Common sense tells us that the same “Top Ten” list of hospitals or automobiles cannot possibly apply with much success to individual persons. So, why do these one-size-fits-all rankings persist? One reason is money. Rating organizations that publicize their accolades often rely on a business model that forces them to adopt these inflexible techniques.
The One-Size-Fits-All Business Model
Here is how that business model works. Suppose a rating organization is judging widgets. The organization ranks the widgets from best to worst, using some fixed-weighting rubric. The fixed weights imply that all consumers have identical preferences across the different widget features.
Next, the organization may contact the manufacturers of the highest-performing widgets to congratulate them. They may invite the manufacturer to license the right to cite their high ranking in marketing and promotional materials.
Today, we can see this business model in healthcare, particularly for hospital ratings. Jordan Rau’s 2013 Kaiser Health Network article, excerpted below, illustrates the practice:
Here’s another surprise for consumers: Healthgrades, U.S. News, and Leapfrog charge hefty licensing fees to hospitals that want to advertise their awards. The fees can range from $12,500 to the mid-six figures. Healthgrades, for example, told NYU Langone Medical Center in Manhattan it would cost $145,000 to use its citations, according to Dr. Andrew Brotman, NYU’s chief clinical officer.
MedStar Health, which runs three hospitals in the District and seven in Maryland, pays $70,000 to US News to use its name and awards when promoting its hospitals, says Jean Hitchcock, MedStar’s vice president for public relations and marketing. With such an economic structure, it’s no surprise that the raters keep finding more ways to rank hospitals.
It’s easy to see that this licensing strategy would fall apart if ratings were flexible, reflecting the preferences of each user.
A Personalized Composite Measure
Now contrast one-size-fits-all ratings to a system producing personalized scores for each consumer. Tailored Value Ratings result in rankings that vary according to each person’s preferences. This method is more accurate, relevant, and practical; it rejects assumptions of fixed and universal consumer preferences.
The one-size-fits-all approach persists largely as a benefit for the rated entities; they capitalize on their ranking for promotional purposes. For consumers, there is little or no use for one-size-fits-all. With tailored Value Ratings, we put each consumer and his or her unique Preference Profile first. Value Ratings sidestep business models that put sellers’ interests ahead of what is important to each consumer.