Friday, March 04, 2011

Fundamental Shift: Transparent Hospital Pricing


"As out-of-pocket costs for health care increase, some of the most significant changes in decades are coming to hospitals to meet the demand for price information. Three Michigan hospital systems -- Ford, Dearborn's Oakwood Healthcare and Spectrum Health in Grand Rapids -- post average prices for common tests and procedures, from X-rays to back surgery. Ford and Oakwood have expanded financial counseling programs and give their best discounts to uninsured customers, as do a growing number of other hospitals.

In some of the most significant changes in decades, hospital systems are beginning to post their prices publicly and offer a range of help, including big discounts to uninsured and underinsured people with limited household incomes.

"It's a fundamental shift" in how health care prices are set and publicized, said Stephen Hathaway, chief revenue officer for the Detroit-based Henry Ford Health System.

The changes come as Michigan's uninsured population has grown to 1.35 million, an increase of 200,000 between 2007 and 2009, the latest year of information available from the state health department.

Interest in health care prices also comes from a growing number of people with high-deductible health insurance plans -- including 23,000 salaried General Motors workers who, starting in January 2010, were transferred into a Blue Cross Blue Shield of Michigan plan with a $3,000 annual deductible that families have to pay first before their insurance covers most costs. GM also gave employees $1,000 to create a health savings account, plus an additional $500 credit for those who quit smoking or make other lifestyle changes -- money that workers can put towards their deductible or use for another health purchase. The number of Michigan employers offering such high-deductible plans or health savings accounts rose from 16% to 23% from 2008 to 2010." 

MP: The chart above is from the Henry Ford Hospital website for its "Pricing Information," showing a 40% discount for being uninsured, and I assume paying in cash.  The Ford hospital website also has a section for "Canadian Patient Information."

HTs: Steve Bartin and Ben Cunningham

23 Comments:

At 3/04/2011 4:47 PM, Blogger Indur M. Goklany said...

The chart provides a glimpse of what I believe is a fundamental problem: insurance. Because of insurance most people don't work too hard to keep costs low.

 
At 3/04/2011 5:20 PM, Blogger Walt G. said...

I thought it was insurance fraud to charge insurance companies more than the hospital's lowest price. That was one of the reasons they jacked the price up and then accepted less than the posted price as payment in full.

 
At 3/04/2011 5:30 PM, Blogger Benjamin said...

I wonder if profits and health care mix that well.

If we go all-private care, your insurer will basically say that elder insurance will either cost $100k a year or more, or they can use private-sector death panels.

Or your deductible is $110k a year.

Might be time to throw in the towel, and go the top-down Euro route, and cut our health bills in half, btw.

 
At 3/04/2011 5:39 PM, Blogger Dr. T said...

Hospital charges are meaningless. What we need to know are the actual combined reimbursements from insurers and patients or from governments (Medicare and Medicaid) and patients. Then we will know if the "uninsured discount" is a savings or a rip-off. For example, if Medicare pays a cardiac surgeon $15,000 for a full bypass and pays the hospital $45,000 for the procedure and hospitalization, then the $63,900 charge to uninsured patients is not a discount, it's a $3900 rip-off.

 
At 3/04/2011 8:40 PM, Blogger NormanB said...

The Rational Health Care Play

1) The governmnet pays a stipend to every citizen to buy a Health Care Savings Plan.

2) Citizens then shop for the best insurance program for them.

3) Citizens then shop for the best vs cheapest health care and believe me, they'll find it.

QED: Health care costs are contained. No 2,300 page law nor 250,000 pages of regulations needed. No extra FBI agents, also.

 
At 3/04/2011 9:08 PM, Blogger Hydra said...

Benjamin: I actually had a health insuror offer me a policy where the deductible was higher than the coverage.

It was the best offer I got.

 
At 3/04/2011 9:12 PM, Blogger Hydra said...

What do you do when a single procedure costs more than your health savings plan puts up in 25 years?

 
At 3/05/2011 12:04 AM, Blogger NormanB said...

Hydra.

You have a HSA and a catastrophic insurance policy.

 
At 3/05/2011 7:57 AM, Blogger Hydra said...

Hsa plus catastrophic might work. But the average 401 k is only $70 k. People don't save. And two days in the hospital can knock a big hole in $70 k.

Then there is the problem with catastrophic: you may not be able to buy it. On the free market, I couldn't. I was considered uninsurable. Period.

Now I'm insured, but only because I have group insurance through my employer.

But say this works. Some people will say, I'm healthy, don't need insurance. Then they crash their motorcycle. What do you do with the pieces?

 
At 3/05/2011 6:13 PM, Blogger Evergreen Libertarian said...

I damn near choked to death. I made the mistake of looking at the costs of childbirth at the Henry Ford Hospital.

This nation needs many more midwives.

 
At 3/05/2011 7:07 PM, Blogger Ron H. said...

"But say this works. Some people will say, I'm healthy, don't need insurance. Then they crash their motorcycle. What do you do with the pieces?"

Well, the towing company contracted by the local government entity will most likely clean up, then lien sale the big pieces to the local motorcycle junkyard after the owner refuses to pay the towing and storage bill.

