, Harvard Business Review, April, 72–73.Google Scholar
  47. Lexchin, J.: 2004, ‘The Effect of Generic Competition on the Price of Brand-name Drugs’, Health Policy 68(1), 47-54.CrossRefGoogle Scholar
  48. Lofton, K. E.: 2005, ‘The Difficult Realties of Healthcare in Our Country’, Frontiers of Health Services Management 21(4), 29-34.Google Scholar
  49. MacInnis, D. J. and B. Jaworski: 1989, ‘Information Processing from Advertisements: Toward an Integrative Framework’, Journal of Marketing 53, 1-23.CrossRefGoogle Scholar
  50. MacInnis, D.J. and C. Moorman: 1991, ‘Enhancing Consumers’ Motivation, Ability and Opportunity to Process Brand Information from Ads’, Journal of Marketing 55 (October), 32-53.CrossRefGoogle Scholar
  51. Marshall, K. P., M. Skiba, and D. P. Paul: 2009, ‘The Need for a Social Marketing Perspective of Consumer-Driven Health Care,’ International Journal of Pharmaceutical and Healthcare Marketing, 3(3), 236-257.Google Scholar
  52. Menzel, P. T.: 1990, Strong Medicine: The Ethical Rationing of Health Care. (Oxford University Press, Oxford).Google Scholar
  53. Miller, T.: 2006: ‘Getting on the Soapbox: Views of an Innovator in Consumer-Directed Care’, Health Affairs 25, w549–w551 (published online 24 October 2006;  10.1377/hkhaff.25.w549.
  54. Mitroff, I. I.: 1983, Stakeholders of the Organizational Mind (Jossey-Bass Publishers, London).Google Scholar
  55. Moynihan, R. and A. Cassels: 2005, Selling Sickness: How the World’s Biggest Pharmaceutical Companies Are Turning Us All into Patients (Nation Books, New York).Google Scholar
  56. Newhouse, J. P. and the Insurance Experiment Group. 1994: Free for AIP Lessons from the RAND Health insurance Experiment (Harvard University Press, Cambridge, Mass.).Google Scholar
  57. Penz, G. P.: 1986, Consumer Sovereignty and Human Interests, (Cambridge University Press, Cambridge).Google Scholar
  58. Plender, J.: 1997, A Stake in the Future: The Stakeholding Solution (Nicholas Brealey, London).Google Scholar
  59. Porter, M.E. and E.O. Teisberg: 2004, ‘Redefining Competition in Health Care,’ Harvard Business Review, 82(6), 65-76.Google Scholar
  60. Poskocil, A.: 2009, ‘Bottom Line: For-Profit Care Drives up Costs’, The Roanoke Times, October 17, p. 15.Google Scholar
  61. Rahtz, D. R. and L. R. Szykman.: 2008, ‘Can Health Care Organizations Better Contribute to Quality of Life by Focusing on Preventive Health Knowledge’? Journal of Marcomarketing 28(2), 122-129.CrossRefGoogle Scholar
  62. Rakowski, E.: 1991, Equal Justice (Oxford University Press, Oxford).Google Scholar
  63. Ramaswami, S., T. Strader and K. Brett: 1998, ‘Electronic Channel Customers for Financial Products: Test of Ability-Motivation-Opportunity Model’, Proceedings of the Association of Information Systems, Americas Conference, August, pp. 300–328.Google Scholar
  64. Rawls J.: 1971, A Theory of Justice (Harvard University Press, Cambridge, MA).Google Scholar
  65. Ray, M. L.: 1985, ‘An Even More Powerful Consumer?’, in R. D. Buzzell (eds.), Marketing in an Electronic Age, (Harvard Business School Press, Boston).Google Scholar
  66. Reidenbach, R. E. and B. Sadifer-Smallwood:1990, ‘Exploring Perceptions of Hospital Operations by a Modified SERVQUAL Approach’, Journal of Health Care Marketing, 10 (1), 47-66.Google Scholar
  67. Rizzo, J. A.: 1999, ‘Advertising and Competition in the Ethical Pharmaceutical Industry: The Case of Antihypertensive Drugs’, Journal of Law and Economics 42(1), 89-116.CrossRefGoogle Scholar
  68. Rodge, L.: 1971, Marketing in a Competitive Economy (Cassell & Company Ltd, London).Google Scholar
  69. Roijakkers, N. and J. Hagedoorn: 2006, ‘Inter-Firm R&D Partnering in Pharmaceutical Biotechnology since 1975: Trends, Patterns, and Networks’, Research Policy 35, 431-446.CrossRefGoogle Scholar
