Commoditization

Depending on how one looks at their health care and specifically their dental or oral health we should be aware that treatment in general is being commoditized.  So what does “commoditized” mean?

Commoditization

Wikipedia defines commoditization in business as the process by which goods that have economic value and are not distinguishable in terms of attributes (uniqueness or brand) end up becoming simple commodities in the eyes of the market or consumers. It is the movement of a market from differentiated to undifferentiated price competition and from monopolistic competition to perfect competition. (https://en.wikipedia.org/wiki/Commoditization)

 

Commoditization occurs when consumers can buy the same product or service from different small or large businesses. Price is the only distinguishing factor in commoditized products, because there is no significant difference in quality or in how consumers use these products.

Commoditization is often related to agricultural goods such as grains or livestock.  However even in these cases there is some differentiation as to quality.  Wheat for example may be differentiated by the moisture content or the protein content of various samples thus differentiating various shipments despite the general commoditization.   Variation of these qualities will affect the price even within the category. 

Perhaps another example of commoditization would be for the purchase of dollars.  Let’s face it every dollar bill is exactly the same as is every other dollar bill.  Why then are there various “prices” as we buy or rent money from the bank if as a commodity it is the same in all ways?  The obvious difference isn’t the commodity or the dollar, but the consumer.  The variation of the price is now contingent on the credit worthiness of the “buyer” not the value of the product.  There is also some consideration for the service involved with or provided by the institution to the consumer but that is a topic for another discussion.

So what does this all have to do with health care and specifically dentistry?  Consider this - there is an extreme and concerted effort on the part of “Wall Street” venture capitalists to try and commoditize dentistry and health care in general.  To be sure there are some good aspects in reducing the supply of dentistry to a commodity level such as direct price competition.  A problem arises when the individuality of the patient, the disease, the treatment of the disease or the restoration is reduced to an individual or common modality. 

Each and every restoration performed by your dentist is a custom restoration.  It cannot be transferred, transformed or replaced by another common restoration.  There are some similarities in the delivery of the services provided by the dentist but they certainly do not reach the level of a commodity.

Since there are infinite types of situations and numerous if not infinite number of operators addressing those situations the idea of trying to commoditize treatment is not a good one.  The idea that price is the only difference between treatment and restorations is an example of false frugality.  There will always be cheaper materials and various shortcuts that will reduce the initial cost of treatment but the old adage that you get what you pay for is especially true in medicine and dentistry.