By Dr. Bartley Bryt
The cost of healthcare is hidden from consumers and is rarely presented at the point of care, if at all. And most consumers are unaware of the variability in unit costs. For example, in 2014, the “usual and customary” surgeon’s fee for gall bladder surgery in Queens, New York, was about $2,000. But 20 miles east in Nassau County, Long Island, where more doctors are in private practice, the fee was $25,000.
The result? Most Americans are overpaying for healthcare. If healthcare consumers knew they could get the same service at a fraction of the cost – that is, if there were transparency – it would help make healthcare more competitive. And I believe competition is the cure for ailing healthcare in this country, as Simeon Schindleman, our CEO at Brighton Health Plan Solutions, contends in an article in Forbes.
Attempts have been made to provide transparency at the point of service, with the development of cost comparison tools, mobile apps, and consumer education efforts. And, hot off the press, the government is now requiring hospitals to post their standard price list online. But it’s unclear how difficult implementation could be, considering the technical nature of hospital billing practices. Research by McKesson shows that most cost transparency approaches at point of service have not gained traction; only 8% of providers and payors cite success in these engagement methods. The failure stems from various causes: people were not made aware of the tools, or they found them too burdensome and time-consuming. People don’t necessarily want to devote time to research when they feel they have an acute need for healthcare.
An easier and perhaps more effective way is to provide transparency at open enrollment, when people are comparing health plans and deciding which to choose. It will be more intuitive for families to select economically when health networks openly compete on the total cost of care – at the point of benefits enrollment.
As providers compete on cost, quality, patient experience, and other measures, the providers that offer the best value will gain more membership. They will grow their business and increase total revenue. It will also incentivize them to continue to offer value and improve.
In this model, when consumers arrive at the point of service, they can be confident they are getting a decent deal – reducing their need for due diligence at the time that they need care, when they might not be in the right frame of mind to compare costs.
As in other marketplaces, the healthcare industry would be well-served by competition. The best vendors (or providers) would gain market share, and consumers would effectively compare prices and make informed decisions. Create health plans have established such a competitive marketplace – where consumers, plan sponsors and the best providers win.