Stamping out hospital price opacity

After 15 years or so of hating the profession he had stumbled into after college, my father gravitated to his hobby for his livelihood: stamps.

Despite what would best be described as an undisciplined business, the resale and wholesale of collectible stamps revolved around the Scott Catalogue, philately's chargemaster.

Well, sort of. The Scott Catalogue could list a particular stamp at $250, but in reality, it was only worth a small fraction of the Scott price. Wholesalers, such as my father, knew that fact, but people looking to unload stamp collections they or their parents put together eons ago had no idea.

Sound familiar to you hospital executives?

I thought the twain of stamps and hospitals should never meet until I read a report recently published in JAMA Internal Medicine. A University of Iowa student named Jaime Rosenthal called more than 100 hospitals around the country, trying to get a quote for hip surgery for a fictional grandmother well-to-do enough to pay out of pocket. Only 16 percent were able to quote a complete price. They ranged from $11,000 to more than $125,000.

While the results showed many healthcare providers can't provide reasonable price estimates, there is "no justification" for price opacity , which renders any efforts at measuring and pronouncing quality meaningless, well-known medical ethicist Ezekiel Emanuel wrote in an accompanying editorial.

That article acted for me much like one of Gustave Flaubert's memory-stirring madeleines. The well-worn Scott Catalogues lying around my childhood home popped into my mind, even though I had successfully forgotten them for decades.

Eventually, the Scott Catalogue came under pressure to revise its prices to reflect actual values, which it did so around 1990. It roiled the stamp business for several years, and no doubt contributed to my father dealing more in coins and historical documents, which are much more stable markets for collectibles.

Indeed, the hobby of philately has inexorably been moved from historical interest to dustbin (when was the last time you heard of someone who collected stamps?). And with the Postal Service cutting back on deliveries and losing billions, it's likely never coming back.

But everybody needs hospitals. And given most Americans will gain healthcare coverage over the next several years--along with steep premiums and co-payments--it's in the best interest of the industry not to stop doing a Scott Catalogue number on its customers. - Ron (@FierceHealth)