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Why would price transparency be a good thing for health consumers?

One of my readers recently asked for some examples of how price transparency might improve his lot. A great question! The people who stand to benefit the most from price transparency are the uninsured and those with high deductible health savings accounts. Price transparency is globally valuable because it allows people to understand the true cost of healthcare, making them more informed consumers. It also promotes accountability of hospitals, healthcare providers, and insurance companies.

Naughty Hospitals

Arbitrary fees:

“The cost for a total hip replacement in the greater Seattle area varied between $13,996 at one local hospital and $46,758 at another. Furthermore, there wasn’t necessarily any correlation between the cost of the procedure and the hospital’s quality or experience doing it. …Why would anyone pay a higher price for lower quality and potentially more complications, especially when it concerns your health?”

Where does a non-profit put its profitsDr. Feld knows where:

“We are unable to know the hospital’s actual overhead. If we did, we could to find out what the hospital’s actual costs are. We could then calculate the hospital’s profit. These numbers are totally opaque.

Most hospitals are non profit hospitals. They can not post a profit at the end of the year. Therefore, they have to pour the extra money into something. Executive salaries and capital expenditures are a prime avenue for getting rid of their profit. A key question is how is the hospital’s overhead calculated? Maybe reducing costs to the consumer would be a good idea?”

Predatory hospital billing:”

Over the past year, aggressive billing practices have been exposed at a number of hospitals in the United States. Despite the fact that a widower had paid $16,000 of his late wife’s bill of $18,740, some 20 years after the incurrence of the bill a teaching hospital held a lien on his home for $40,000 in interest. Many years earlier the hospital had seized his bank account, and now the 77-year-old man was destitute. Only tremendous publicity caused the hospital to back down. In California, a patient was forced into bankruptcy in 2000 by a for-profit hospital from a day-and-a-half stay in the hospital that did not include any surgery but totaled $48,000 in hospital bills. These have become common stories as hospitals aggressively market, bill, collect, and foreclose, just like any other corporation. The uninsured are facing the brunt of the hospital industry’s billing practices.

Naughty Outpatient Facilities

“Mr. Smith needs to get an MRI. He has a high deductible HSA, with a $2000 deductible, much of which he has not yet spent. So he will likely have to pay for 100% of this service himself. Without access to cost information by facility, he would simply go to a convenient, local facility and might pay up to $1300 for this single test. If he had access to health care cost information on the web, he could look up the cost of his service across different facilities and choose to go to the one that only charges $450 – a very meaningful difference for Mr. Smith.”

“More than 3 million people have already signed up for HSAs, and 29 million are projected to do so by 2010. Forty percent of the people who bought HSAs have family incomes below $50,000. More than a third of those who bought HSAs on their own had previously been uninsured.”

Naughty Doctors

What happens when 2 procedures have been shown (through careful research) to have equal efficacy, but one is reimbursed at a much higher rate? Docs will choose to perform the more expensive one, of course.

“Prostate cancer patients’ biggest concerns — after cure — are the possible side effects of surgery, including urinary incontinence and sexual impotency. Data on these side effects from robotically assisted prostatectomy were sketchy at best, and no evidence was available to indicate that any surgical method emerged as better than another for these side effects… Open radical prostatectomy costs $487 less a case than non-robotic laparoscopy and $1,726 less than robot-assisted prostatectomy.”

Naughty Insurance Companies

Insurance companies don’t want to make their pricing public because they don’t want their competition to know how much (or how little) they’re compensating physicians. Therefore, consumers are prevented from seeing costs as well – which can hinder their ability to make informed decisions about their care.

I bet others can think of some excellent reasons why price transparency is beneficial to consumers. Care to contribute?

This post originally appeared on Dr. Val’s blog at RevolutionHealth.com.


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2 Responses to “Why would price transparency be a good thing for health consumers?”

  1. sappleton says:

    This is a great concept, but what would it take to make it a reality? Obviously the technology is available to make the “pricelist” available to the healthcare consumer, but it seems like the industry leaders with the power to change would be opponents of transparency. I would love to be able to compare prices on hospital/clinic websites, but in reality I think I don’t think it’s going to happen anytime soon.

    From an outside perspective, it seems to me that a catastrophe would have to occur to force the industry to change. That catastrophe could be the single payer/government health care plan.

    I believe our only other true hope is a real culture change of healthcare consumers. With babyboomers moving into retirement, their caregivers (children) are going to be more involved in this process. Hopefully these people will be led by online bankers, online shoppers, online communicators – that will see a possible opportunity of using technology to help organize and distribute this information. With all of the technological breakthroughs in medicine in the last 20 years – the physician-consumer communications piece has dragged behind unfortunately. I have better communication capability with the company that made my new bicycle lights than with my Pediatrician – healthcare provider to my children!

    Anyway – I appreciate your perspective and thank you for your time. I wish you the best.

