It’s hard to think of a worse way to pay for health care than our current system. Imagine if travel websites listed flights with no prices, as airline companies argued that they simply can’t know the price before you fly. After all, your flight could be delayed, cancelled, or rerouted. And how could airlines possibly give you a price beforehand if they don’t know whether you’ll consume a beverage on the flight?
This is what we are dealing with in our health care system today, as inflated and surprise medical bills spark national outrage. No one is suggesting that we surgeons give a price quote before performing an emergency thoracotomy, but 60 percent of medical services are non-urgent and shoppable. So why aren’t medical prices more transparent?
The confusion in pricing is driven primarily by secret discounts that hospitals and insurers negotiate. It’s a game they both play whereby prices are artificially elevated as insurers are given bigger and bigger discounts each year in the deal making. This money game thrives on keeping the true cost and price of care elusive, preventing out-of-network patients, those with high-deductibles, and the uninsured from being informed consumers in a rational market.
Every stakeholder in health care is doing very well financially except for one—the patient. The business of medicine has grown to now become the largest industry in America, with a bloated $3.5 trillion spend, 30 percent of which goes to things that have nothing to do with health. For example, many businesses have sprouted to mark-up, discount, negotiate and collect medical bills, known as the re-pricing industry. After-the-fact pricing created these businesses. This sector of health care not only costs money itself to staff and operate, but it can also result in significant lost productive time for Americans who have to deal with it.
On a recent trip to Carlsbad, New Mexico, I met Hannah, an insured high-school teacher with a PhD. For months, she had spent every waking moment she was not at work or with her newborn on the phone fighting her medical bills in a fog of war between the hospital, insurer, and collections agency. Despite her best efforts, the hospital filed a lawsuit against her to garnish her paycheck, notifying her through the Sheriff’s deputy who served her papers in her classroom. In tears, she told me that the care she received “ruined her life,” even though her doctor cured her ailment. For many Americans like Hannah, fighting medical bills is exhausting.
I also met Steph, a single mom of three young children who had her waitressing paycheck garnished in court by the local community hospital. She took on a second waitressing job to pay the bills and now spends little time with her children. Dealing with secret pricing is not only costly to everyday hard-working Americans, it can affect every aspect of their personal lives.
Why are medical prices so secret? After all of my interactions with the medical establishment, I’m convinced that it’s not a diabolical plan. Instead, it’s simply a remnant way of doing business. For years, hospitals have been focused on other priorities such as hiring staff and meeting regulatory requirements. Itemizing their true costs has never been required by the market. But given our current cost crisis and its toll on American families, transparency’s time has come.
Critics argue that few patients use pricing information in seeking medical care. But big purchasers of health care such as employers and health plans and those paying out of pocket for medical care do look at prices—and these proxy shoppers of health care keep markets competitive for everyone.
Price transparency would also usher in quality transparency. Imagine you want to buy a TV and find one at the only store in town for $800. You might wonder whether you should buy it at this price. But if there were two TV models for sale and one costs $800 and the other costs $900, you’d immediately demand to know all the specs and quality differences of each.
The field of quality measurement in health care has been stagnant for far too long. In a study by the University of Iowa, researchers called 101 U.S. hospitals asking for the cost of a standard coronary bypass surgery (CABG). Only 53 were able to provide a price, and that price ranged from $44,000 to $448,002. In comparing each center’s price to their outcomes in the national Society of Thoracic Surgery registry, the most mature and advanced registry in medicine, there was found to be no association between price and quality. Sunlight is best remedy for health care’s costly waste.
President Trump’s new price and quality transparency executive order seeks to make public the secret discounts between payers and hospitals. Such a major reform, barely covered by the media, would help cut through the money games of health care’s special interests.
There are other areas where reform is needed to address secrecy in health care. For example, to address the issue of kickbacks in the industry. The Alexander-Murray bipartisan bill currently in the Senate seeks to create greater transparency of kickback payments.
I went in to medicine to help people. Honesty in caring for patients is at the foundation of who we are as a medical profession. To me, caring for a patient who is sick means caring for the entire person. Financial toxicity is a medical complication that needs to be taken seriously.
Just as the vast majority of Americans would agree that no airline passenger should receive a $900 surprise bill for having a carry-on bag, we need to be united in fixing this same problem in health care. If airlines today were to remove all prices from travel websites and instead bill you after the flight, imagine the backlash. Even with a topic that has been as highly polarized as health care, surely we can all agree on this simple idea: let’s get rid of price secrecy in health care and restore medicine to its mission.
by Marty Makary on 10/2/19 at 12:31 PM EDT