My daughter recently decided that eliminating body waste into a toilet was a more refined and princess-like process than peeing and pooping in diaper. My wife and I had a hand in that, we had an intervention with Ella: we locked us all up in the house for a weekend and by Sunday night, we had potty-trained our final kid, and hopefully bought our last diaper. My daughter’s doing great, and I can give you the website for the technique if you’d like.

Until that fateful weekend, I had a real problem. Diapers are expensive, especially considering you have to use around five or six a day. So when we were buying 46 diapers for $15.99 at the grocery store, we were paying $62 a month, not including the price of those baby wipes. That’s a couple of rounds of golf in Spokane.

Then, I was talking to some neighbors and they started talking about Costco, how things are so much cheaper there, like diapers. At Costco, you can get the same Huggies® brand diapers for $37.99 for a 176 count box. That is $39 a month, which is a whole lot less.

“It is completely unfair, it’s an outrage!” I exclaimed. Why did my neighbors, card-holding members of Costco, only have to pay $39 a month, while I was paying $62 a month? I told my neighbors that I was going to call a lawyer and sue (who, I hadn’t figured out, perhaps Huggies®), and I’d heard of a good attorney named Scruggs. After a minute or so, my neighbors settled me down and explained one law of economics: volume pricing. They said that by being members of Costco, they had access to discounts based on Costco’s ability to purchase products and services in bulk. Although it seemed to make sense to me, I still wanted to sue someone.

***

Okay, the story above is not true. In fact, my wife and I had been buying diapers at cut-rates at Costco for five years, since our first kid was in them. But, I did have a very similar conversation with a stranger on a recent business trip, except for he was the complainer and I was the friendly neighbor trying to explain economics. The subject of our conversation wasn’t ‘diapers’…it was healthcare. After briefly explaining what I did for a living, he went off on why these large insurance companies can get their members discounts from providers, while self-pay patients have to pay an egregious, full-price. He thought something sneaky was going on, and was mad at providers (funny though, he didn’t seem upset at insurance companies). I got frustrated when the man didn’t understand my point, which was that providers can give discounted prices to health plans because of plans’ purchasing power, kind of like Costco. So I excused myself and pretended to make a call on my cell phone.

Well, this evening I was in a cul-de-sac in my neighborhood where kids and parents seem to migrate on nice days, and again I had the same conversation. This time it really was a neighbor of ours; this neighbor is in upper-management for the railroad. He, however, did understand my point after explanation…thank goodness, because I like this guy and I will have to be neighborly for some time. He ended by saying that he wished he could go and negotiate discounts with providers for the railroad. I don’t know how the railroad works, but I told him that hospitals would most definitely be willing to talk. Of course I mentioned prompt-pay clauses and such.

***

My real problem is that the story about diapers and Costco could never be true. People completely understand that it is fair to pay less per unit when buying in bulk (for anything other than healthcare). Really, has anyone ever complained that a single can of Coke costs 75-cents at a convenience store, but a six-pack costs $3.00, or 50-cents a can? No. So, Costco is a CPMO (Consumer Products Maintenance Organization) and no one cares that its members get cheaper rates than the general public. But hey, don’t get the public started on prices for healthcare.

Or perhaps, the real issue is that hospitals and providers have not done enough to provide consumer education to their patients. I think that the average public is more like my neighbor, and would appreciate education and would understand economics. I think the stranger I met in the airport would be the exception, the small sector of the population who does not care to understand any reality, but just likes to complain to anyone who will listen – don’t get me started on why our politicians get so easily distracted by these people.

So, the next time you or your staff are on a call with an outraged patient, who for some reason other than indigence does not have insurance, and who is complaining about how much he is being charged for you saving his life; try the Costco analogy. Because in this day and time, the facts that hospitals are the foundation for any community’s health and that hospitals are practically regulated to have margins of 3% or less are lost on patients who leave the hospital and receive a bill for the quadruple bypass that saved their life.

(Speaking of margins, if jewelry stores had only 3% margins there’s a good chance I could get my wife a nice 10-year anniversary band, but alas, even at Costco they are really expensive.)