Health Care and the alternative point of view

[creditcardfree]

To Jim's point on getting the consumer to understand true costs. I am 100% in favor and I recently moved to a HSA qualified HDHP and think it will be an interesting to see if it changes to how we (OK - my wife) uses medical care. The biggest problem here is that my doctor can not tell me how much the tests he/she wants to run cost. So if I am ill and they want to take an X-ray "as a precaution" and run some tests "as a precaution" and I ask how much that will costs they (in most cases) can't tell me (and I feel like they will look at me sideways as though I am questioning them). So I think it not only do consumers need education on costs but providers do as well on cost and transparency.

Yes, in what other industry are we unable to figure out the price we will pay prior to service?

I do know that doctors often can quote you a cash price, if you ask. My husband needed a dental appliance and was quoted $150 from the dentist. Of course, they tried to bill our insurance for $300, but as we guess it was declined. I had to call the dentist, after receiving the dentist bill for $300 and confirmed that, yes, we could send in $150, rather than the $300 they were trying to bill us. Ugh! Actually, my only examples of quoted health costs are from dentists now that I think about it.

Steve, would you be able to tell a patient how much a procedure is if paid in cash? Would your front office staff know? Just curious.

This is a great discussion!

[jIM_Ohio]

You are probably right - I have not had this issue yet. Still docs/hospitals in general can not quote costs so the consumer is at a disadvantage in price shopping.

BTW - GREAT discussion. This has been very nice to be able to discuss a topic that seems to have led to a political meltdown in terms of civility and not feel attacked or threatened. Rather we explore different view points and share opinions in a collaborative manner. Thank you...

It probably takes 18 months of an HDHP to brainwash you into thinking everyone else still paying high premiums and low co pays is an idiot.

We put aside our full deductable into the HSA. Meaning our yearly max is 7k and we put in the max of 6k+ into HSA (I forget what max is, I check it when doing open enrollment, calculate it, then forget it).

The money is there to spend, so if something is needed, we spend it. Sometimes its a 2 minute discussion, but most of the time its "automatic".

If someone does not put max into HSA and used an HDHP, I could see where the debating might be more stressful over what the actual price is.

We expect to pay $7000-$9000 each year for medical care. If we spend less its money in OUR pocket, not profit for the insurance company.

[disneysteve]

I think many doctors will agree that doing more doesn't always mean better quality in fact it can be worse (Steve??!)

I agree that more is not better. I think I said that earlier.

To Jim's point on getting the consumer to understand true costs. I am 100% in favor and I recently moved to a HSA qualified HDHP and think it will be an interesting to see if it changes to how we (OK - my wife) uses medical care.

I'm a big fan of HDHPs and would have one if we didn't live in NJ. There is an inherent problem with them, though. Since care must be paid for out of pocket, it creates in incentive to delay care - Let's wait and see what happens and I'll go to the doctor if it gets worse. I already have lots of patients delay care to avoid paying a $20 copay. Imagine how many more would do that if they had to pay $75 or $100 or more.

[geojen]

I agree with several points in this discussion, and have something to add.

1) We should be able to compare costs before a procedure is performed. I actually tried to do this before I had my son. I asked the hospital where I was planning to deliver what an average birth costs, so that I could plan how much money to put into my FSA for my part of the charges. The answer? "Somewhere between 4000 and 8000 dollars." WHAT?!? That is all you can give me? What the heck? I'm sorry, but you know the hospital, as a busisness, knows darn well down to the penny what an average vaginal birth costs in it's facility. Giving me a 4,000 dollar range was beyond ridiculous. As an aside, I did have a vaginal delivery--it cost over 8,000 dollars. Sooo, who is having deliveries for 4,000? (Mind you, my son was a preemie and had special needs, but that 8,000 price tag had nothing to do with his care. His charges were separate).

2) The waste of the billing systems is ridiculous. My son had to stay in the NICU for 7 weeks. Did the NICU send out a single bill at the end of his stay? No. Every single doctor he saw (and he was visited once a day, for about 5 minutes), my insurance company was charged 740 dollars. This was on top of the several hundred thousand my insurance was charged from the NICU itself. To this day, I am still recieiving bills from 2008 related to my son's stay at the NICU. This is ridiculous. Obviously, any money I had set aside in the FSA is long gone since I can't roll that over. So, now I have to come up with money to pay bills from 17 months ago that the hospital and insurance companies are now just settling up. That is beyond ridiculous. How is anyone supposed to plan for medical expenses with a system like this? I agree that everyone should have some skin in the game, but right now the game is rigged.

3) I agree that health insurance should not be tied to employment, for many of the same reasons others have already stated. Besides that, many low-paying industries do not offer insurance anyways, or offer sub-par insurance. A prime example: Walmart. I saw on CNBC that many walmart employees qualify for medicare and take that over the pathetic insurance offered by Walmart. There is something very wrong with this situation. Yet, we still need people to work these jobs. I think that perhaps no employer should be expected to supply health insurance. Think of what an economic boon that could be for our buisnesses? They could compete better with companies from other countries that don't expect employers to provide insurance. That is why it really puzzles me that buisness aren't clamoring for some kind of single-payer system.

[disneysteve]

You do the tests when your gut instinct tells you the tests are needed.

In some cases you wait 2-3 days to see the doctor if you are sick
but if you are really sick, you go in immediately. YOU KNOW- you trust your instincts.

Jim, that might work for an intelligent educated patient like yourself but not everyone fits that description. I have patients who repeatedly "forget" to take their insulin even after multiple hospitalizations for uncontrolled diabetes. One woman was just in last week. She spent 4 days in the ICU after her sugar went up to over 900 (100 is normal) after not taking her insulin for a few days. You can't leave the decision making to the "instincts" of folks like that.

[jIM_Ohio]

2) The waste of the billing systems is ridiculous. My son had to stay in the NICU for 7 weeks. Did the NICU send out a single bill at the end of his stay? No. Every single doctor he saw (and he was visited once a day, for about 5 minutes), my insurance company was charged 740 dollars. This was on top of the several hundred thousand my insurance was charged from the NICU itself. To this day, I am still recieiving bills from 2008 related to my son's stay at the NICU. This is ridiculous. Obviously, any money I had set aside in the FSA is long gone since I can't roll that over. So, now I have to come up with money to pay bills from 17 months ago that the hospital and insurance companies are now just settling up. That is beyond ridiculous. How is anyone supposed to plan for medical expenses with a system like this? I agree that everyone should have some skin in the game, but right now the game is rigged.

As a parent of 2 NICU babies for 11 and 13 weeks each, and seeing the 500k+ bill for each of them, I know your pain more than I could ever describe here.

Our Fertitily treatment was the same- given a bill in 2007, paid in full within a week or two, then 18 months later the insurance company changed what was covered and sent us a bill for another $500.

A lawyer told us it would be useless to go to court over it.

[disneysteve]

Steve, would you be able to tell a patient how much a procedure is if paid in cash? Would your front office staff know? Just curious.

We could tell you the cost of any vaccines we give or any lab tests we do. We can't tell you the cost of any test or procedure for which we have to refer you elsewhere to get like an x-ray or ultrasound because it depends where you go, which speaks to Jim's point. X-ray facility A doesn't charge the same price as x-ray facility B or C or D. Of course, medicine isn't unique in that regard. A gallon of milk costs a different price at each grocery store. I can show you intersections that have 4 gas stations and each charges a different price per gallon. That's what happens in a free market.

Remember, the majority of doctors are small business owners, so part of that free market system. If you want to fix prices, you need to totally change the nature of healthcare. You need to make me and every other doctor a government employee with a fixed salary and full benefits.

[disneysteve]

18 months later the insurance company changed what was covered and sent us a bill for another $500.

Many insurance companies require us to get "prior authorization" for certain procedures. The "approval" they fax us says very clearly at the bottom that authorization is not a guarantee of payment. Well then what the hell is it? Why does my staff, and sometimes me personally, have to waste our time going through the whole authorization process if the insurance company can still turn around and deny the claim. Why not just let us order what we want and worry about it later? That alone would save a fortune because each insurance company wouldn't need a whole department staffed with people who do nothing but process authorization requests all day, only to approve 95% of them anyway.

[jIM_Ohio]

We could tell you the cost of any vaccines we give or any lab tests we do. We can't tell you the cost of any test or procedure for which we have to refer you elsewhere to get like an x-ray or ultrasound because it depends where you go, which speaks to Jim's point. X-ray facility A doesn't charge the same price as x-ray facility B or C or D. Of course, medicine isn't unique in that regard. A gallon of milk costs a different price at each grocery store. I can show you intersections that have 4 gas stations and each charges a different price per gallon. That's what happens in a free market.

