Researchers at the University of Iowa recently found in a survey of 120 hospitals that only 19 were able to give consumers an exact price for a hip replacement. Further when prices were given, they varied by roughly 1200%, from $11,000 to over $125,000, for the same procedure! They were provided with standard assumptions to help ensure accurate comparisons. Correcting this surprising gap in knowledge about their own costs is a critical step toward improving the cost of care. And providing apples-to-apples cost information to patients is the next step because, in a significant departure from today’s ‘normal,’ patients are becoming increasingly price sensitive.
Self insured employers and health plans are considering offering incentives such as splitting the cost savings when employees choose lower cost, high quality providers. If employers rewarded employees for choosing lower cost providers who have demonstrably excellent outcomes, the business of elective surgery and non-emergent medicine would take a long stride forward in becoming price sensitive. Most experts agree that this would quickly result in hospitals beginning to compete on price – and that would begin bending the health care cost curve in the right direction!
Dr William Bithoney