Wednesday, September 18, 2013

Medical Transparency: Resistance is Futile

John Green, one of the vlogbrothers, posted a video blog on YouTube that so far has racked up over 2 million views, entitled "Why Are American Health Care Costs So High?"

The bottom line take-away from this manic, though entertaining (and I assume accurate) review of the United States health care system is the reason why costs are so much higher in the US compared to the rest of the world is ...

Because they can...

John argues that there is no central pricing control like other countries, that consumers will pay whatever they are charged because, basically, they don't know any better, and there is no transparency in health care pricing.

Maybe that's true. I don't know, I'm no expert on health care costs, or health care for that matter - hell, I'm no expert on anything.

But it does make sense that health care pricing should be a factor in most medical care decision situations where there is time to make an informed judgment about a procedure - which is most of the time.

Some medical businesses are starting to advertise their prices and it's causing some debate in medical circles.

The Surgery Center of Oklahoma, owned by its roughly 40 surgeons and anesthesiologists, drew national interest and sparked a bidding war as several other medical facilities in Oklahoma posted their prices according to media reports.

Pricing transparency is gaining momentum.

North Carolina passed a law requiring hospitals to provide prices on 140 common medical procedures and services.

In May, the federal government published the billed charges – the equivalent of a hospital sticker price – for the 100 most-common inpatient procedures.

The debate goes beyond pricing and for workers' compensation medical issues price alone is meaningless without knowing the quality of the care provided, i.e. outcomes.

One assumption made by those engaged in the debate is that the patient would be concerned with this value analysis - and I think that's an erroneous assumption.

In workers' compensation most of the decision making is taken away from the patient/injured worker. Decisions are made for that person by the physicians, the insurance company/administrator, attorney (if involved), the state, etc. While the patient/injured worker may ultimately decide whether to undergo any particular procedure, the who, how, when and cost of undergoing the procedure(s) is made by others.

Still, in my mind there is no reason for the patient/injured worker not to know how much someone is charging for a service or product before buying. Nearly everything is subject to the shopper's discrimination when it comes to pricing.

But not medical care.

Even with fee schedules, capitations, and other artificial controls on prices we never really know what is being charged until the bill arrives, and in workers' compensation cases even that's not the end as the carrier/administrator may negotiate even further down which has the perverse effect of inflating the initial charge because the provider builds in the post-bill discount factor.

Does the ultimate consumer of services and goods, i.e. patient/injured worker, even care about pricing and quality?

Probably not about pricing - not his/her money.

I'm sure there's quite a bit of concern about quality though - after all it IS his/her body.

Educating the patient/injured worker about cost will make no immediate difference in workers' compensation cases - again, not his/her money. Educating about quality would likely make a difference, if the data were easily available and interpreted, and if there were choice in providers - which in most work comp systems with networks in place, there isn't.

And even then, the doctor/patient relationship may sway the patient/injured worker's decision.

It's a sticky issue, but I think in the grand scheme of things, whatever transparency is available is good for the ultimate health of the medical industry and workers' compensation.

One step at a time. As consumers get used to seeing pricing before making important procedure choices, the more that pricing will become a factor in choice.

And ultimately those competing on price are going to start publishing outcomes and other quality metrics and there will then be competition based on outcomes.

It's a cultural thing and culture is very difficult to change - it happens in small increments.

I'm glad that Surgery Center of Oklahoma and other similar health care businesses are being bold and are publishing fees. That's one small step towards a cultural revolution that will change health care and change workers' compensation.

So while the ultimate consumer may not care right now about price, transparency in pricing will eventually lead to more information about quality and outcomes - the evolution of market competition will cause this to happen.

This won't happen over night, and of course there will be resistance - but that's like trying to resist Borg assimilation: "resistance is futile."


  1. The only reason that anyone is publishing fees or costs is the fear that the government will legislate a procedure that is even more onerous.
    And the any legislation that curtails private enterprise is just a step on the road to nationalization.

    Since you quote the Borg, remember that this axiom was flawed, because they lost, due to resistance.

    Even though Work Comp is the only system that is set up to provide benefits the rest being set up to allow people to elect what theythey want to receive in return for a payment, it appears that the fallacy that we must mirror the rest of the world in costs is still in effect.

    America is the only country that runs everything on a capitalist system. These payments allow not only the finding of nee drugs and procedures, but also people from other counties (like Canada) to get treatment in v less than the 6 months it takes in their home countries.

    Rather than bemoaning the fact that we allow people to pay for the treatment they want, maybe we should start looking at costs the way we used to; the states publish how much it cost the previously, and then we figure an Inflation factor and we're done. It's got to be better than a nationwide average, set at the low edge, in the hopes that a the government prophesies, the physicians will follow.

    Instead, the physicians are all going concierge, which it's the true reflection of capitalism.

    As it now stands, we're going to have a small percentage of doctors who've agreed to nationalize their practices, and the rest of us are going to end up paying directly, and then trying to seek reimbursement from our carriers.

    In regards to Work Comp, either we forget nationalistic rates, or we allow doctors to lien everything until the end of the case (the way they do in civil litigation, or else we just scrap the medical benefit and come up with a different concept (maybe allowing the EE a lump Sim, and whatever he doesn't use gets added to his settlement).

    Of course this last alternative actually teaches self-reliance and self-determination, so the politicians who want to take care of people will hate it.

    But the system is falling apart, and its just going to strangle more slowly unless something is done, and all the comparisons to the rest of the world are just obfuscatimg the problem and trying to compare apples and oranges.

  2. This is exactly what I have been saying for some time now on my blog. The medical tourism industry needs to get transparency so that we can see how their prices compare to prices in the US, and then we can determine if these destinations really provide lower cost health care with better outcomes than what is available in the US.

    The workers comp and medical tourism industries need to wake up and start working together, otherwise costs will keep on rising here, and a better, less expensive alternative will go to waste.

    There is already cross-border health care between the US and Mexico for Mexican workers in the US, but that is only under general health plans, not comp. There shouldn't be too much difference other than statutory regulations in comp between comp and general health care plans.

    Self-insured employers and employers who opt out of mandatory comp could lead the way, but there needs to be transparency across the board.

    I have tried a few times to get a Caribbean and Latin American facilities to give me prices, but all four have refused. That cannot continue.