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It is one of those great juxtapositions of the modern age, where classical economics meets social media. And yes, they can agree! That's why as a management consultant/professor, one of my all-time favorite expressions comes from Gary Vaynerchuk, who has updated and put his own twist on Adam Smith's famous notion that the "invisible hand" of capitalism works to sort out "things" as they apply to business and economics with his now famous (well, not as famous as Adam Smith), but growing idea that "the market is the market."
For the economically-minded, I provide the following video:
And for those of you who prefer your wisdom in 140 characters or less, here's Gary V's restatement of the principle for our modern age in what else, but a Tweet:
And so as a business and strategy "guy," I am always curious when we see the market working in exactly the way it was prescribed to do now centuries ago. Even in the age of the Internet and the "whiz-bang" global economy of today, this one economic truism—whether you want to refer to it in the classic way (with Smith's "invisble hand") or with the often F-bomb infused, modern version of Gary V—well, it still holds. No matter how much society, technology, the economy and life changes, some economic principles simply do not change. And the fact that people will make rational decisions underlies the heart of our free market system and all that springs from it—both in terms of opportunities and challenges.
And so that is why I have had an ongoing fascination with what has become a major shift in behavior in our society. Both anecdotal evidence and academic research agrees on how many individuals are making an economically-rational choice. Simply put, given the choice between a $10, $30, or even $50 ride in an Uber or Lyft and a call to 911 to summon an ambulance—which can cost them thousands of dollars, more and more, individuals are following the path dictated by Economics 101 and opting for the far-less expensive option. They are making their own individual, highly rational decisions. However, their choices are collectively serving to rethink how Emergency Medical Services (EMS) and much of our health care system operates. This makes for a fascinating case study on how yes, the market is indeed the market, even when it comes to what is often seen as the most complex, most intractable sector of the American economy today.
Uber vs. an Ambulance?
Oftentimes in the age in which we live, trends start simply with friends telling friends, whether at a coffee shop, at work, or online. Such is the case with a truly remarkable phenomenon. That is the fact that increasingly, when people experience a medical condition that necessitates them seeking medical attention, they are not calling 911 and being seen by an ambulance staffed with trained EMTs (Emergency Medical Technicians). Friends try something, and it works, and in the social media age, they tell both their "real friends" and those they know on Twitter, Facebook, etc. And so it is that particularly when it comes to Millennials, if a medical issue arises and all they want to do is to get to the hospital, they increasingly are thinking of going to the app on their smartphone, not to calling 9-1-1, when they need such assistance.
Now, what began as "word of mouth" and became truly a societal trend first really came to light last December. This was when a working paper was published by the University of Kansas. With the provocative title of "Did UberX Reduce Ambulance Volume?," two professors, one a doctor at Scripps Mercy Hospital in San Diego (Leon S. Moskatel) and one a practitioner of the "dismal science," (Economist David J.G. Slusky of the University of Kansas), their research delved into how the presence of Uber as an alternative means of medical transportation in a community impacted the rate of ambulance usage. What they found, in a nutshell, was that yes, the availability of Uber and other rideshare services negatively impacted the rate of ambulance calls. In fact, the number of people calling 9-1-1 and requesting an ambulance for a medical emergency declined by seven percent in the areas under review where Uber and/or other rideshare services were available. This decrease in the use of ambulances was judged to be statistically significant by any measure, meaning that there was an "Uber effect" present in these markets...
And so what was anecdotal and rumored proved to be true through actual economic and medical research. More and more, individuals were making the economically rational decision and opting for the lower cost option (Uber, Lyft, or another rideshare service) when they needed to be transported for medical services rather than calling for the much higher-priced, fully-staffed ambulance alternative. Across many minds, the invisible hand—and the market—really do work, steering individuals, particularly those without health insurance or only with bare-bones, minimal plans, to choose the far lower cost alternative. If you are in a situation where there is some uncertainty as to whether your medical condition warrants a real ambulance, then you would make the rational decision to choose Uber over an ambulance. For a minor medical issue, maybe you just need to go to an urgent care clinic, and in this case, Uber would be the rational choice over calling for an ambulance and then heading to an emergency room with the EMTs.
Of course, there will be individuals would choose Uber over an ambulance for less than rational reasons. Maybe someone feels "embarrassed" about whatever their medical condition might be. Maybe someone fears the prospect of dealing with EMTs. Maybe someone just makes the decision that, "well, I'm not THAT sick or hurt!" Maybe someone thinks that just because they don't have far to go to the emergency room, they don't really need an ambulance and all that expense.
Now, of course, another rule—somewhat written, somewhat unwritten—of economics is that of "unintended consequences." These are unforeseen—and unforeseeable—events arising out of a given situation. And so there have been, understandably, many unforeseen consequences arising out of the shift of patients choosing to use their Uber app as opposed to simply dialing 9-1-1. Yes, Uber drivers have delivered babies! Yes, there have been some "incidents." Yes, there have been a few things that will leave a stain on the car's upholstery. And yes, there have been times when the Uber driver has had to call for a REAL ambulance for someone who hailed a rideshare on their phone to get to the hospital! And over time, cases like these will only multiply, as this trend continues to develop.
