Prices Matter…Even (especially) in Healthcare
By Lance Larsen
I’ve now approached hundreds of doctor’s offices and asked this question. “How many of your patients ask about the cost of medical services — say an MRI that you prescribe?” The response is usually a slightly exasperated look. Why? Your primary care physician has virtually no access to that information. It makes all the sense in the world for a patient to care about cost and ask her doctor this question; but from the “business of healthcare” side of things, the family doctor just doesn’t have the tools to answer it.
And boy do patients care about cost.
In 2014, the Robert Wood Johnson Foundation funded a study of more than 2,000 US adults on this very topic. Here’s what they found:
- 56% of those surveyed had made at least one attempt to search for pricing before receiving care.
- People with high deductibles were a bit more likely to spend time searching for prices before selecting a provider.
- 43% responded that they would choose lower-cost providers if they knew the prices in advance.
This last one is my favorite:
- 48% of the people who do search for pricing…drum-roll please..ask their doctor.
So what does all of this tell us. It tells us a lot of things, but I’ll point out just two.
The first thing the study makes clear is that people do want to know what healthcare services are going to cost them. I don’t think any patient would debate this point.
The second, and I would argue more important insight is this: price transparency belongs in the doctor’s office.
Now, I hope that last night wasn’t sad-movie-night because I’m about to relate a tragedy of epic proportions. It’s a tale of the now decade-long first wave of healthcare price transparency that has had some effect, but not nearly enough. Every single large insurer (and I would imagine many of the smaller ones) has built a transparency portal. A number of third-party transparency companies (Castlight Health, Change Healthcare, ClearCost Health, Compass, and more) have sprung up, many of them offering their services through employer-sponsored health plans. Even the non-profit sector is getting in on the action (HCCI with it’s Guroo tool, and also Clear Health Costs).
Among the entities that I’ve listed there are at least 4 different business models, and 3 distinct ways of assembling a price estimate. (Sidenote — Healthcare pricing is like manufacturing an automobile, there’s a trade-off among performance, dependability, and the cost of maintenance, so people create these systems differently).
Here’s the kicker. Just the sources I can find online indicate a half billion dollars of investment in these solutions (and that doesn’t include what the large insurers have spent developing their in-house offerings, a number that I suspect would be measured in billions). But if I were to walk up to 10 people on the street and ask them where they go to price shop for their medical procedures, I would be lucky if a single one of them names any of the resources I’ve listed (or the other 10 I didn’t name). Contrast this reality with the fact that those of us who live in the US spend more on healthcare than anything else over the course of our lives! And yet, we don’t seem to allow ourselves to overpay in any other arena. If I asked people how they find the best deals on shoes they’d list a half-dozen resources in their first breath.
Now we come back to the key insight from the study I talked about earlier. People want to shop for prices but they’re not using any of the systems that have been developed to help them do so. That’s puzzling, so one might ask what all of these different systems with different business models and different pricing algorithms have in common that makes them ineffective?
The user-path that a patient must go through to use them. Let’s walk through a scenario. Your doctor says:
“Lance, (use your own name here if you’d like :) you need an MRI, I’m giving you a prescription to go and get one.”
At which point you ask,
“Doc, I’m on a high-deductible plan, can you help me find a good-quality provider that isn’t going to eat into my kid’s college fund?”
The doc says,
“Sorry, I really have no way to know who is or isn’t in your insurance plan or what your insurer has contracted to pay them. I usually send everyone to a radiologist that I’ve worked with for a long time, but you’re welcome to go do your own research.”
And now you’re like,
If you’re lucky enough to have an employer that has purchased a transparency tool for it’s employees, and if you’re lucky enough to think about it in this moment, you have to go home and log on. Now you spend an hour fiddling with the site, wondering all the while if you’re looking up the right thing (there are several types of MRI’s that can be done for any particular body part). How do you know that you’re researching the right one? How do you know that these prices are accurate? Lest you think I’m making all this up, check out this NPR article from a few months ago on this very scenario. But for a moment, let’s just pretend that all of the existing transparency providers are doing their level best to deliver accurate pricing (I have no data or anecdotes to suggest otherwise).
If you are aware of and use such a price transparency tool, you are in extremely select company. The last 400 words have been one huge lead-in to say that healthcare transparency solutions across the board have astonishingly low utilization rates. In some cases, we’re talking single-digits usage by the relevant population. But wait, didn’t we start this out by saying that most people want to know what things cost?
We did. And they do. But that information needs to be connected to the path of care. It can’t be a disconnected and ancillary service. Telling someone to go home and look up how much their MRI will cost is like your real estate agent asking you to sign on the dotted line for your new apartment and telling you to go home and look up the price. It’s absurd.
So now what?
Great question. At Markit Medical we’re building a platform to stand on the shoulders (actually, under the feet is a better analogy) of the existing transparency platforms. We think that they’ve actually built some pretty cool features, but that they need help delivering their super awesome pricing data to the right people at the right time. This is only possible by involving the patient’s physician as the instigator of the process. This way, instead of:
“Why don’t you go get this MRI from the same imaging provider where I send everybody”,
“Good luck finding a provider on your own”,
it’s more like
“Here’s a list of radiology providers who are in your network and some price estimates for each of them, let us know where you’d like to go and we’ll get that scheduled for you.”
The key is to convince our doctors that you and I will love them for proactively taking our financial health into account.
And our offer stands: Markit Medical will do all the work for the doctor, so long as she or he is willing to be the bearer of good news.
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- Robert Wood Johnson Foundation Research “How Much Will It Cost?” Link — — http://www.publicagenda.org/pages/how-much-will-it-cost
Articles you might like to read
- The American Journal of Managed Care, Face-to-Face Price Transparency
- Becker’s Hospital Review, Consumers vs. patients: Healthcare’s biggest misunderstanding