MEDICAL PROVIDERS THAT PUBLISH PRICES: A RADICAL APPROACH TO HEALTH REFORM?

The raging health reform debate has completely obscured recent disclosures by some medical providers of shocking information that has long been held among their most closely guarded secrets: their prices. These innovators are responding to the rapid four-year growth of high-deductible health plans that incentivize consumers to demand cost-effective solutions for their medical problems. Stated simply, a lot more patients want to know the prices of medical services before they buy them.

I recently discovered one striking example of this trend that promises an entirely different and brighter future for American health care than the one currently fermenting its way through the legislative bowels of our nation’s capital. It is the website for The Surgery Center of Oklahoma in Oklahoma City. Click on the link and see something extraordinary: a leading-edge medical facility that actually tells you its prices up front—but only for patients who pay them in full and in advance. Otherwise, if you want the Center to bill your insurance company and fight through its bureaucratic layers for uncertain payment at some distant time, the price will be higher.

Need an ACL repair? They’ll do it for $6,400, including the initial doctor consultation, facility fee, surgeon’s fee, anesthesiologist’s fee, and all uncomplicated follow-up care. The Center’s website also spells out what’s not included, such as overnight stays, diagnostic studies prior to surgery, and the costs of hardware and implants which they will precisely estimate and sell to you at their invoice price—no markups.

The site lists about forty participating surgeons in orthopedics, ENT, general surgery, ophthalmology, and plastic surgery. I checked out one of them at random on HealthGrades.com and he looked pretty good—although HealthGrades’ quality reporting isn’t quite ready for primetime (but keep trying, guys, you have a great idea).

I love the idea of the Surgery Center of Oklahoma because it introduces to medicine the kind of competitive price information that we consumers rely on to make sound value decisions for everything else we buy. My guess is that the Center is also wearing a belt and suspenders on the quality and customer service fronts, since anything less would make them vulnerable to competitors whose ire they’ve undoubtedly raised for having had the temerity to actually reveal prices. Believe it or not, most hospitals consider such information to be proprietary and confidential. Imagine shopping at Wal-Mart and not knowing how much your purchases cost you until you got your credit card bill a month later.

Another promising site is NewChoiceHealth.com. It will tell you the competitive cash prices for an encyclopedic range of medical procedures in virtually any city in America.  For example, here in Colorado Springs, I can get a spinal MRI at Memorial Hospital for $1,300. Alternatively, I could get one from Sherman Radiology Group for only $600—and it’s a shorter drive from my house. Since I have high-deductible insurance with an HSA, I care a lot about how much such services cost!  But if I still had my old HMO plan, I wouldn’t give a rat’s whit, since my copayment would be the same at either facility.

The only problem I see with cost-conscious innovations like the Surgery Center of Oklahoma and NewChoiceHealth.com is that their business models may be doomed if any of the current health reform bills achieve their sponsors’ oft-stated goal to reduce patient exposure to actual medical costs. Unfortunately, there is no way to do that without also removing consumer incentives to engage in the kind of value-savvy shopping for which Americans are otherwise famous. This can only drive health care costs further skyward, or as the great libertarian humorist P.J. O’Rourke has said, “If you think health care is expensive now. Wait until you see what it costs when it’s free.”

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