Remember, the majority of doctors are small business owners, so part of that free market system. If you want to fix prices, you need to totally change the nature of healthcare. You need to make me and every other doctor a government employee with a fixed salary and full benefits.

Steve- in most places I go, the gallon of gas is within $.05/gallon within any 5 mile radius. I used to work at a gas station- many of the owners met 2-3X per week and set their prices together.

I am suggesting something similar be done with medical procedures for a very short time. My goal is to find who is efficient and who is overcharging. If you ask an insurance company, they will tell you it costs $X to get an ultrasound or MRI done. If you ask a doctor, it costs something different, and if you ask the tech or dr doing the test, it costs something different.

My goal is to remove that inefficiency by setting a profitable price for the doctor. Meaning figure out what a decent (7%??) profit margin is and charge that... or figure out what a decent hourly rate is ($50/hr for the tech and $120 for the dr??) and use that to base the cost off of- the price can be set as a profitable price point, the goal is then to make the system efficient (less haggling on price because it is set)- the haggling I am referring to is between the dr office and insurance company, which often results in a lower payment than is profitable for the dr.

I want to take the power away from the insurance companies to reimburse the drs offices less than is reasonable, while being fair to both dr and consumer. This will drive out some insurance inefficiencies (for example some places might choose to employ more people in billing, charge more for same procedure, because they know the insurance companies will try to haggle price down- I want to move away from a system like this which is very inefficient IMO).

You make an analagy with a gallon of milk or a gallon of gas... my counter point will be this-
even if the convenience store charges $3.00 for the milk and wal mart charge me $2.59... that difference $.41 which is 13% of the cost... for the gas its $.05 usually, and that is 2% of the cost.

For health care if an MRI costs $50 in one place and $150 in another, that is a 200% mark up. If markup was within 15%, I would consider prices the same (like the gallon of milk).

[disneysteve]

Steve- in most places I go, the gallon of gas is within $.05/gallon within any 5 mile radius.

Jim, around the corner from my house are 2 gas stations directly across the street from one another. One is consistently $.25/gal more than the other. If you drive down the road about 2 miles, there is a station that is always $.50 or so more than every other station on that strip. I have no idea how they stay in business or why anyone goes there, but people do.

If you ask an insurance company, they will tell you it costs $X to get an ultrasound or MRI done.

No, the insurance company will tell you how much they will pay to have an ultrasound or MRI done. That has only a marginal relationship to how much it costs to actually perform the test.

My goal is to remove that inefficiency by setting a profitable price for the doctor. Meaning figure out what a decent (7%??) profit margin is and charge that

I understand where you are going with that and I'm not saying you are wrong, but the system just isn't set up that way. Medicine is a service industry. It isn't utilitarian. There is more to it than just walk in, have a test done and walk out. How's the parking? How long does it take to get an appointment? How long do they keep you waiting? How quickly do they report the results to your doctor? How modern is the equipment? You keep using an MRI as an example. An older MRI machine might take 40 minutes to complete the same study that a newer machine can do in 25 and with better resolution. How do you account for that in your fixed pricing system? How do you account for the fact that the place with shorter waiting times and quicker result reporting has a larger staff that makes that possible? Pay everyone the same price for an MRI and there goes that good service.

You make an analagy with a gallon of milk or a gallon of gas... my counter point will be this-
even if the convenience store charges $3.00 for the milk and wal mart charge me $2.59... that difference $.41 which is 13% of the cost... for the gas its $.05 usually, and that is 2% of the cost.

For health care if an MRI costs $50 in one place and $150 in another, that is a 200% mark up. If markup was within 15%, I would consider prices the same (like the gallon of milk).

I know you were just making up numbers, but I don't think there is a 200% difference in cost from one MRI facility to another (and I wish you could get an MRI for $50 or $150 - I would go right now and get my shoulder checked out). Even your milk example doesn't hold up. I can go to Wegman's and pay $2.09/gallon. Right down the street at ShopRite, it is $3.99. That's a lot more than a 13% difference.

[jIM_Ohio]

Jim, around the corner from my house are 2 gas stations directly across the street from one another. One is consistently $.25/gal more than the other. If you drive down the road about 2 miles, there is a station that is always $.50 or so more than every other station on that strip. I have no idea how they stay in business or why anyone goes there, but people do.


No, the insurance company will tell you how much they will pay to have an ultrasound or MRI done. That has only a marginal relationship to how much it costs to actually perform the test.


I understand where you are going with that and I'm not saying you are wrong, but the system just isn't set up that way. Medicine is a service industry. It isn't utilitarian. There is more to it than just walk in, have a test done and walk out. How's the parking? How long does it take to get an appointment? How long do they keep you waiting? How quickly do they report the results to your doctor? How modern is the equipment? You keep using an MRI as an example. An older MRI machine might take 40 minutes to complete the same study that a newer machine can do in 25 and with better resolution. How do you account for that in your fixed pricing system? How do you account for the fact that the place with shorter waiting times and quicker result reporting has a larger staff that makes that possible? Pay everyone the same price for an MRI and there goes that good service.


I know you were just making up numbers, but I don't think there is a 200% difference in cost from one MRI facility to another (and I wish you could get an MRI for $50 or $150 - I would go right now and get my shoulder checked out). Even your milk example doesn't hold up. I can go to Wegman's and pay $2.09/gallon. Right down the street at ShopRite, it is $3.99. That's a lot more than a 13% difference.

Steve- portions of the gasoline industry confuse me... for example if gas is 3.00/gallon, and the gas has already been delivered to the station (meaning they paid $2.90 or whatever for it) why would they increase prices to $3.10 just because some exchange suggested the price of a barrel of oil increased? The gas they are billing me for has already been in inventory for about 2 days.

The reverse makes even less sense... for example if gas was delivered and charged to station at $3.00 gallon, then the price of crude oil drops (price for a barrel of oil drops), why would the station drop the price of gas on what it already paid for (below the $3.00 it paid)?

I don't get it (that does not follow normal rules of supply and demand and profitability).

Back to health care

No, the insurance company will tell you how much they will pay to have an ultrasound or MRI done. That has only a marginal relationship to how much it costs to actually perform the test.

This is not normal free market economics. My thoughts are to make reform to where it is well known what an MRI costs. If different resolutions of MRIs exist (good point above) then they should be each coded differently (maybe they already are)?

Obviously everyone has different PC systems at the various offices. I know the technology exists to make this all a common system (my company does that for Ford and its suppliers, GM and its suppliers, Lockheed Martin and its suppliers and many many more enterprises).

My system architecture would look like this

MRI
resolution 1 is code XXX001
resolution 2 is code XXX002
resolution 3 is code XXX003
and so on (I am sure the resolutions have ranges)

the XXX is based on who does the MRI
abc for a tech
def for a doctor
xyz for a person of another background

and then my price points are the cominations- abc001 has a different price than abc002 and that is different than abc003

def001 is different than abc001 and so on

and the basic architecture of the system could track this (show costs of all 001, show costs of all abc, show costs of all abc001).

My point is that data like this is needed to know the "true price" based on all the components of the test, then within 18-36 months have the same reform be required to disclose prices, even though they are not fixed (any provider can set the rate) and give the patient some rights to either
a) if a rate within 30 miles is cheaper, they get that rate instead
b) if a specific location is known to overbill, they receive a fine unless the extra cost can be justified
c) make other consumer friendly provisions which suggest the providers need to be consumer friendly... right now the system is insurance company centric and it needs to be patient and provider centric IMO.

[disneysteve]

My thoughts are to make reform to where it is well known what an MRI costs.

Obviously everyone has different PC systems at the various offices. I know the technology exists to make this all a common system (my company does that for Ford and its suppliers, GM and its suppliers, Lockheed Martin and its suppliers and many many more enterprises).

My point is that data like this is needed to know the "true price" based on all the components of the test

a) if a rate within 30 miles is cheaper, they get that rate instead

I guess I'm having trouble imagining how this could work without a total overhaul of the way we do things and switching from a capitalist system to a socialist system (I hate to use "political" labels but it seems appropriate here). If you do work to get Ford and it's suppliers all using the same system, that's great, since they are all on the same team working together. All of the radiology sites, however, are in direct competition with one another. Why would they all want to get on the same system? Each one wants to be able to offer something different and better than what the others offer in order to attract patients to their site.

