The business environment for health care organizations has changed significantly in recent years. Consumers are increasingly more savvy about getting the greatest medical bang for their buck. This has fostered a closer examination of recommended tests, drugs and therapies not only for their therapeutic value but also for their cost effectiveness. More patients are now broaching the subject of cost with their physicians and asking hard questions. Unfortunately, most physicians are less than knowledgeable about how much many of their recommendations cost, but there are a growing number of services that can help them.
Price transparency has been slow to arrive in the health care system, but there are finally some organizations that are letting consumers view costs before they choose a provider. With the average annual health care cost pegged at $22,030 in 2013, there is a compelling reason to seek out the lowest cost provider. A recent study by PricewaterhouseCoopers found that only 37 percent felt they were sufficiently knowledgeable about lab tests, only 40 percent knew enough about non-emergency medical services, and 54 percent were satisfied with their knowledge of doctor visit prices.
The typical physician is unable to tell a patient how much a service costs, primarily because most medical services are priced differently depending on the payer. An insurer is likely to get a different price than an uninsured patient because there is usually some bundling with other associated services. At the moment, medical professionals can be forgiven their ignorance because pricing is a fluid, highly complicated aspect of health care.
This has made it extremely difficult for consumers to pinpoint an exact cost, even for some of the most routine procedures. Some third party organizations like Consumer Cost Lookup, Healthcare Bluebook and Guroo use a workaround to determine costs. By aggregating the cost data for an entire locality, these companies are able to provide an average price for many common services. While much of the information is not provider-specific, these quotes can offer a comparative benchmark. More insurance companies are recommending these estimator services to members, but there is limited use of them so far (less than 2 percent).
Another important source for medical service prices is the state and federal government. Under the Patient Protection and Affordable Care Act, hospitals must list the price of procedures. While this may offer some insights for consumers as to which hospitals are more competitive, they are usually not reliable for predicting actual costs. Most hospitals publish the highest price for their procedures, but typically charge much less to most patients.
A number of states like Massachusetts, Maine and New Hampshire have established government run pricing resources. In Maine and New Hampshire, consumers may obtain cost estimates based on insurance claims data through websites. Massachusetts has passed a law, the first of its kind in the U.S., which requires insurers, hospitals and physicians to provide the latest pricing information to consumers. More states are considering developing similar legal requirements or consumer resources although there is considerable resistance from many segments of the health care and insurance industries.
Article written by:
Robert Moghim, M.D.
CEO, Health Carousel Locum Tenens