Transparency in Healthcare Costs

One of the first questions I always get asked when I recommend some medication or test is "how much is it?" or "how much will it cost me?"  It's never an easy answer as I have to inquire as to which insurance company they have to determine the appropriate copay if it's on the formulary, while at other times, I have to uncover the negotiated "cash price" with the provider of services.  

The common point to this is that all these inquiries require that I or my staff make a phone call.  Why?  None of this information is easily available & accessible online.  In this day & age of smartphones and connectivity, the cost of a medication & procedure is cloaked in way too many variables.  Depending upon your insurance, if you're "lucky" enough to have insurance, you'll most likely be charged a different price than if you were willing to pay cash.

But to make matters worse, did you know that different hospitals charge vastly different amounts for essentially the same procedure & care?  Towards the end of May, a retrospective analysis was published in Archives of Internal Medicine in which the authors evaluated 19,368 adults 18-59yo who'd been hospitalized in California for a "routine" appendectomy requiring less than 4 days as an inpatient.  The median hospital charge was over $33K but ranged from a low of $1,529 to a high of $182,955.  Mind you, none of these patients had any complications requiring a stay in the intensive care unit (which would have really increased the cost!).  But isn't it curious that county hospitals charged one third less than non-profit hospitals while for-profit institutions charged 16% more than non-profits?

To limit the effect of geography on cost variation, the authors then analyzed charges within counties in which more than one hospital provided care.  The smallest difference from low to high was found in Fresno County at $46K.  That's the smallest difference in pricing for a 4 day stay after an uncomplicated appendectomy.  In essence, if you didn't know better (and who does?), you might end up with a charge for a few grand or for $70K in Central California.

Here in Sin City, we have two dozen facilities that are accredited as hospitals, of which 10 provide acute care.  But for me, it's a gamble as to which facility charges the least and which the most for any given procedure.  I have no idea.  Worse, I'd have to call up each facility and ask about each individual procedure.  Well, of course, they're not going to tell me lest they lose their competitive edge.  But how do you & I rationalize & get a handle on a 100-fold difference in pricing?

Well, an article in Forbes highlights the attempt by Castlight Health to shed some light on this matter and bring transparency to health care costs.  Granted, money shouldn't be the deciding factor in all decisions, especially emergent & life threatening ones, but shouldn't we have a say in where to have an elective procedure performed?  And shouldn't cost be a variable in the decision?

But we can't negotiate from a position of power if we don't have any basis upon which to make our cost comparison.  Hospital A might be willing to cut 25% off a potential $20K charge but that would still be more expensive than Hospital B which only provides a 10% discount off its $10K charge.  Without this information, we won't be able to make the best decision for us.  Without this transparency, there is no market pressure to bring down or at least control health care costs that are spiraling out of control.  Let's hope Castlight Health can make a go of this.

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