Already, we've seen pushback from the American Ambulance Association, a McLean, Virginia-based trade association for the EMS industry, pointing out the real differences between making use of a simple rideshare service versus using a full staffed and equipped ambulance versus an Uber or a Lyft.
In the end, yes, the invisible hand is working. The market is the market, and the fact the more and more people are making maybe not a planned, but an instinctive, rational, economic choice to make use of rideshare services for their trips to the hospital versus taking an ambulance. And yes, actions have consequences. Now, the collective decisions made by many individuals for their own care and those of friends and loved ones are building into a collective trend, and this force will cause changes in the way we approach not just such transportation choices, but healthcare in America.
This trend has very real implications for companies operating ambulances all over the country. The challenge of the changing landscape for emergency—and perceived possible emergencies—medical transportation presents some very unique and unprecedented challenges and opportunities, both for private companies and public agencies operating ambulance services. It impacts their top and bottom-lines, and over time, they may well have to adjust the size of their fleets, the number of EMTs they employ, and in time, maybe develop "alternative products" to what is conceived as the "one size fits all, traditional ambulance service offering. For fire departments and for other local agencies who run ambulance care, they will have to make strategic planning and budgeting decisions based on uncertain demand going for such services forward, but often without the flexibility to respond quickly enough to the changes in the market that are occurring as the marketplace for such services expands and morphs in new ways. These will be challenging, and yet intriguing times for EMS providers, and the ways in which they respond will shape the future of emergency medical transportation.
Of course, there is the always the distinct possibility that we may see another possible scenario, given the way the political machinery works in America. That is the fact that we could well see attempts to legislate and regulate the market for such services, from both sides of the issue. Of course, with political influence (i.e. dollars), we could well see action on behalf of "Big Ambulance," both from individual companies and from trade associations, who might seek on the local and state levels to attempt to promote laws/regulations that might do one of two things. First, of course, they might seek to put limits on the use of ridesharing for emergency medical transportation. This could take the form of attempts at outright prohibiting the use of Uber, Lyft, or other services by patients (which might face steep legal challenges) to other restrictions, such as restricting rideshare providers from dropping off passengers at hospital emergency rooms (a move that might indeed find legal support, akin to airport authorities' restrictions on how/when/where such services can pickup/dropoff passengers). And then again, we may see hospitals and their industry groups get involved politically as well, as in the interest (or justification) of patient care, quality, liability issues, and improved outcomes, they may want to restrict how incoming patients arrive by placing restrictions on rideshare dropoffs. Yes, the best possible scenario may be for seriously ill/injured patients to be brought into the emergency room by a fully staffed, fully-equipped ambulance, and so it may be in the interest of hospitals, both individually and collectively, to try to enforce patients going through the best pathway—and there could be legal action attempted to do so.
Now on the flip side, there could be actions, either genuine, grassroots efforts or more likely, given the way the political game operates, efforts led by/supported by/financed by ridesharing interests to push efforts that could be labelled "patient choice" or "patient freedom" to use whatever means of transportation they might choose to fit their particular circumstances. On other words, this would mean trying to enshrine into local, state and perhaps even federal laws/regulations a "right" for patients to use whatever means of transportation they might deem as necessary and appropriate.
Of course, there could also be political interests operating by - or on behalf of rideshare drivers themselves. As we've seen, many Uber drivers with tales of having to handle medical situations waaaaaay beyond the needs of a standard ride. Could we see political actions and/or regulations taken to protect the interests and safety of ridesharing drivers if more and more people choose—perhaps rightly, perhaps wrongly, and perhaps REALLY wrongly—to take an Uber or a Lyft rather than calling for trained, staffed, and yes, much more expensive, EMT services.
In the end however, we will likely see healthcare institutions across the board choose to face economic realities and largely concentrate on exploring how to best respond to the changes taking place in emergency medical transportation - and medical transport in general. There will likely be an evolution to where ridesharing will indeed find its place as an integral, permanent—well, as permanent as things can be today—part of the American health care system. We may indeed see a push from government and from health insurers to make ridesharing services an attractive—perhaps even incentivized—mode of medical transport, even in some situations which have heretofore been considered the domain of EMS and EMTs and the business of ambulance services and fire departments. Further, we see that the ridesharing services themselves want to be a health care partner and get their share of the medical transport business. You can see this coming with the recent announcement of the launch of Uber Health, where health care providers of all sizes and all types can work with the ridesharing firm as an integrated part of their service delivery, benefitting both patients with convenience and the provider with more control over the "flow" of their patients, easier and more assured scheduling, and of course, in the legal age in which we live, HIPAA-compliance.
Yep, the market is indeed proving to be the market, and in the end, all of this will shake-out. It may be turbulent, and it may be disruptive, but the economic principles espoused by Adam Smith work, even in the age of Uber, as more and more Americans are making the right economic decisions for themselves when it comes to how they get to health care. And in the end, the systems will need to adapt, and this may mean that the way emergency services and medical transportation are provided and regarded may change radically over the next few years. One thing is for sure, this is an area that should be watched and studied very closely, as there are likely big changes ahead, all because you can summon help on your smartphone with just a few taps. Both Adam Smith AND Gary V should be quite proud!