Price doesn't equal Value (Fishbone Diagram)

Product Place and time Price Promotion Process People Productivity Purpose

When setting prices, a business avoids going too low. Of course, we understand this fails to maximize profit. More importantly, consumer behavior demonstrates that a product which is sold for a lower a price than its competitors, is first considered a value. Eventually, the price difference becomes too great. Then the discount is no longer judged to be a better value, and begins to suggest that the product is inferior. For many consumers, the product which they believe has the most value is the second most expensive. For this reason, a business will develop a luxury version of their product. While it may manage to sell a few of these highest end items, more benefit is derived by the now second most expensive item being perceived as a better value.

The price schedule for the AMA is cheap when compared to other professional organizations such as that for trial lawyers. Could the low cost lead many physicians to question how relatively inexpensive professional organizational fees can return value? What if the annual dues were doubled? Would physicians anticipate more value and respond by joining the AMA?

Zane highlighted that much of the cost of participating in the AMA is incurred by traveling to the national meetings. His recognition again raises the question whether a national organization is needed. Or, perhaps Annual and Interim meetings are not regularly required. More productive work may be invested in local improvement, rather than preparing for the next national meeting. When the total cost of participation is largely related to travel expenses, then the disconnect between price and value widens further.

Reviewing the price we find a lot of wasted value. This concept of waste, arises repeatedly in medicine. In the case of the AMA annual events the waste takes the form of travel. Going to Chicago is a fun time, no doubt. However, many physicians would just assume take a legitimate family vacation. Travel to Chicago for CME and professional development workshops allows value to dribble away as hotel receipts, cab fares, and hasty lunches.

Instead, physicians could receive more value by attending regular meetings at which local financial consultants educate attendees on choosing a medical equipment loan from options locally available. They would attend such conferences with neighboring physicians and discuss the local problems they face. Rather than mulling over what they'd like to do about those problems, then only delivering their decision as a single vote to a national legislative body, they could take action--locally and immediately. Of course there are national problems physicians face which require a national organization. One such problem is how to best adopt EMRs to achieve the furtively defined, "meaningful use." Perhaps a local forum in which physicians can offer lessons learned from their adoption of EMR would be more beneficial. As more and more small clinics merge to grapple with increasing overhead, the need to know local fellow physicians increases.

Now, we'll put more meat onto our Fishbone Diagram. The new problems identified:



By picking apart price, we have noted additional problems with Place. Creating a fishbone diagram should allow this sort of active brainstorming. We can quickly categorize this newly identified problem under its appropriate Place label as we fill in the Fishbone Diagram.