Disclosing prices could cut health care costs
Americans are blessed with many of the best doctors and hospitals on the planet. But they also must contend with paying for health care bills that are out of this world.
The Trump administration is shining a light on the dark and frightening experience of paying for health care. It recently announced a final rule that requires hospitals to disclose their secret prices. Illuminating basic pricing information will create an enormous opportunity for patients, doctors and hospitals. Ideally, it will create competition that will drive down costs.
According to a recent JAMA study, 25 percent of U.S. health care costs are a result of waste. Nearly 40 percent of hospital patients receive surprise medical bills. Transparent prices will significantly reduce these cost drivers because waste and inefficiencies will be reflected in higher prices that will scare off potential customers. Patients will also gravitate to providers that offer the peace of mind of guaranteed cash-out-the-door prices with no hidden upcharges.
As a surgeon, I have seen the potential of transparent health care pricing firsthand. Our team was an early adopter of price disclosure, posting our guaranteed prices for health care services online. As a result, I was invited to speak at the White House event where President Trump announced this rule.
By providing patients’ health care and eliminating costs and bureaucracy that does not add to that care, we can provide treatment at major discounts. For example, one of our patients was quoted between $15,000 and $45,000 at local hospitals for an inner ear procedure for his daughter that we performed for $5,250.
Under the opaque health care status quo, hospitals are not rewarded for reducing costs. The higher their prices, the larger their profits. The lack of transparency and avalanche of money has created an opportunity for middlemen throughout the system to “take their cut” and do nothing to provide care. Posting clear prices will prevent much of this cronyism because it will allow patients to pay directly for care in a functional market without the meddling of inflationary third parties.
The rule requires hospitals to disclose their pricing information in an identical, user-friendly and machine-readable format, so patients can easily compare prices like they do for other goods and services. Doctors can advise their patients about what procedures are needed at what priority.
I have experience with the traditional hospital system, yet I’m a new “convert” to the possibility of a health care free market that removes incentives for kickbacks and inflated prices.
Price transparency holds particular promise for employers, which provide health insurance for 181 million Americans and have been among the biggest victims of double-digit annual health care cost increases because they are exposed to the full cost. Armed with transparent-pricing information, employers can steer their employees to providers who offer the best bang for the buck — and their employees receive care without copays or deductibles. Employers such as Texas-based Employee Solutions, Fisher59 and Senderra Rx, which are already contracting with transparent providers, even share their savings with their employees in the form of cash bonuses.
This rule will allow innovative human resources departments to perform costbenefit analyses for employee health care.
When I spoke at the White House, I called on Americans to fight for their right to know their health care costs. Patients, employers, doctors, policymakers and the general public must make their voices heard on this issue, or they will be kept in the dark. This rule threatens the cash flow of hospitals and insurers, two of the most powerful industries in the country, which are deploying their armies of lobbyists, lawyers and PR flacks to defeat this rule.
Much of the joy and fun of caring for patients has been siphoned away in the last few decades. One reason is the “crowd” of uninvited guests in the exam room with me and my patients. These hidden voices seek to alter the care doctors provide. Price transparency will allow the two most important “experts” to sit down and decide health care: the doctor and the patient.