I also think there are too many variables. To stick with the MRI example, a hospital has different overhead than an outpatient site owned by a hospital and that is different than an independently owned outpatient site. Then it also matters if it is an MRI-only site or a full-service radiology facility that offers a wide range of testing.

One problem that definitely exists is that the landscape is over-populated with such facilities. There are probably at least 100 different places I could go for an MRI within 20 miles of my office. Is that really necessary? Probably not. But what do we do about it now that they are already there and running and serving patients and employing hundreds of workers? Do we force a bunch of those places out of business in the interest of lowering costs to the system?

And I would still maintain that a 30-mile radius is way too big in an urban area. There is no way any of my patients would travel 30 miles to have a test done or see a specialist. Most of my patients won't/can't leave town, so 5 miles is about their limit, 10 miles tops.

[jIM_Ohio]

I guess I'm having trouble imagining how this could work without a total overhaul of the way we do things and switching from a capitalist system to a socialist system (I hate to use "political" labels but it seems appropriate here). If you do work to get Ford and it's suppliers all using the same system, that's great, since they are all on the same team working together. All of the radiology sites, however, are in direct competition with one another. Why would they all want to get on the same system? Each one wants to be able to offer something different and better than what the others offer in order to attract patients to their site.

I also think there are too many variables. To stick with the MRI example, a hospital has different overhead than an outpatient site owned by a hospital and that is different than an independently owned outpatient site. Then it also matters if it is an MRI-only site or a full-service radiology facility that offers a wide range of testing.

One problem that definitely exists is that the landscape is over-populated with such facilities. There are probably at least 100 different places I could go for an MRI within 20 miles of my office. Is that really necessary? Probably not. But what do we do about it now that they are already there and running and serving patients and employing hundreds of workers? Do we force a bunch of those places out of business in the interest of lowering costs to the system?

And I would still maintain that a 30-mile radius is way too big in an urban area. There is no way any of my patients would travel 30 miles to have a test done or see a specialist. Most of my patients won't/can't leave town, so 5 miles is about their limit, 10 miles tops.

Steve- technology can track the data, the goal is narrow down the cost built in from the insurance inefficiency (the last 30 years has seen insurance companies inflate the costs, so the goal is for the MRI providers to be profitable with a scaled down insurance system). The early part of that process would require controlling price to force the ineffiencies out, but as we go back and forth I see some short comings of my system.

Here are some Ford-GM examples which might help you...

Some of the suppliers (MOST of the suppliers) for Ford and GM and Honda and Toyota are the same... Honda and Toyota to a lesser extent, but companies like Dana Corp, Lear, Johnson Controls and Delphi supply all the major automakers.

The technology exists so that Dana can have its own part number (for whatever it is supplying). It might be that the axle to dana is part 1234567

Ford uses a numbering system like 00-00-00 and then 00-01-00 and then 00-02-00. I know this as CPSC coding, you see it as a bunch of numbers. It is a way to quickly identify what part of a car the data belongs to and the CPSC is included on everything which goes with the car. Ford has used that system for 30-50 years- longer the computers have been around for sure.
and I could go on, but know that Ford has about 200 combinations of those numbers just to identify which part of the car that part goes in (thats not the part number, that is just the sub system identifier).

I am sure GM has a similar scheme to track its parts.

The Technology exists so the following is true

Dana can have its own part number independant of part numbers for GM or Ford, even thought the part is the exact same part. In the Danba environment they see the dana part number.
GM can control what data Dana sees when looking within its environment. In the GM environment, they see the GM part number.
Ford can control what data Dana sees when looking within its environment. In the Ford environment they see the Ford Part Number.

this is important because Johnson Controls and Lear are in direct competition with each other. So when Lear is within Ford environment, it cannot see any data made by Johnson controls. When Johnson controls is in the environment, they cannot see any data made by Lear.

I will throw one more loop into system...
if you deal with Lockheed Martin's case, it is more important because some of the data is classified. So the technology is robust enough it passes all DOD requirements for security.. meaning not only are the same supplier permissions set up, it can also handle security clearences on the person looking at the data (if you do not have a top secret clearence, you cannot see all of data your company provides if that data is top secret as well).

