Updated: Pricing Transparency: An Interesting Idea, But . . .
Update: Kate Steadman’s got a great post on her blog about pricing transparency and what it isn’t going to do. Check it out by clicking here.
A heated debate has recently flared up over the Bush Administration’s proposal that hospitals disclose the prices they charge for medical services. The Administration believes that publicizing this information will make it easier for individuals – who they would like to see using Health Savings Accounts (HSAs) – and insurance companies to choose cost-effective care. The Administration also wants hospitals to publish information about the quality of their services.
Given the Administration’s preference for market-based healthcare solutions, it is easy to see why it wants hospitals to disclose this information. Advocates of consumer-driven healthcare have long argued that in order for individual healthcare consumers to use medical goods and services cost-effectively, they need the following information:
-Healthcare cost information
-Information about the quality of healthcare goods and services
Armed with these two pieces of data and a set budget (read: HSAs), some economists suggest that healthcare utilization would decrease and costs would go down.
However, I wonder whether publicizing hospital pricing information will have the desired impact. First, patients with health insurance do not pay directly for hospital services. Second, while Administration officials have suggested that public pricing data will help the uninsured “shop for less expensive treatments,†I’m not so sure.
If forced to publicize pricing data, hospitals may set uniformly high prices to protect their profit margins. If this happens, how will public pricing data help the uninsured patient visiting the emergency room for a condition that could have been prevented if they had regular access to a physician?
Pricing transparency is an interesting idea, but given the structure of the US healthcare system, I’m not sure if it will have the desired impact. Most people are not shopping on the free market for healthcare goods and services. As for the uninsured, it’s more cost-effective (for them) to provide them with insurance so that they can benefit from the low rates negotiated by the managed care industry or government.
March 16th, 2006 at 2:06 am
Good post… it’s a scary thought for an uninsured person to have to search for the lowest price in healthcare. This is one service that you wouldn’t want to go to the cheapest guy for. Price simply shouldn’t factor into the decision of healthcare. The Bush Administration’s proposal is a slippery-slope that I’d rather not go down.
March 16th, 2006 at 11:12 am
You’re correct, the price transparency movement would struggle right now on its own, given the current marketplace obstructed by regulation and third party payment. That’s why the administration is giving price transparency some political and regulatory muscle.
Personally, I extremely conflicted. I would love to prices but I had regulation. What’s a libertarian health wonk to do??
Trapier K. Michael
http://www.marketplace.md
March 16th, 2006 at 1:13 pm
Emily: Thanks for your post. Actually, I think that people should have a certain awareness of price and quality in order to choose cost-effective treatment. However, in some cases, this is not feasible. I think we have a long way to go before we can improve how people factor in the price of healthcare to their decision making.
Trapier: I agree this is a difficult issue to manage. However, it’s great that people are talking about it. Dialogue is always good and these new regulations need to be carefully considered before they are enacted.
March 17th, 2006 at 6:55 pm
[Editor’s note: I usually don’t allow comments from commercial enterprises to appear on this blog, but this one is interesting as it pertains directly to pricing transparency. If you’re interested in learning more about this tool, go to the Web site mentioned below. I have no financial involvement in this company nor do I endorse their products.]
Healthia has launched a hospital pricing module that allows you to compare/research pricing for various procedures. Check it out.
http://www.healthia.com/pricing/
September 28th, 2006 at 11:45 am
I work at an acute care facility that closed all of our inpatient services. The Emergency Department is the only service provided and we are a non-profit healthcare organization. I am active in our efforts to improve customer satisfaction. Price transparency is irrelevant to the poor or uninsured because they do not pay anything for their care. Insuring them will require the payment of co-pays and if they could do that they could be seen by a primary care doctor now. They come the facility with the shortest waiting time and/or the closest to their home. Consumer driven healthcare is putting the most uninformed person of the equation in the driver seat. It is on the level of being your own attorney without the benefit of going to law school. The only people who might benefit from such a “ill-advised” plan would be those who are interested in saving money (in the short term) for their share holders or their productivity bonuses.
January 22nd, 2007 at 6:05 pm
Development Emergency Medical Service in America has received the second wave, improvement of quality of service and speed of reaction WBR LeoP