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Thread: Hospital Publishes Rates; Capitalism Ensues

  1. #1

    Default Hospital Publishes Rates; Capitalism Ensues

    Well, an hospital in Oklahoma did what neither the private or socialized systems really do: they published their procedure rates online. What happened was interesting.

    http://opinionator.blogs.nytimes.com...ide-the-price/

    JULY 31, 2013, 10:20 AM
    Revealing a Health Care Secret: The Price

    By TINA ROSENBERG

    The Surgery Center of Oklahoma is an ambulatory surgical center in Oklahoma City owned by its roughly 40 surgeons and anesthesiologists. What makes it different from every other such facility in America is this: If you need an anterior cruciate ligament reconstruction, you will know beforehand — because it’s on their Web site — that it costs $6,990 if you self-pay in advance. If you need a tonsillectomy, that’s $3,600. Repair of a simple closed nasal fracture: $1,900. These prices are all-inclusive.

    Keith Smith, the co-founder of the center, said that it had been posting prices for the last 4 of its 16 years. He knew something was happening, he said, when people started coming from Canada. “They could pay $3,740 for arthroscopic surgery of the knee and not have to wait for three years,” he said. Then he began getting patients from elsewhere in the United States and began to find out — “I get 8 or 10 e-mails a week” — that he was having an effect on prices far away. “Patients are holding plane tickets to Oklahoma City and printing out our prices, and leveraging better deals in their local markets.”

    The Oklahoma City TV station KFOR, which ran a story on the Surgery Center on July 8, said that several other medical facilities in Oklahoma are now posting their prices as well.

    KFOR’s story has been picked up by news outlets around the United States. Clearly what the Surgery Center has done is resonating.

    On NewChoiceHealth.com, which compares prices offered by different facilities in the same city, Smith’s prices are consistently the cheapest or near it in Oklahoma City. Several hospitals charge $17,200 for laparoscopic hernia repair — for which Smith charges $3,975. A gallbladder removal is $24,000 at some hospitals in the city; it’s $3,200 at the Surgery Center. His prices are better in part because ambulatory surgical centers are cheaper than hospitals (for many reasons), but also there’s a virtuous circle here. He can post his prices because they are good ones. And they are good because he’s chosen to compete on price.

    What’s remarkable is that this is remarkable. Why should a business become the subject of news stories simply because it tells people the cost of its services?


    Because it’s health care. Unlike everything else we buy, when we purchase a medical treatment, surgery or diagnostic test, we buy blind. We do not know the cost of health procedures before we buy. When we do get the bill, we have no idea what the charges are based on and have no way to evaluate them.

    The consequences are by now familiar: CNN reports on hospital charges of $1,000 for a toothbrush and $140 for a Tylenol pill. Elisabeth Rosenthal is writing an excellent series on health care costs for The Times — her stories, about the cost of births in America and another comparing American hospital prices to those of other countries, are revealing.

    Americans pay three, four, sometimes 10 times more for medical procedures, operations and tests than people in other countries like Spain, Canada, the Netherlands, New Zealand — although we do not get better care. The most exhaustive catalog of health price horrors — and the most thorough explanation of their causes — is Steven Brill’s Time magazine cover story of March 4, “Bitter Pill” (subscription required).

    Also familiar are the stakes in this game. Health care costs make up 18 percent of gross domestic product; we spend $8,000 per capita — twice what other industrialized nations do. Government spending on health care costs is a fifth of the federal budget. The growth of health spending is the “single largest fiscal challenge facing the United States government,” writes the Committee for a Responsible Federal Budget.

    Why are health care costs so high? It’s not because of quality; numerous studies have failed to find any correlation between price and quality. Nor is price a function of hospital costs — not when one facility in Oklahoma City can charge 7.5 times what another charges for the same procedure.

    One of the most important reasons has to do with the political and market power of health care providers, who are essentially able to name their charges. The foundation of that system is the fact that only sellers, and not buyers, know the price. If prices are secret, patients can’t comparison shop. There is no way to push prices down, or force providers to compete on price. Price secrecy hides the need for reform. “Getting prices out in the open is crucial to bringing prices down,” said Katherine Hempstead, senior program officer at the Robert Wood Johnson Foundation.

    Some trends in the health care industry are working against transparency. Price opacity comes from the power imbalance in the health care market, and that imbalance is worsening. Hospital chains are consolidating and growing. This may have advantages for patients in some ways, but it increases the chains’ clout and lessens competition. This allows hospitals to fight off demands for transparency.

    But most of the events of the last few years — especially the last few months — have moved the United States toward more price transparency.

