Price Transparency Is Nice. Just Don’t Expect It to Cut Health Costs

by Larry Emmott on January 3, 2017

in Digital Marketing,Health Care Politics,Management

From NYT:

In Los Angeles and San Francisco, one analysis found, mammography prices vary by over a factor of five — from a low of $128 to almost $700. Prices for IUDs and lower-back M.R.I.s vary by a factor of three. An examination of Massachusetts health care prices found nearly a fourfold variation in M.R.I. prices. Despite these differences, even patients motivated to find the lowest price often can’t.

Source: Price Transparency Is Nice. Just Don’t Expect It to Cut Health Costs. – The New York Times

Very interesting and I respectfully disagree, kinda”. Price transparency should have a profound effect on healthcare costs, but it won’t nearly as much as it should. Our current overly complex and opaque system makes it impossible for a healthcare consumer to shop for price. This is exacerbated by the fact that the patient is rarely actually paying for the service so the patient has no incentive to check prices. The payers – insurance companies and government – have every incentive to shop price. This disconnect is what leads to conflict.

Consumers can choose to buy a $20,000 Kia or an $80,000 Jaguar. Both are cars that deliver the same basic benefit but we are willing to pay four times as much for one than the other because of a perceived difference in quality. That is some people are willing to pay more if they see the value and have the money to spend. On the other hand if you are driving the car but not paying for it you would naturally want the Jag. Whoever is paying but not driving would want the Kia.

Payers want us to accept the cheapest options so they attempt to convince us that there is no actual quality difference, medical care is a commodity, all doctors and dentist are the same so we should accept the cheapest alternative. In other words a Kia is exactly the same as a Jaguar. Even worse they imply that professionals who charge more are ripping off the patients and the insurer stands guard protecting us.

Technology does allow for some price transparency and for the most part that is a good thing. However controlling costs and maintaining quality will require a complete overhaul of our medical payment system.

Related:

by: at .

Share

{ 1 comment }

Darrell Pruitt January 4, 2017 at 8:31 am

“Payers want us to accept the cheapest options so they attempt to convince us that there is no actual quality difference, medical care is a commodity, all doctors and dentist are the same so we should accept the cheapest alternative. In other words a Kia is exactly the same as a Jaguar. Even worse they imply that professionals who charge more are ripping off the patients and the insurer stands guard protecting us.”

That’s the best paragraph you’ve ever published, Larry

Comments on this entry are closed.

Previous post:

Next post: