Healthcare pricing: taking a new tool for a test drive
Will we ever have healthcare prices that are easy to understand and compare for consumers? We gnawed on that question in our latest podcast, as the answer could have a significant impact on how hospitals and health systems position and market themselves in the future. The reasons why we don’t have clear pricing now are many, and we won’t go into them here. But our podcast conversation led to some frustration as we wondered if pricing – the cornerstone of the promise of consumer-driven health plans – would ever really arrive in a market-moving way.
Then I saw a tweet from Gregg Masters, a self-described “recovering X-managed care executive, converted health system reformer,” who goes by the Twitter handle “2healthguru.” Gregg had passed along a link to a new web site called the Healthcare Blue Book, which touts itself as “your free guide to healthcare pricing.” The site is aimed at those with high deductible insurance, or no insurance at all – in other words, those with the most skin in the game. It purports to provide a “fair price” for hospital, physician, lab, cosmetic and other services, adjusted for zip code. So I decided to test it out, using myself as a guinea pig.
I tested two procedures I’ve had recently to see how close the estimate from the web site came to my actual costs. First, I looked at a rather routine procedure I’ve mentioned before – having a wart removed from my foot. My provider charged $208 for a one-time liquid nitrogen application, and my insurance “allowed” $202.03, which is what I would have been on the hook for had I had a high deductible plan (which I don’t – I have a $15 office copay with 80/20 co-insurance, which applied here, makes my final outlay $40.41.) On the web site, I typed in “wart removal,” and the web site showed a “skin lesion removal (benign)” at $116 for the physician fee. Is that the same thing? Hard to say, because the web site didn’t provide any description of the service. So really there’s no way to know if I’m comparing the right service or not (I’m guessing no). I tried to enter some other descriptions, but couldn’t get any further clarity.
Next I looked at a high-level diagnostic – a CT scan. When I enter “CT scan” in the web site, I’m provided with a number of detailed choices from which to pick. I can’t tell from the hospital bill or the EOB exactly what kind of CT scan I had (shocker), but I’m pretty sure it was an abdominal CT, with contrast (that part I didn’t forget – yummy). Choosing that version of the CT scan on the site leads to a price of $396, which the site says should cover both physician interpretation fees and the technical imaging fees. On my EOB, the price of the CT scan was $567, which is relatively close in the overall scheme of things.
But here’s the problem: That wasn’t my only cost for the procedure. I actually had two scans done, one at $567 and one at $615, at the same visit. In addition, there is a pharmacy charge for $223, which I would assume is for the six gallons of contrast they made me drink. If I were a consumer trying to price shop this procedure, how would I know they would conduct two scans? Did the physician order that, or did the tech decide we needed two? Same goes with the wart removal – a $40 outlay seems reasonable, but I had to return for seven treatments. How would I have known that in considering my budget? My physician couldn’t say how many treatments it would take to rid my foot of the wart, and if he doesn’t know, there’s no way I can know, so no real way to calculate my out-of-pocket costs.
So the results of my little experiment show how far we have to go if we really want to provide clear, accurate pricing that will allow consumers to shop for medical services (whether that’s even a good thing or not is best left for another day). Or if you’re a pessimist, it shows we’ll never get there, because there’s no way to truly nail down what it will take to diagnose and treat any given affliction for any given individual. Not to knock the Healthcare Blue Book web site – the branding is smart (though assuming they’re not affiliated with the Kelley Blue Book, I wonder if they’ll run into some trademark issues), and the site is clear and easy to use. I couldn’t find any detailed explanation of how they are determining the prices that show up from searches, so who knows how accurate they really are. And obviously given my brief experience, I’m not sure the basic information they provide is enough for consumers to feel confident in using the information to negotiate with providers. At least they’re trying, and hopefully over time, they’ll continue to hone the site to become more transparent and accurate.
In the meantime, we’ll keep exploring this topic, and what it means for healthcare marketers.
Chris:
Have you seen http://www.zepherella.com? Their tag line is no surprise healthcare pricing.
Josh
[...] service called the Healthcare Blue Book aims to do just that (with thanks to Chris Bevolo for making me aware of this). The auto analogy is clearly visible in their name, and the concept [...]
[...] service called the Healthcare Blue Book aims to do just that (with thanks to Chris Bevolo for making me aware of this). The auto analogy is clearly visible in their name, and the concept [...]