    Every year, hospitals must tell the federal Centers for Medicare and Medicaid Services how much it costs them to do each procedure that has a billing code. That information has been publicly available from the C.M.S. since the mid-1990s — but it has been very hard to use the database, and you could get it only in paper form. Now it’s easier to use (but not free) on two Web sites: Cost Report Data and American Hospital Directory.

    May 8 of this year was the biggest day in health care cost transparency yet. Health and Human Services Secretary Kathleen Sebelius released two important databases. One was what Medicare paid for the 100 most common inpatient services at hospitals across the United States. The other was the hospital’s chargemaster price.

    Chargemaster prices are set by the hospital alone and reflect what the hospital would like you to pay. They are the basis for calculating the discounts given to insurers, and they are generally what’s billed to people without insurance. These charges are commonly three times the Medicare price or more, but The Times reported that in the CMS data, some hospitals charged 10 or 20 times the Medicare price. The variation makes your head spin. The average charge for a joint replacement at a hospital in Ada, Okla., was $5,300. The comparable charge in Monterey Park, Calif., was $223,000.

    Some of the factors that are increasing transparency are not happy ones. A big one is the recession, which left a lot of people uninsured for the first time. When you are paying out of pocket for health care, you are a lot more interested in finding out costs.

    Then there is sheer desperation born of the significant increases in health care costs. With premiums rising at least 5 percent per year, employers are increasingly pushing costs onto employees — the employee contribution has doubled in the last five years. Employees can’t afford more. But employers are hitting their limits, too — it’s either stop offering health coverage, or look for really new ways to bring down the cost.

    About 40 states now have some kind of health care transparency laws of varying effectiveness (here’s a report card that doesn’t think much of most of them.) One of the best is New Hampshire’s law, which posts information on actual prices paid so patients can compare them.

    And there are Web sites. “It used to be only travel agents knew the cost of plane tickets,” said Jeanne Pinder, who founded the Web site clearhealthcosts.com, which uses crowdsourcing and reporting (Pinder is a former New York Times reporter) to post prices for shoppable procedures. “Then Kayak and ITA blew that up. If you wanted to buy a house and you asked a Realtor about comparable sales, you’d get, ‘That’s proprietary.’ Now you have Trulia and Zillow.”

    Now health care is getting its Kayaks and Trulias. New Choice Health’s site allows patients to enter a procedure and city to see the range of self-pay prices offered by facilities in that city.

    Patients can even solicit bids. There are other sites; here’s a list.

    It’s a long way from Lending Tree or Amazon, but a big step nonetheless. It couldn’t have happened even a few years ago. “Providers are increasingly aware they need to have a cash or self-pay price,” said Pinder. “When we first started out doing this that wasn’t true. They were like, ‘What, somebody’s uninsured?’ ”

    The Surgery Center of Oklahoma is not the only medical facility that posts its prices. Pharmacy clinics like CVS’s Minute Clinics, many urgent care facilities and a small number of hospitals do as well.

    I haven’t mentioned the elephant in the room, Obamacare. Only it’s not an elephant on health care transparency. It will require hospitals to publicly report their charges. But its real job is to increase access to coverage. And while having insurance is crucial, insurance also gives people a reason not to ask the true cost of their medical care. There are ways around this, though — plans with a higher deductible and lower premiums not only give people a reason to compare prices, they are usually a better deal.

    The Surgery Center of Oklahoma is probably just the beginning. “You’re looking at one example of something that’s going to become really, really important,” said John C. Goodman, a highly influential conservative health policy analyst. “Once one hospital in a city starts doing it, everyone has to do it. “

    Today’s column focused mainly on transparency for patients who are paying their own bills. But what about the insured? Is anyone but Steve Brill combing through medical bills to spot the $1,000 toothbrush? You might think that your insurance company is doing that for you. It is not. In my next column in two weeks, I’ll look at why.

    Join Fixes on Facebook and follow updates on twitter.com/nytimesfixes.

    Tina Rosenberg won a Pulitzer Prize for her book “The Haunted Land: Facing Europe’s Ghosts After Communism.” She is a former editorial writer for The Times and the author, most recently, of “Join the Club: How Peer Pressure Can Transform the World” and the World War II spy story e-book “D for Deception.”

    http://opinionator.blogs.nytimes.com...ide-the-price/

  2. #2
    This right here is the issue -

    " There are ways around this, though — plans with a higher deductible and lower premiums not only give people a reason to compare prices, they are usually a better deal."

    We should have Health INSURANCE not Health Plans. Health insurance should work similar to auto insurance. You don't pay out a claim for an oil change you pay out a claim for a car wreck.