    -Steve

  2. consumer_advocate says:

    As a consumer advocate, I am heading up an initiative to provide price transparency for routine healthcare services. I am hoping to take the “secrecy” out of healthcare pricing by enabling consumers to share healthcare pricing and their recommendations with other consumers. I have developed a website with a searchable directory of true prices for common healthcare services (diagnostic tests, MRI, mammogram, x-ray, office visit, and outpatient procedures). The contents of the directory are contributed by consumers to share with other consumers. The directory is free and provides actual price information on what consumers paid for common healthcare services. Both the insured and the uninsured will benefit by allowing them to compare costs and make the most out of their healthcare dollars. The 44.8 million uninsured individuals can benefit by using this directory to research prices and negotiate better rates with healthcare providers. Consumers can benefit by using the directory to look-up prices for routine healthcare services before the service is performed. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” /><o:p></o:p></P>
    <P class=MsoNormal style=”MARGIN: 5pt 0in; mso-layout-grid-align: none”><SPAN style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”>I am very interested in feedback and comments on this initiative.</SPAN><o:p></o:p></P>
    <P class=MsoNormal style=”MARGIN: 5pt 0in; mso-layout-grid-align: none”><SPAN style=”FONT-SIZE: 10pt; FONT-FAMILY: Arial”><A href=”http://www.outofpocket.com”>www.outofpocket.com</A><o:p></o:p></SPAN></P>

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Richmond, VA – In an effort to simplify inpatient medical billing, one area hospitalist group has determined that “altered mental status” (ICD-9 780.97) is the most efficient code for use in any patient work up.

“When you enter a hospital, you’re bound to have some kind of mental status change,” said Dr. Fishbinder, co-partner of Area Hospitalists, PLLC. “Whether it’s confusion about where your room is located in relationship to the visitor’s parking structure, frustration with being woken up every hour or two to check your vital signs, or just plain old fatigue from being sick, you are not thinking as clearly as before you were admitted. And that’s all the justification we need to order anything from drug and toxin screens, to blood cultures, brain MRIs, tagged red blood cell nuclear scans, or cardiac Holter monitoring. There really is no limit to what we can pursue with our tests.”

Common causes of mental status changes in the elderly include medicine-induced cognitive side effects, disorientation due to disruption in daily routines, age-related memory impairment, and urinary tract infections.

“The urinalysis is not a very exciting medical test,” stated Dr. Fishbinder. “It doesn’t matter that it’s cheap, fast, and most likely to provide an explanation for strange behavior in hospitalized patients. It’s really not as elegant as the testing involved in a chronic anemia or metabolic encephalopathy work up. I keep it in my back pocket in case all other tests are negative, including brain MRIs and PET scans.”

Nursing staff at Richmond Medical Hospital report that efforts to inform hospitalists about foul smelling urine have generally fallen on deaf ears. “I have tried to tell the hospitalists about cloudy or bloody urine that I see in patients who are undergoing extensive work ups for mental status changes,” reports nurse Sandy Anderson. “But they insist that ‘all urine smells bad’ and it’s really more of a red herring.”

Another nurse reports that delay in diagnosing urinary tract infections (while patients are scheduled for brain MRIs, nuclear scans, and biopsies) can lead to worsening symptoms which accelerate and expand testing. “Some of my patients are transferred to the ICU during the altered mental status work up,” states nurse Anita Misra. “The doctors seem to be very excited about the additional technology available to them in the intensive care setting. Between the central line placement, arterial blood gasses, and vast array of IV fluid and medication options, urosepsis is really an excellent entré into a whole new level of care.”

“As far as medicine-induced mental status changes are concerned,” added Dr. Fishbinder, “We’ve never seen a single case in the past 10 years. Today’s patients are incredibly resilient and can tolerate mixes of opioids, anti-depressants, anti-histamines, and benzodiazepines without any difficulty. We know this because most patients have been prescribed these cocktails and have been taking them for years.”

Patient family members have expressed gratitude for Dr. Fishbinder’s diagnostic process, and report that they are very pleased that he is doing everything in his power to “get to the bottom” of why their loved one isn’t as sharp as they used to be.

“I thought my mom was acting strange ever since she started taking stronger pain medicine for her arthritis,” says Nelly Hurtong, the daughter of one of Dr. Fishbinder’s inpatients. “But now I see that there are deeper reasons for her ‘altered mental status’ thanks to the brain MRI that showed some mild generalized atrophy.”

Hospital administrators praise Dr. Fishbinder as one of their top physicians. “He will do whatever it takes to figure out the true cause of patients’ cognitive impairments.” Says CEO, Daniel Griffiths. “And not only is that good medicine, it is great for our Press Ganey scores and our bottom line.”

As for the nursing staff, Griffiths offered a less glowing review. “It’s unfortunate that our nurses seem preoccupied with urine testing and medication reconciliation. I think it might be time for us to mandate further training to help them appreciate more of the medical nuances inherent in quality patient care.”

Dr. Fishbinder is in the process of creating a half-day seminar on ‘altered mental status in the inpatient setting,’ offering CME credits to physicians who enroll. Richmond Medical Hospital intends to sponsor Dr. Fishbinder’s course, and franchise it to other hospitals in the state, and ultimately nationally.

***

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