The Health and Wealth Convergence
Lot’s of folks write or talk about the convergence between health and wealth. I want to take a stab at it using two plots and as few words as possible!
Most of us have heard crazy stories about how the price of the same commoditized healthcare service can vary by thousands of dollars … even when the doctors are less than a mile apart. One provider may charge $3,000 for an MRI while a doctor less than a mile down the road is reimbursed $1,200.
In addition to confirming significant price differences across providers, our metadata insights at HealthyHive have also shown that “Place of Service” often accounts for a large portion of price variation. A place of service example is: “Did you receive care in a hospital setting or in a physician’s office setting?” It turns out it’s a question worth pondering, especially for elective outpatient services.
Plot 1
Plot 1 illustrates the average price difference for a common radiological outpatient service. We’ll call it $400. I use this example to avoid the easier examples where one patient paid $2,500 more — at this point why add salt to the wound??
Plot 2
While $400 won’t make or break your health savings account, these days a $400 price variation is more the norm than the exception. So what could that potential $400 savings mean for you 25 years from now? If you invested those HSA dollars at a modest return of 5% you’d have over $1,700 to put towards your Medicare Advantage premiums. Furthermore, investing the funds in an HSA instead of a 401(k) would adds $500 in tax savings.
So What?
So, think twice before you blindly follow your doctors orders to get that MRI in a high-cost setting like a hospital. Chances are, he or she has incentives to refer expensive, commoditized care. And almost certainly, that referring doctor won’t have the first clue how much the service will cost you. Tell your doctor you are interested in difference location of service options. As a rule of thumb, free-standing specialty clinics or doctor offices will run less than a hospital.
This data is courtesy of New Hampshire’s all-payer claims database. NH is the nation’s leader in state-based consumer-centric healthcare policy. If you have not read about NH and its free market, pro-consumer healthcare successes yet, chances are you will in the future.
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