  3. #3
    Quote Originally Posted by Lewkowski View Post
    This right here is the issue -

    " There are ways around this, though — plans with a higher deductible and lower premiums not only give people a reason to compare prices, they are usually a better deal."

    We should have Health INSURANCE not Health Plans. Health insurance should work similar to auto insurance. You don't pay out a claim for an oil change you pay out a claim for a car wreck.
    I guess you base this on the assumption that humans are as simple to maintain as automobiles. Lewk, you are a hoot and a half, in your own special way.
    Faith is Hope (see Loki's sig for details)
    If hindsight is 20-20, why is it so often ignored?

  4. #4
    Quote Originally Posted by Being View Post
    I guess you base this on the assumption that humans are as simple to maintain as automobiles. Lewk, you are a hoot and a half, in your own special way.
    Because that analogy makes perfect sense.

    If we moved to a high deductible, low cost insurance model for health insurance this would make people shop for price. When disaster occurs your covered but outside of that (regular check ups, prescriptions, ect) you will have an incentive to look around for the best price. This will create pricing pressure like that of this article and make the market far more competitive. Look at the price of laser eye surgery - it went down when other medical procedures went up. Why? Because patients paid for it out of pocket - giving them an incentive to price shop.

  5. #5
    My hdhcp requires 5 grand out of pocket for the family and 10% of all costs after that. I am not "covered" in the event of a disaster, very far from it in fact, I'm still fucked financially. This is why health insurance is a joke. We need coverage, not gambling.

    Got to love at will government employment.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  6. #6
    Quote Originally Posted by Ominous Gamer View Post
    My hdhcp requires 5 grand out of pocket for the family and 10% of all costs after that. I am not "covered" in the event of a disaster, very far from it in fact, I'm still fucked financially. This is why health insurance is a joke. We need coverage, not gambling.

    Got to love at will government employment.
    Costs would go lower if everyone had a high deductible health insurance coverage. The way we do health insurance is idiotic. It creates market distortions because unlike almost every other consumer product the costs are paid by someone else. No one (or very few) shop for affordable pricing for their healthcare and since the regular insurance plans out there are so common hospitals and doctors base their billing practice on this idiotic system. Which by the way was primarily caused by misaligned tax incentives for employee plans... ah government is there anything you don't fuck up?

  7. #7
    Quote Originally Posted by Ominous Gamer View Post
    My hdhcp requires 5 grand out of pocket for the family and 10% of all costs after that. I am not "covered" in the event of a disaster, very far from it in fact, I'm still fucked financially. This is why health insurance is a joke. We need coverage, not gambling.
    All insurance is gambling. Up to and including the house edge. What are you asking for instead OG? Universal subsidization? Which actually means the poor don't pay, the middle class pays more than 50% of the countries health-care expenses and the rich pay the remainder.
    Last night as I lay in bed, looking up at the stars, I thought, “Where the hell is my ceiling?"

  8. #8
    Quote Originally Posted by LittleFuzzy View Post
    All insurance is gambling. Up to and including the house edge. What are you asking for instead OG? Universal subsidization? Which actually means the poor don't pay, the middle class pays more than 50% of the countries health-care expenses and the rich pay the remainder.
    Saying insurance is gambling is a pet peeve. Most insurance is the responsible thing to do - weather it be auto, property or life. For example - life insurance. You don't take the policy thinking you will die in X years and have your family profit. Its a contingency plan if things take an unexpected turn. Its like deciding to pack an extra set of clothes on vacation - your not gambling that you'll need it but if you spill something on yourself you have a contingency plan.

  9. #9
    Quote Originally Posted by LittleFuzzy View Post
    All insurance is gambling. Up to and including the house edge. What are you asking for instead OG? Universal subsidization? Which actually means the poor don't pay, the middle class pays more than 50% of the countries health-care expenses and the rich pay the remainder.
    Make it the new model for SS, get rid of the cap and institute a regressive tax. The more you earn, the less you pay as a percentage of your lifetime income.
    Faith is Hope (see Loki's sig for details)
    If hindsight is 20-20, why is it so often ignored?

  10. #10
    Quote Originally Posted by LittleFuzzy View Post
    All insurance is gambling.
    Exactly. The Insurance Industry has become both the middle-man and the House. Adding costs, rarely losing, always profiting. Sounds more like gambling than medicine and healthcare.

