The Real Reason Your Doctor Doesn't List Prices

Posted by - Wednesday, October 17th, 2012

With just weeks until the election, health care has become a hot discussion topic once again. Costs are rising—and regardless of what happens with Obamacare, this will continue to be the case.

Health care spending by the government has shot up between 1987 and 2009. But household expenses have gone up with it, as you can see from the chart:

Health Care Costs

But the worst part is patients may not have noticed. Many healthcare costs, particularly at hospitals, are hidden—even wildly varied.

Try to guess what you might pay for an appendectomy in California. It's a pretty common procedure; many people get their appendixes removed, often when they're young.

Now, even if you or no one in your family has ever had an appendix taken out, there's a good chance your guess was right. If you guessed anywhere between $1,529 and $186,955, you got it!

A study published in the Archives of Internal Medicine found that to be the range. And that's not over a span of, say, ten or twenty years. That's all in one year.

And it wasn't even by region. These prices varied by individual institution, type of health care and, of course, ability to price shop.

From the Washington Post:

“Price shopping is improbable, if not impossible, because the services are complex, urgently needed, and no definitive diagnosis has yet been made,” the authors conclude. “In our study, even if patients did have the luxury of time and clinical knowledge to 'shop around,' we found that California hospitals charge patients inconsistently for what should be similar services as defined by our relatively strict definition of uncomplicated appendicitis.”

But this study also was unable to gather all the information on insurance. Insurers would not provide information on what they paid for the procedure; the authors could only determine what the patient paid.

Andy Grove of Wired compares this to the advent of the “Monroney sticker” on vehicles in 1958—the sticker that shows the manufacturer's suggested retail price (MSRP), fuel economy, environmental rating, and other vehicle data.

Prior to the bill by Senator Mike Monroney, the same car could have widely different prices at different dealers—just as an appendectomy still has an enormous price range depending on institution.

Grove compares health care to the automobile industry of the 1950s—with “irrational and inexplicable pricing,” a lack of data, and a need for a “window sticker.”

And he's right. It's clear that there is a huge, ongoing problem in an industry that serves every single individual.

The price inconsistency is just the tip of the iceberg. Technology is now available to streamline data collection and improve medical procedures. But the medical industry has been slow on the uptake.

My doctor's office just began using computers for personal patient information within the past few years. I recently left my dentist when the office continued to hand-write receipts. Yet other industries have had data computerized for a decade or more.

As far as technology for procedures, the heath care industry has been quick to move—but whereas in other industries this helps to bring costs down, in health care it pushes them up.

And even computerizing data has been giving doctors an excuse to push up costs. What was intended to be beneficial to all parties, making data collection easier for doctors and things like prescription combinations safer for patients, became an excuse to exploit the patient further.

From the New York Times:

Some experts blame a substantial share of the higher payments on the increasingly widespread use of electronic health record systems. Some of these programs can automatically generate detailed patient histories, or allow doctors to cut and paste the same examination findings for multiple patients[...]making it appear that the physicians conducted more thorough exams than, perhaps, they did.

Its discouraging that so many doctors could be taking advantage of their patients in that way, and it really is enough to make one reconsider if a doctor's main goal is to help the patient.

The process is, of course, fraud, but the lack of knowledge patients receive—and our willingness to accept whatever price we're given in the health care world—can allow it go unnoticed.

The problem Grove sees is this twisted focus in the medical world. He writes:

The health care business is about patients. But the patient population has been largely powerless and remains so even as the members of the medical community—hospital chains, nationwide insurers, large employers—have become much more powerful. Over time, the patient—the raison d'etre of the health care business—has been reduced to merely another raw material.

If technology can grow within the industry to focus on patients, he concludes, individual patients can become an integrated part of data collection—allowing for more personalized treatment.

Personalized treatment means the patient has more power, and perhaps this can ease the economic burden. So long as the technologies are not exploited as they currently are.

The automobile industry was revolutionized in 1958. The health care industry must do the same.

*Chart courtesy of Wired

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