Very important for the missile guidance systems we put into planes.

So the technology can handle all the deviations of billing (for example one MRI provider cannot see how the other provider is billing the same procedure). The goal is to "standardize" health care by tracking everyone providing MRIs and whoever is tracking this cannot profit from the research (must be an agency like FDA, not a for profit insurance company). Right now all pricing and reimbursement appears to be in control of the insurance companies, and they do not adhere to same standards and ethics an elected official or government entity is held to.

Once its know the actual MRI is X value (the data can flush this out), it becomes easier for Medicare, Medicaid and any other program to know the value of that procedure.

What I see as the problems

1) NO ONE knows what most health care costs.
2) Even if you put 1 insurance company with 1 doctor, 1 Nurse and 1 billing specialist you could not put together a true cost for a given service- there needs to be mass data available for trending.
A great example would be whether a "transportation fee" is assessed to move a lab sample from one floor to the next- I saw this on a bill once, even though the lab was 2 doors down from where the procedure occured. If I had same procedure done at a different provider, would they assess the same fee? This is level of standardization I am looking for (who is allowed to assess that fee?)
3) The government health care agencies (Medicare/Medicaid) do not pay at same rates aa private insurance companies- this is unfair to those which carry private insurance (savings of 2k per year for a family of 4 if this inefficiency is removed).
4) Doctor's should be allowed to charge what is reasonable for a procedure without any entity talking them down on price- provided there is full price disclosure before the procedure. If full price is not known, see point #1.
5) Based on item #4 and #1, it is clear its an endless cycle until it is well documented what the price of a procedure is. My line of thinking on keeping prices consistent is temporary until the cycle of #4 is removed from the system (if price is disclosed before procedure Dr should be able to set price at anything they want).

[disneysteve]

1) NO ONE knows what most health care costs.

I guess this is what I have a problem with. If you call a radiology facility and ask how much it will cost to have an MRI of your knee done, they will give you a price. If you call a lab and ask how much it will cost to have your cholesterol checked, they will give you a price. If you call my office and ask how much it costs to have a visit with me, you will be given a price. What isn't known? Any provider should be able to give you a price for a particular service. That price will vary based on which provider you ask, but that's normal for any business. Some providers charge more. Others charge less. Same as one store charging more for that gallon of milk than another store. Different overhead. Different profit margin. Different operating costs. Different business models. I'm not sure if it is realistic to come out and say, "Okay, from now on, every provider doing MRIs of the knee will be paid $800 and that's it. Not a penny more." That might be enough for some places but others may have already invested in equipment and staff and a building based on an expected fee of $900 per knee MRI. What are they supposed to do?

As I said, some areas of medicine are probably overpopulated and maybe some of those places need to be driven out of business which might be the result of action like this. Consolidation may bring economies of scale into the picture which could lower overall costs going forward so that may be a good thing. I don't know.

[jIM_Ohio]

I guess this is what I have a problem with. If you call a radiology facility and ask how much it will cost to have an MRI of your knee done, they will give you a price. If you call a lab and ask how much it will cost to have your cholesterol checked, they will give you a price. If you call my office and ask how much it costs to have a visit with me, you will be given a price. What isn't known? Any provider should be able to give you a price for a particular service. That price will vary based on which provider you ask, but that's normal for any business. Some providers charge more. Others charge less. Same as one store charging more for that gallon of milk than another store. Different overhead. Different profit margin. Different operating costs. Different business models. I'm not sure if it is realistic to come out and say, "Okay, from now on, every provider doing MRIs of the knee will be paid $800 and that's it. Not a penny more." That might be enough for some places but others may have already invested in equipment and staff and a building based on an expected fee of $900 per knee MRI. What are they supposed to do?

As I said, some areas of medicine are probably overpopulated and maybe some of those places need to be driven out of business which might be the result of action like this. Consolidation may bring economies of scale into the picture which could lower overall costs going forward so that may be a good thing. I don't know.

The price is not consistent- because to be given the answer, more than likely I will be asked which insurance plan I am on.

For example last year from 2008 to 2009 my kids were getting synagis shots. The shot in December was a different cost than the shot in January because the insurance plans changed.

This type of inefficiency needs to be corrected

its the same procedure
to the same patient
the cost should be the same

which insurance plan I have should not change the cost