  11. #11
    Quote Originally Posted by Lewkowski View Post
    Saying insurance is gambling is a pet peeve. Most insurance is the responsible thing to do - weather it be auto, property or life. For example - life insurance. You don't take the policy thinking you will die in X years and have your family profit. Its a contingency plan if things take an unexpected turn. Its like deciding to pack an extra set of clothes on vacation - your not gambling that you'll need it but if you spill something on yourself you have a contingency plan.
    That's bullshit. You neglected to include Health Insurance in your post. Is that a "contingency plan", too? Ask your wife if being a childhood cancer survivor is anything like packing an extra set of vacation clothes, or if chemotherapy is like dry-cleaning a stain from your dinner shirt.

  12. #12
    http://economix.blogs.nytimes.com/20...nce-companies/

    I'd like to know how many casinos have a profit margin of 3-5%.
    Hope is the denial of reality

  13. #13
    Sounds like a compelling reason to remove the private insurance industry from healthcare.

  14. #14
    Quote Originally Posted by GGT View Post
    Sounds like a compelling reason to remove the private insurance industry from healthcare.
    And instead replace it with a government run program? Because the government always makes this run better...

  15. #15
    Quote Originally Posted by Lewkowski View Post
    And instead replace it with a government run program? Because the government always makes this run better...
    If removing the "middle man" is sound economic theory for consumer goods like mattresses, jewelry, cars, clothing, or food...why shouldn't it apply to life-saving services like healthcare?

  16. #16
    Quote Originally Posted by Lewkowski View Post
    Costs would go lower if everyone had a high deductible health insurance coverage.
    Since we're playing the "pulling shit out of my ass game" I'll add that if everyone had hdhcps the cost to join would go up, benefits would go down, coverage would shrink, and we would be right back where we are now.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

  17. #17
    I think that while this discussion is entertaining, it avoids the real question here. Sure, there's value in more transparent pricing systems - for both the insured and uninsured - and, for that matter, for pricing that isn't set up to give physicians an incentive to add procedures for no good reason. So I approve of the basic point, and I also approve of the general idea of shifting some medical costs to people who will do price-shopping, while keeping catastrophic costs reasonably low.

    However, the price shopping ignores other reasons people might choose a physician - notably, quality of care (not to mention membership in an insurance network, better office hours, proximity to home/work, ease of getting an appointment, etc.). The market for quality of care is incredibly opaque - most people find their physician by a proximity search through their insurance or through word of mouth. There's little data out there on patient outcomes with a given physician, let alone other intangibles... and, as the OP suggests, price is not a particularly good proxy for this.

    I think that determining and publishing actual metrics would greatly improve the healthcare market, far more than mere price transparency. I don't see it happening any time soon, though.

  18. #18
    Let sleeping tigers lie Khendraja'aro's Avatar
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    Not to mention that in the case of a broken leg or a sore tooth, you rather have other things in mind than doing price-shopping.

    "Yes, honey, I know it hurts but this doctor who's only a three-hour drive away can set your bone for a whole 100 dollars less!"
    When the stars threw down their spears
    And watered heaven with their tears:
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    Did he who made the lamb make thee?

  19. #19
    Quote Originally Posted by Khendraja'aro View Post
    Not to mention that in the case of a broken leg or a sore tooth, you rather have other things in mind than doing price-shopping.

    "Yes, honey, I know it hurts but this doctor who's only a three-hour drive away can set your bone for a whole 100 dollars less!"
    I'm not sure I'm following. Because there are some cases where price isn't the only or overriding factor, price can or should play no consideration when choosing medical care?

    That's akin to saying because I'm not picky in where I stop to fill up my gas tank when I'm running on empty, I shouldn't ever take price into account when purchasing gasoline.
    Last edited by Enoch the Red; 08-01-2013 at 07:24 PM.

  20. #20
    Quote Originally Posted by Khendraja'aro View Post
    Not to mention that in the case of a broken leg or a sore tooth, you rather have other things in mind than doing price-shopping.

    "Yes, honey, I know it hurts but this doctor who's only a three-hour drive away can set your bone for a whole 100 dollars less!"
    Agreed with Enoch here; a large portion of healthcare costs is non-emergent care, whether it's preventative stuff or scheduled procedures. There's plenty of scope for price shopping for anything but ER visits. For most non-ER emergent care, you have already done the work - finding a cheapish dentist or primary care physician would happen as a matter of course even before an emergency.

  21. #21
    Let sleeping tigers lie Khendraja'aro's Avatar
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    As long as you have no way to determine quality of care, merely listing prices can be only harmful.
    When the stars threw down their spears
    And watered heaven with their tears:
    Did he smile his work to see?
    Did he who made the lamb make thee?

  22. #22
    No, I think there's some value - if nothing else, in naming and shaming places that overcharge to a ridiculous extent.

