I work in the transportation industry. My employer is a common contract carrier, i.e.; we transport truckloads of freight from shipper to receiver for a contract price. The industry is competitive, and margins are paper-thin. I have a suggestion for my boss that will improve our market position, and profitability.
“How’s that work?” you ask.
On this wise: We will contract with the broker or shipper to pick up and deliver his freight. After we successfully deliver the product, we shall bill the customer for an amount that we characterize as “reasonable and customary.” He pays us, and all’s well.
“How does this differ from your current practice?” you ask. Reasonable question. Permit me to explain.
In the past, we have leased or purchased equipment; bought lubricants, fuel, tires, batteries, insurance, permits, etc. from the various purveyors of such things.
We paid our vendors from the revenue generated by servicing our customers at a contracted price. No more. Henceforth, we bill the customer for the “reasonable and customary” freight charges, he pays us, and we are slick.
He can then expect to receive bills from a petroleum vendor for fuel and lube oil, from an insurance underwriter for insurance costs, from a leasing company for the use of the equipment, from a tire retailer for the tires … well, you get the picture. While we’re at it, we’ll contract with the drivers, and each driver can bill the customer for his services.
We can slash our payroll dramatically, and save on fringes while we’re at it. The drivers can go online and find their own affordable health insurance and save us several hundred bucks per person in health care costs. I don’t see any down side, do you?
What’s that you say? “The customers won’t abide any such unreasonable scheme,” you say? I beg your pardon, but I can cite you a well-established industry that has operated in such fashion for a generation, and enjoys prestige, influence, and profit (even allowing for high rates of default in accounts receivable).
You doubt my veracity? Tsk…I must be specific, I can tell. OK.
Years ago, I developed physical ailments requiring attention beyond my doctor’s expertise. He referred me to a surgeon who specialized in treating my malady.
After consultation and diagnostic procedures, a procedure was recommended, and after due consideration, (and my insurance company’s permission), I agreed. In due course, I presented my body at an appointed time, was subjected to assorted indignities, and finally mercifully anesthetized.
Weeks after awaking, I received a statement of charges from my surgeon. My insurance didn’t agree that his charge was completely “reasonable and customary,” but he had the foresight to have me agree in writing that I would pay any charges beyond insurance compensation.
OK, deal’s a deal. Same deal with the hospital on whose premises I awoke, bruised and hurting from anus to appetite, and bleeding from the former.
For months afterward, statements arrived from parties of whose very existence I was unaware, much less of my patronage of their products or services; viz.: radiology, laboratory, anesthesiology, oncology, and hematology.
I have no idea whether this list is exhaustive, but it appears that as part of the admissions process, I extended to one and all my personal guarantee to pay whatever my insurance declined to pay.
Now, I ask you, if this business model has served so well that even a not-for-profit hospital can build a business empire that included nearly a quarter of the state, why can a trucking company not take advantage of the same business model?
If my boss is reading this, “You are welcome, Sir.”
All kidding (not to say bitter jesting) aside, how could we have been so desperate for change in health care financing that we allowed the train wreck that is the Affordable Care Act to happen?
Think of your response if I ask you to do business with our company under the terms I’ve just outlined.
Why do we accept such an arrangement from the health care industry? And don’t get me started on “reasonable and customary.” Do you realize that each insurance company determines for itself what is reasonable and customary?
Revolutions fail more often than they succeed. Why do they keep happening? People get fed up with unreasonable and unjust situations against which they are powerless. Is the Affordable Care Act the opening salvo?
Sonny Scott is a community columnist who lives in Chickasaw County. Contact him at firstname.lastname@example.org.