  70. Ruger, J. P.: 2008, ‘Ethics in American Health 1: Ethical Approaches to Health Policy’, American Journal of Public Health 98 (10), 1751-1756.CrossRefGoogle Scholar
  71. Sandel, M. J.: 1984, Liberalism and Its Critics, (New York University Press, New York).Google Scholar
  72. Schultz, R. S.: 2002. ‘Consumer-Managed Health Care,’ Journal of Financial Service Professionals 56 (6), 23-26.Google Scholar
  73. Schumpeter, J. A.: 1942, Capitalism, Socialism, and Democracy (Unwin, London).Google Scholar
  74. Schwartz, D. A.: 1972, ‘Sometimes It Doesn’t Pay to Follow the Leader’, Sales Management 109 (October), 42-44.Google Scholar
  75. Sirgy, M. J. and C. Su: 2000, ‘The Ethics of Consumer Sovereignty in an Age of High Tech’, Journal of Business Ethics 28, 1-14.CrossRefGoogle Scholar
  76. Slate, S. F. and J. C. Narver: 1994, ‘Does Competitive Environment Moderate the Market Orientation-Performance Relationship?’ Journal of Marketing, 58 (January), 46-55.CrossRefGoogle Scholar
  77. Smedley, B. D., A.Y. Stith, and A. R. Nelson, eds. 2003: Unequal Treatment: Confronting Racial and Ethnic Disparities in Health (National Academies Press, Washington).Google Scholar
  78. Smith, N. G.: 1995, ‘Marketing Strategies for the Ethics Era’, Sloan Management Review 60 (Summer), 85-97.Google Scholar
  79. Song, X. M. and M. E. Parry: 1997, ‘Teamwork Barriers in Japanese High-Technology Firms: The Sociocultural Differences between R&D and Marketing Managers’, Journal of Product Innovation Management 4 (September), 356-367.CrossRefGoogle Scholar
  80. Strader, T. and A. Hendrickson: 1999, ‘Consumer Opportunity, Ability and Motivation as a Framework for Market Research’, Electronic Markets 9(1/2), 5-8.Google Scholar
  81. Taggart, J.:1993. The World Pharmaceutical Industry (Routledge, London).Google Scholar
  82. Takeuchi, H. and I. Nonaka: 1986, ‘The New Product Development Game’, Harvard Business Review 66 (1), 137-146.Google Scholar
  83. The Guardian: 2000, ‘A Bitter Pill for the World’s Poor’, The Guardian, January 5.Google Scholar
  84. Tu, H. and J. L. Hargraves: 2003, Seeking Health Care Information: Most Consumers Still on the Sidelines, Issue Brief no. 61 (Center for Studying Health System Change, Washington).Google Scholar
  85. U.S. Department of Health and Human Services: 2006, ‘National Healthcare Disparities Report, 2006’, December 2006, http://www.ahrq.gov/qual/nhdr06/nhdr06.htm. Accessed 13 April 2007.
  86. Walzer, M.: 1990, ‘The Communitarian Critique of Liberalism’, Political Theory 18, 6-23.CrossRefGoogle Scholar
  87. Wheeler, D. and M. Sillanpaa: 1997, The Stakeholder Corporation: A Blueprint for Maximizing Stakeholder Value (Pitman Publishing, London)Google Scholar
  88. Wheelwright, C.: 1993, Managing New Product and Process Development, (The Free Press, New York).Google Scholar
  89. Wonglimpiyarat, J.: 2008. ‘Technological Change in the Pharmaceutical Industry: Policies for Technology Transfer and Management for the Developing Countries’, International Journal of Technology, Policy and Management 8(2), 194-210.CrossRefGoogle Scholar
  90. Yeoh, P-L. and K. Roth: 1999. ‘An Empirical Analysis of Sustained Advantages in the U.S. Pharmaceutical Industry: Impact of Firm Resources and Capabilities’, Strategic Management Journal 20(7), 637-653.CrossRefGoogle Scholar
  91. Zeithaml, V.A.:1988, ‘Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence,’ Journal of Marketing, 52(3) July, 2-22.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2011

Authors and Affiliations

  1. 1.Department of Marketing, Pamplin College of BusinessVirginia Polytechnic Institute and State University (Virginia Tech)BlacksburgU.S.A.
  2. 2.Yonsei UniversitySeoulKorea

Personalised recommendations