  23. #23
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    Quote Originally Posted by wiggin View Post
    No, I think there's some value - if nothing else, in naming and shaming places that overcharge to a ridiculous extent.
    Ditto, it won't change the system, but it will reduce some of the absurdities.
    Congratulations America

  24. #24
    Quote Originally Posted by Khendraja'aro View Post
    As long as you have no way to determine quality of care, merely listing prices can be only harmful.
    I think there is a huge fallacy here. And Khen, normally you strike me as a very intelligent being so help me understand your point...... are you saying that listing prices can only be harmful if that is the only piece of data you have?

    Are you saying that is it better then having no prices and no other data to go on?

    What is sounds like you saying is picking a healthcare provider with NO data is better then picking a healthcare provider with just a tad bit of data (being price). And if this is the case, it doesn't make sense to me.
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  25. #25
    Let sleeping tigers lie Khendraja'aro's Avatar
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    The problem is that if this is the only data to go by, then this is also the only data you can do comparisons on. Which in turn means that the prize becomes the driving force. Which in turn yields a race to the bottom.

    What we as a society need is effective care, not cheap care. Because cheap usually means more expensive in the long term.
    When the stars threw down their spears
    And watered heaven with their tears:
    Did he smile his work to see?
    Did he who made the lamb make thee?

  26. #26
    Stingy DM Veldan Rath's Avatar
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    Word of mouth can come into play, and less expensive does not mean cheap.
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  27. #27
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    Quote Originally Posted by Khendraja'aro View Post
    The problem is that if this is the only data to go by, then this is also the only data you can do comparisons on. Which in turn means that the prize becomes the driving force. Which in turn yields a race to the bottom.

    What we as a society need is effective care, not cheap care. Because cheap usually means more expensive in the long term.
    See here how the US citizen got to the point where he pays 10 times more for the same care as a Dutch citizen. As soon as people start telling you that money shouldn't be an issue, you know it's going to cost you excessively.
    Congratulations America

  28. #28
    Quote Originally Posted by Khendraja'aro View Post
    The problem is that if this is the only data to go by, then this is also the only data you can do comparisons on. Which in turn means that the prize becomes the driving force. Which in turn yields a race to the bottom.

    What we as a society need is effective care, not cheap care. Because cheap usually means more expensive in the long term.
    Price data is pretty powerful when combined with third party scoring, consumer reviews, etc. Not dissimilar to buying a car. But the status quo excludes price data, which I think doesn't help.

  29. #29
    Let's go back to the OP for a minute, and look at the details. The first paragraph is pretty damn important:

    The Surgery Center of Oklahoma is an ambulatory surgical center in Oklahoma City owned by its roughly 40 surgeons and anesthesiologists.
    If you need an anterior cruciate ligament reconstruction, you will know beforehand — because it’s on their Web site — that it costs $6,990 if you self-pay in advance. If you need a tonsillectomy, that’s $3,600. Repair of a simple closed nasal fracture: $1,900. These prices are all-inclusive.
    1) Owned and operated by the doctors doing the surgery and anesthesiology. That could be a conflict-of-interest, similar to physician-owned outpatient radiology services, pre-surgery requirements, and 'preferred' referrals.

    2) Self-pay in advance. That's huge. I can't blame them for wanting to by-pass the Insurance Industry (with all its paperwork, red tape, administrative costs, and prior-authorizations that eat into their overhead). But that means only patients with cash-on-hand, or a credit card with a fairly high limit can pay in advance.

    Their procedures could be emergency surgeries, not elective surgeries. If you need an ACL reconstruction, chances are you've had a traumatic injury, are experiencing severe pain, and immobility that's disabling. Most people would go to a hospital ER for that, not an Ambulatory Surgical Center. EMTs and ambulance services would be hard-pressed to make that medical decision, too.

    On the other hand, their elective surgeries may not even be medically necessary. Tonsillectomies, for example, have been proven largely ineffectual, and possibly harmful to the immune system. A 'repair of a simple closed nasal fracture' can also be treated with non-surgical measures -- manual repositioning/nasal bridge bandage/packing/ice packs.

    In short, that Oklahoma out-patient surgery center isn't a Hospital. Simply publishing their advance self-pay costs isn't Healthcare. And Capitalism is the wrong metric.

  30. #30
    Quote Originally Posted by Dreadnaught View Post
    Not dissimilar to buying a car.
    except that many states consider websites like truecar, which post honest car prices, to be illegal.
    "In a field where an overlooked bug could cost millions, you want people who will speak their minds, even if they’re sometimes obnoxious about it."

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