If you are referring to the rider, I would suggest notifying next of kin as to the location of the pieces. They often want to save them as the central focus of a later burial ceremony.

And you wonder why people call you a leftist.

 
At 3/05/2011 7:25 PM, Blogger Ron H. said...

NormanB

Here's an even better plan:

The Rational Health Care Play

1)

2) Citizens then shop for the best insurance program for them.

3) Citizens then shop for the best vs cheapest health care and believe me, they'll find it.

QED: Health care costs are contained. No 2,300 page law nor 250,000 pages of regulations needed. No extra FBI agents, also.

 
At 3/05/2011 9:10 PM, Blogger Paul said...

"Might be time to throw in the towel, and go the top-down Euro route, and cut our health bills in half, btw."

Ah, Benji, when will you be condescending to us next about our failure to live up to Milton Friedman's holy writ?

 
At 3/05/2011 11:00 PM, Blogger Hydra said...

Ron: so your plan is health savings plan plus optimal catastrophic health insurance ( provided you can get it) and if you don't have it, then tough tattoos.

Is that your recommendation?

I'm not a leftist. I'm just asking a question a out the hsa plus catastrophic idea.

What qualifies as catastrophic? Anything that exceeds your life savings? Anything that exceeds your hsa balance? Or do we have a defined list of covered catastrophic procedures: if its not on the list, them you are on your own.?

 
At 3/05/2011 11:04 PM, Blogger Hydra said...

Ok maybe I'm a leftist. I have health insurance because I'm part of a group ( commune).

I'm better off because of it.

 
At 3/05/2011 11:11 PM, Blogger Hydra said...

I bought a box of name brand drill bits. Worst drill bits I ever bought. Wouldn't drill holes in 1/8 inch aluminum without snapping off.

How do you shop for carpal tunnel surgery?

 
At 3/06/2011 10:34 PM, Blogger orthodoc said...

"Hospital charges are meaningless. What we need to know are the actual combined reimbursements from insurers and patients or from governments (Medicare and Medicaid) and patients. Then we will know if the "uninsured discount" is a savings or a rip-off. For example, if Medicare pays a cardiac surgeon $15,000 for a full bypass and pays the hospital $45,000 for the procedure and hospitalization, then the $63,900 charge to uninsured patients is not a discount, it's a $3900 rip-off."

Actually, Medicare reimburses a surgeon about $2400 for a coronary artery bypass and graft.

 
At 3/07/2011 3:12 AM, Blogger Ron H. said...

"Ron: so your plan is health savings plan plus optimal catastrophic health insurance ( provided you can get it) and if you don't have it, then tough tattoos.

Is that your recommendation?
"

Yes. A high deductible insurance plan pays everything over your deductible of $3k,$4k, $5k, an amount you chose. Such plans are commonly available now as group plans as well as well. Check out what John Mackey, former CEO of Whole Foods had to say on the subject.

These plans are similar to your auto or homeowner insurance, paying amounts you spend over the deductible.

An HSA helps you save for routine care and amounts you can afford to cover yourself.

"How do you shop for carpal tunnel surgery?"

For you, it is pointless to shop, as you have indicated in previous comments that you have no skill at it, and generally have problems with things you buy. Most people, however, would likely consider accepting the recommendation of their primary care doctor, who is, after all, qualified to diagnose carpel tunnel in the first place, something most of us aren't qualified to do.

 
At 3/07/2011 3:21 AM, Blogger Ron H. said...

"I bought a box of name brand drill bits. Worst drill bits I ever bought. Wouldn't drill holes in 1/8 inch aluminum without snapping off.

Perhaps this isn't a fault of the drill bits, but of the operator.

If not that, then it must be just another of those typical Hydra problems that are seldom encountered by anyone else.

 
At 3/07/2011 12:05 PM, Blogger Tom said...

Doctors and hospitals should be required to set a single price, available to all.

The current system screws the uninsured, with give-away prices to Medicare and Medicaid, and special pricing deals to insurance companies.

Medicare and Medicaid actually cost far more than insurance would, because they are unmanaged, piecemeal medicine. A typical government program: high cost, low quality, increasingly rare and reluctant providers, which cheats all the other (private) users of the system. Your big government: working hard against you, every day.

That table is a price adjustment to reduce the screwing of uninsured people. How wonderful.

 
At 3/07/2011 12:42 PM, Blogger Ron H. said...

Tom

"Doctors and hospitals should be required to set a single price, available to all."

Wow! several questions come to mind right away:

- Who would decide what this price should be?

- Would this be a single price nationwide, or would other factors such as geography and demographics be considered?

- Would you envision a federal level bureaucracy administering and enforcing these prices? And, if so, what do you suppose it would cost us all as taxpayers?

- Are there any other goods or services you feel should be price controlled in this manner?

 
At 3/07/2011 6:46 PM, OpenID Sprewell said...

Ron, I believe Mackey's still CEO. He just resigned his second position as chairman of the board, apparently cuz some activist shareholders didn't like the dual role.

 
At 3/08/2011 2:51 AM, Blogger Ron H. said...

Sprewell

"Ron, I believe Mackey's still CEO. He just resigned his second position as chairman of the board, apparently cuz some activist shareholders didn't like the dual role."

You are correct. Thanks for setting me straight.

 

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