"Make sure he doesn't spend two grand on a TV."
Despite my father-in-law being bound to a wheelchair and a fixed income, his spending tends toward the unfettered. My wife put me in charge of this planned purchase because it is a simple proposition to purchase a television the size of a wading pool for way south of $2,000. Or even $500, which was my intended price point.
Yet I keep putting off going to the doctor to get some gnarled skin checked due to price anxiety. Could be $500. Could be $2,000. Who knows?
Healthcare is the very last of the vast tracts of commerce in this country where price transparency doesn't exist. Going online to check the price for a procedure is not only not recommended by anyone, but also simply not possible. In an age brimming with information, computers, smartphones and eBay, nearly 20 percent of the nation's economy still can't be priced out.
Lack of cost transparency carries a pricetag of its own. According to a new Thomson Reuters survey, it costs the country about $36 billion a year in terms of overspending on healthcare. In some markets, the same procedures cost three times as much in one hospital compared to another.
If one Best Buy sells a television for $500 and another store across town carries it for $1,500, how many sales do you think the latter location will record? Assuming I can get a full-body tackle on my father-in-law in time, I would presume zero.
Price opacity comes from a lot of things, but for healthcare's it's primarily the overhang from when its modern iteration was created 70 years ago. Employer-sponsored healthcare was meant as a perk to overcome wartime wage freezes, nothing more. Only now, after decades of steadily accelerating cost growth, the country is moving away from that model.
With even the best-insured Americans paying at least hundreds of dollars a year toward their own healthcare and price inflation likely to continue unabated, the tolerance for being kept in the dark about how much their bill will run them will soon fizzle out. Within the next decade, doctors in both the inpatient and outpatient settings should expect to have to dicker over the price of whatever they do before they do it. Hospitals will have to routinely provide an estimated bill of charges to the patient as part of the admissions process, much like finance companies are required to spell out such costs prior to closing a loan.
Oh, and those little stories like Beth Israel paying a settlement for "turbocharging" Medicare claims will grow from a couple of headlines in the news cycle to major scandals. No one wants to patronize a business that encourages underhanded transactions.
The Affordable Care Act is going to push this change even faster, as more businesses drop their coverage and their employees will have to get online for the first time to price out and purchase their healthcare.
It's a little too soon to see how this will affect hospital finance, and there isn't enough space in this column to cover all of the ramifications. It's going to happen nonetheless. As they say on TV, stay tuned. - Ron (@FierceHealth)