Tag: transparency

Travel agents and investment bankers

The more I think about it, the more I’m convinced that travel agents perform a very similar role to investment bankers. In the olden days, not everyone had access to financial markets. In order to buy or sell stocks, one had to go through a brokerage company, who would be paid a hefty commission for his services. The markets weren’t that liquid, and they were definitely not transparent, so the brokers would make a killing on the spread. With the passage of time, advent of electronic trading and transparency in the markets brokers aren’t able to make the same spreads that they used to. Customers know the exact market price for the instruments they are trading, and this results in brokers not able to make too much out of these trades.

It is a similar case with travel agents. Vacation markets (flights, hotels, etc.) are nowhere as liquid as financial markets, and will never be. Sometimes, when you are booking holidays to a strange place, you know little about it, and hence commission a travel agent to find you a place to stay there. Given that you know little about that place, the agent can charge you hefty commissions, and make a nice spread. Of course, nowadays such opportunities are diminishing for agents, as you have websites such as Agoda which allow you to book hotels directly. Now, at one place you can compare the prices of different hotels, and have better information compared to what the agents traditionally offer you. The spread is on the downswing, I must think.

Then, don’t you think package tours are very similar to structured products? Structured products are nothing but a package of several risks packaged together. By acting as a counterparty on a structured product, a bank (even now ) can afford to charge fairly hefty fees. Structured products are illiquid,  and there is no publicly available “market price”, so it is easy for banks to make themselves good spreads on such products. However, all it takes to defeat this is an intelligent customer. All the customer needs to do is to try and understand the risks himself, and start “unbundling” them. Once he unbundles the risks, he can now trade each of them independently, on more liquid markets, and get a much better price than what bankers will offer him. The catch here is that he’ll need to put in that effort in unbundling.

It’s the same with package tours. Given the bundles, it is easy for the agents to make higher spreads. However, if you as a customer simply unbundle the package (hotels, transport, food, etc.), you can find out the price of each (available on sites like agoda and elsewhere) and find out for yourself the spread that the agent is making. And then you compare the agent’s premium with the “cost” of making all the bookings yourself and make an informed choice.

Apart from communication, among the greatest boons of the internet has to do with dismantling middleman monopolies. It is incredible how much use a little information can be of!

Hospital Issues

There is one thing that I haven’t managed to understand about Indian hospitals – it is the dependence on patients’ attendants. Every patient is required to have an attendant next to him/her all the time. In case the attendant is going out, he/she has  to literally take permission from the nurses. Full time, it is the attendant’s job to monitor the patient and alert hte doctors/nurses in case something goes wrong. And the main job of the attendant is to bring medicines.

Yeah, you heard that right. Most hospitals here have attached pharmacies, and the usual practice is for the doctor/nurse to scribble down a prescription which the attendant has to fulfil from the hospital’s own pharmacy. I find this practice weird and ridiculous, and wonder why the hospital cannot short-circuit the attendant’s role and then finally bill the medicines to the patient along with the rest of the bill.

Over the last couple of weeks when my mother has been in ho0spital, I’ve found myself being woken up at all times – including 1 am and 5am to go get stuff from the pharmacy. Sometimes it’s been as trivial as a syringe. Usually it’s a much longer list. Such a long list that given the crowd at the pharmacy, it’s impossible to check if the pharmacist has given you everything he’s billed you for. And in the wee hours of Tuesday morning when there was an emergency and my mother had to be shifted to intensive care, the first thing the people there did was to give me an extra-long list of stuff to get from the pharmacy. This was at 3am.

I wonder why this practice came about, and why it still exists. Is it to facilitate easy transfer pricing for the hospital? Is it t give some sort of transparency to the patient about the medicines being given to him? If the latter, can’t the patient just sign on the prescription authorizing the hospital to procure the stuff from the pharmacy? And given the monopoly power that the hospital’s pharmacy has, service is usually slow and inefficient, thus leading to long queues. And in such scenarios, it’s not easy to actually check if you’ve received everything you’ve paid for. And on top of this, you have the hospital giving multiple prescriptions for the same non-consumable thing, maybe just hoping you don’t notice.

And then there is this thing about the attendants. Thankfully we have enough extended family here in Bangalore that it isn’t hard to find volunteers to do vigil at  the hospital when I’m away at work or other things. But what if we were in a place with no relatives around? Or if the patient were living alone in the particular city? How would the hospital handle this? Would they make the patient himself run around to get medicines?

Whenever I think about these things I tend to get extremely pissed off. The hospital has been otherwise good. The nursing staff are all very nice and never crib. The hospital is maintained extremely well and is clean in most places. There are enough duty doctors at all times. And then they expect an attendant to be with the patient. And the expect the attendant to run around all the time to fetch stuff from the hospital’s own pharmacy.