I had family in town this weekend and we ended up touring a local bourbon distillery. In the tour we learned that until the middle of the 19th century distillers were not allowed to bottle their own products. They had to go through a rectification process. The responsibility of the rectifier was to rectify the proof of the product since it can be dramatically variable based on the distilling process. Since the distilled spirits were invariably over 100 proof, rectifying generally involved adding water. However, since the rectifiers because the wholesale sellers of the spirits they rectified, they were in a conflict of interest that led them to adding all sorts of things, including turpentine and spit tobacco juice to increase their profit margins. This ultimately led to massive consumer dissatisfaction and in some case, poisonings and even death. Eventually the federal government stepped in and allowed distillers to bottle their own product but established standards for which they had to follow (e.g. Bottle in Bond).
I was struck by how similar this story is to our current health care environment. Because of dramatic variability in health care costs and quality, we implemented managed care beginning in the 1980s to create some uniformity. Managed care are the rectifiers of our health care system. Sadly, much like the liquor rectifiers, managed care entities are often in a conflict of interest position where doing things cheaper increases their profit margin. This has led to increasing consumer dissatisfaction and even some deaths.
It does not look like further federal regulation will be our way out of this problem, at least at this time. So how do we rectify our flawed rectification process? This is where I think TCOM might fit in.”