EHP Blog

From Prisoner to Customer to Sophisticated Consumer (Continued)

Hopefully you’ve had time to get your medical house in order. You’ve done the research on your family’s medical history. You’ve found the appropriate internal medicine physicians that specialize in whatever chronic issues your family members face. You are now engaged in your medical care.

The topic on the table today continues to be pricing transparency. The debate continues to rage on by skeptics that argue patients have little incentive to “shop” for medical care because insurance insulates them from medical costs. They also point to studies showing few patients use current pricing transparency tools to shop for medical care.

We can be as skeptical as the next person but a recent event bolstered our belief that pricing transparency in a simple, well-constructed form has an important place in health care. Recently, a company we’ve mentioned before, GoodRx, had a public stock offering for over $1 billion and placed the value of the company at $12.6 billion. Simply stated, GoodRx is a pricing transparency company in the pharmaceutical area. The company provides a simple to use and effective way for consumers to obtain significant discounts on prescription drugs. So given Wall Street’s reaction, we believe there is a place for pricing transparency in health care.

Here’s the catch-twenty two. The health care industry doesn’t. There’s seemingly consensus from both providers and insurers that somehow pricing transparency will cause massive damage to their economic interests and not be helpful to patients. From our media scanning, employers can expect estimated increases for 2021 health insurance premiums to be around 5%. Health benefit consultants are continuing to provide solutions to mitigate these increases. Surprisingly, pricing transparency “tools” are now starting to emerge as consultant recommendations as a means of minimizing the impact of these increases.

We recently surveyed a metropolitan area with an aggressive pricing transparency provider that provides a sophisticated website pricing tool. Our thinking was that with a “bell cow” in the market others would be inclined to follow in some reasonable fashion. Our thinking was wrong. There was little to no discernible impact on others’ to provide some means of pricing transparency. What we weren’t able to determine was the “spillover” impact on other organizations’ pricing for similar services.

Our research is providing us with some undeniable facts. The external business environment is moving rapidly further and further away from the business practices of healthcare. Some of this gap is being created by outdated government legislation and some of it is being created by the industry’s resistance to ongoing technology developments. We accidentally stumbled on to an example of how over 20 year old legislation is having what now might be an unintended negative consequence on private contracting between a physician and patient. The Balanced Budget Act of 1997 prevents an Original Medicare Beneficiary from entering into a private contract with a physician. At the time, the thinking was this legislation was providing the patient with “protection”  from inflated prices. In today’s environment, the legislation prevents patients from gaining access to physicians and from negotiating prices. This finding reinforces our belief that neither the government nor significant industry leadership is going to result in a successful pricing transparency movement.

Unleashing market place competitive forces on health care will lower prices despite what skeptics say. Will there be unintended consequences? Sure. There are examples, like reference pricing that have proven successful in lowering prices. This practice has largely been utilized by large organizations with large workforces. So the benefits have been constrained without creating any type of “spillover” impact.

We are now entering a new era in health care. The “Pandemic” has created wide-spread changes in every day life practices. In health care, we’ve seen a tremdous surge in telemedicine which prior to Covid was being strongly resisted by the health care industry. We’ve seen significant changes in how hospitals protect both their employees and patients from infectious disease. We’re now going to see how the country deals with a significant number of people  having lost employment based health care insurance coverage. This is going to unleash huge numbers of people searching for better deals in health care.

We are now asking for your help in creating a health care marketplace where there is transparency in pricing, quality and access. We have relied upon market forces in almost every aspect of our lives. Health care has been “special” and exempted from these forces. We believe the implementation of pricing transparency legislation will be a first step to pulling back the curtain. As consumers we’re critical in this transformation. We need your insights and experiences to share with others. We’re creating a section on our website where patients and consumers can be a community of health care activists. Share your experiences!



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