Why Health Care Has No Wal-Mart

BW Online | April 21, 2004 | Why Health Care Has No Wal-Mart: "The Wal-Mart Effect: Huge retailers use their buying power to force suppliers to cut costs, then the retailers pass some of those savings on to their customers. Forced to stay competitive, other retailers follow suit. The result: The price of, say, a DVD player, plunges from $1,000 to $50 in just a few years. It is, for consumers at least, the sort of virtuous cycle that economists dream about.

And it has worked for everything from gizmos to food. But it hasn't worked in one corner of the market -- health care, which accounts for 15% of the U.S. economy and is growing. Why don't the same market forces that drive price competition for DVD players keep health costs from rising at double-digit rates? "