Unbiased Analysis of Today's Healthcare Issues

Medical Service Bargain hunters?

Written By: Jason Shafrin - May• 25•06

According to the Kaiser Family Foundation’s (KFF) 2005 Employer Health Benefits Survey, the estimated number of firms who will offer high deductible health plans has increased to 20% in 2005.  This is up from 5% in 2003 and 10% in 2004.  Despite this increase, only 3.9% of workers–about 2.4 million in total–are covered either by a High Deductible Plan combined with a Health Reimbursement Arrangement (HDHP/HRA) or a Health Savings Account (HSA).

The move towards consumer driven health care is upon us.  Services such as HealthGrades have begun to give quality ratings to hospitals as well physicians and nursing homes.  The HealthGrades offers basic 1-5 star ratings for free, but more detailed reports are available if you wish to pay for them.  (I have not elected to purchase these reports and cannot ascertain their quality.  The information for the Distinguished Hospital awards comes from inpatient mortality and complication rates from the CMS’s MedPAR data.

Further, The New York Daily News recently wrote an article (“Cutting Medical Care Costs“) on the trend towards consumer bargain hunting.  For instance:

Private insurers like Aetna have started programs in parts of the country (Cincinnati is an early example) where they’ll publish online the exact prices they’ve negotiated with doctors in the area for hundreds of medical procedures and tests.

Also, the story gives the following anecdote about patient Lew Randall:

Lew Randall, 64, from Freeland, Wash., recently suffered a shoulder injury. His doctor originally told him an MRI, at $1,200, would be in order to assess the damage.

When the doctor heard Randall would be paying the bill himself, he recommended a $300 barium X-ray instead?

“Is it just as good?” Randall asked.

“If it were my shoulder, that’s what I’d have,” the doctor replied.

“So why recommend the MRI?” Randall continued.

“It’s newer technology,” the doctor shrugged. “That’s what patients want.”

Lew Randall, however, is a director at the libertarian Cato Institute so his story may not be representative. 

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  1. […] On Fast Medicine: Maybe you’ve heard the buzz-phrase “Consumer-Driven Health Careâ€?; maybe you haven’t. Well, if you haven’t, “Consumer-Driven Health Careâ€? (or CDHC) is a new approach to making and consuming medicine that elevates the importance of the individual consumer. Consumers are kings in every other service industry; so why not in health care? Or so goes the thinking. So far, CDHC has mainly meant new approaches to health insurance – higher deductibles and personal savings accounts. But CDHC is so much more. CDHC intends to change all aspects of medicine: how we buy it, how we learn about it, how we make it. You might call these three changing sectors consumer-driven coverage, content and care. And while consumer-driven coverage, as we’ll see in a moment, is exploding, and consumer-driven content is making inroads, consumer-driven care is just getting going. Consumer-driven thought leaders, like visionary entrepreneur Steve Case, are just beginning to notice problems with current delivery models, problems like slowness and price opacity, and, so, are just now applying new approaches – like fast-food franchising models for primary and emergency care, which promise quicker service and upfront pricing. Some, like progressive pundit Ezra Klein, think new models might be very promising. But others, like prominent physician-blogger RangelMD, are less excited about the “McDonaldizationâ€? of American medicine (Hat Tip: Kevin, M.D.). And our current healthcare leaders seem to be demarcating the lines of a brewing battle between old and new schools of care delivery. But before we engage in the fight of a lifetime, might we consider collaborating for the common cause that is better healthcare? Perhaps the health policy / medical blogosphere will be a test case for interesting, interdisciplinary thinking. Collaboration between traditional providers and consumer-driven entrepreneurs may indeed be the best route; especially since the CDHC movement seems to gain momentum everyday and certainly can give traditional providers new ways to expand the success of their practices. On Prices: Would you feel naked if you went to a restaurant without prices on its menu? Wouldn’t it be frustrating not to know the price of the car you’re about to buy? Would you sell your house without knowing what you’re getting in return? The answers are probably no, no, and no. But in medicine prices are unfortunately hard to come by. Every other industry has prices. Why not medicine? Upfront pricing would seem especially important since we talk so much about spending too much in this economy. One good thing CDHC has done is highlight how elusive prices are in medicine. Now, with consumerism and price negotiations afoot, patient-consumers are becoming “medical bargain huntersâ€? and are learning how to negotiate for better prices on healthcare like they would for better prices on cars and homes. And as everyone in the industry, from practicing physicians to big insurers, realizes the value of price transparency in our medical economy, we may see some significant improvements as the consumer-driven “transparency revolutionâ€? will gains steam. On HDHPs: And price transparency is only going to become more important, as more and more patient-consumers trend towards insurance plans with higher deductibles. Because with higher deductibles, patient-consumers will be responsible for paying the prices of procedures below the cutoff before coverage begins; and, so, it’s obvious they’re going to want to know what those prices are. Are high-deductibles really all the rage? Read for yourself at the The Health Care Blog, the Kaiser Family Foundation, the Houston Chronicle, the Detroit Free Press, MSNBC, Inside Bay Area and Chicago Business. On HSAs: Why then are HDHPs so hot? High-deductibles have been around for a long time. Why the sudden interest? The answer: Health Savings Accounts. The Health Savings Account is a new tax-sheltered personal saving/spending account intended for healthcare expenditures. In order to qualify for an HSA you, by law, need a high-deductible health plan. And there are currently 3 million such accounts and $2.1 billion in them. Both of those numbers are predicted to explode in the next five years to as total accounts grows beyond comprehension with the potential to reach 70 million by 2011. As HSAs grow, so will HDHPs. […]

  2. […] So why the great consumer-driven awakening in medicine? As Jean Chatzky and the Healthcare Economist note, more and more individuals are opting for a different type of health insurance feature that puts the focus on personal finance: the personal Health Savings Account. […]

  3. Jeff says:

    You can get free detailed hospital comparison reports on cost and quality at http://www.UCompareHealthCare.com