Is it Time for a TMO: Textbook Maintenance Organization?
Posted on September 16, 2005
Ian Ayres, a professor at Yale Law School, writes an interesting editorial for The New York Times in which he discusses a possible solution to the soaring cost os college textbooks, which now can cost up to $150 -- for one book. Ayres compares the situation to the rising cost of prescription drugs and comes up with a novel solution: create book-like HMO's, called Textbook Maintenance Organizations or TMO's to force the universities to get involved in cutting book prices.
Indeed, the pricing problems with textbooks are eerily analogous to those affecting prescription drugs. In both cases you have doctors (Ph.D.'s or M.D.'s) prescribing products. In neither case does the doctor pay for the product prescribed - in many cases, he or she doesn't even know what it costs. And the clincher is that in both cases, the manufacturers sell the same product at substantially reduced prices abroad.Kudos to Professor Ayres for calling attention to the issue. $150 for one textbook is absolutely absurd. Isn't it time for e-book technology to make huge textbooks outdated?The analogy to prescription drugs suggests a possible solution. Perhaps universities can take a lesson from managed health care. Health maintenance organizations are often criticized for being too stingy, but let's not forget that they've played an important role in containing health care costs.
So just imagine what would happen if universities started to provide textbooks to their students as part of the tuition package. Of course tuition would have to rise, but for the first time universities would start caring about whether their professors were too extravagant in the selection of class materials.
This "textbook maintenance organization" wouldn't require a huge centralized bureaucracy. Universities would probably give professors a textbook budget per student. Those who exceeded the budget would have to seek their deans' approval. Some enlightened colleges might even give a share of the savings to professors who don't use up all of their budgets.