Do you know what a non-urgent primary care provider (PCP) visit costs today? If you don’t, you are not alone. According to GoodRx, nearly 50% of Americans have absolutely no idea, and more than 70% find it “difficult” or “very difficult” to anticipate the costs associated with a healthcare procedure and an emergency room/urgent care visit. While not surprising, these numbers underscore the tragic reality of today’s U.S. healthcare delivery system – a system that has made it incredibly difficult for patients to obtain even basic information about the cost, quality and outcomes related to their care and well-being.
In speaking with a confidant who recently went through this obstacle course himself, his experience illustrated what these statistics reflect. When he called the dermatologist’s office to get baseline costs for a routine surgery, he was instead given a list of Current Procedural Terminology (CPT) codes associated with the work and told to check with his insurance plan to see what they charge based on those codes. When he called his insurer, the customer care representative said that while they had the ability to check on pricing, the system was down. When he asked how long it had been down, the representative said “weeks!” His insurers then suggested he go back to square one – ask his dermatologist to find out the rates they bill insurance. After multiple calls and voicemails, he was able to finally get some ballpark cost ranges on the provider end, but it was not enough to give him peace of mind.
Bravo to him for picking up the phone, but it begs the question: this is cancer, so is anybody playing first base? And this patient did more than most. Data shows a majority of Americans (64%) have never sought out pricing for their care.
Given this dermatology experience, the reticence to ask is clearly understandable. Oftentimes the information necessary to make informed decisions about cost, quality and outcomes isn’t readily available. Even after a procedure is completed, what the provider bills the insurer for services rendered isn’t what the patient ultimately ends up paying. So, until the bill comes due, patients are left fretting: What services did I receive? How much do those services cost? What will my insurance cover or will my insurance cover it at all? And, if they do, what if anything do I owe when it’s all said and done?
This is the grim reality consumers face in 21st Century American healthcare delivery. And when people try to broach these tough questions with their health and insurance providers, they often are only met with confusion and resistance, which leads to frustration, and in some instances, forgoing care altogether. HealthSparq’s 2022 Annual Consumer Benchmark Report found that 44% of Americans avoided getting healthcare services because they didn’t know the costs, a nearly 20% jump from 2021.
Healthcare spending accounts for nearly 20% of our nation’s Gross Domestic Product (GDP). At $4.3 trillion and counting, we spend more on healthcare than most of the developed world, yet the average patient has no insight into the true costs associated with their most precious possession: their health. But in almost every other area of consumer spending, be it purchasing a home, cell phone, flat screen television or car, people are able to comparison shop, and negotiate, ask questions and even take a “test drive.” These are the tried and true principles of a market-based economy.
So, how did we get to such a dysfunctional, unthinkable and frightening place in public health?
Not that long ago, it was heresy to talk about the consumer and healthcare in the same sentence. As I detailed in an earlier column, the patient-physician relationship has historically been a transactional one: doctors prescribe, and patients take the prescription – and pay, no questions asked. And historically, their insurance picked up the tab with a limited deductible.
This dynamic is a product of either reluctance to try and understand the scientific language and complexity around diagnosis and treatment and/or a deference to “expert” physicians. In either case, medical professionals have always had the upper hand in terms of knowledge and expertise, and so discussions between physicians and patients didn’t happen. And when asked about costs, providers were reluctant to give answers, because in many cases, they too didn’t know the true costs of care. Why? When someone else foots the bill, questions about cost aren’t a priority.
In my latest book, Bringing Value to Healthcare, I explained the number of forces behind this backwards system. First, third parties negotiate for and pay the cost of healthcare, essentially removing accountability for cost and quality outcomes from physicians and hospital providers. This has enabled a perverse FFS model – where the more services provided for a patient, the more physician and hospital providers stand to make – to flourish. This model drove a test more, treat more, consume more mentality that for too long has been how the system operates.
Conversely, since patients haven’t historically paid directly for their healthcare, they end up demanding more drugs and procedures – whether their physician says they are necessary or not. This behavior has been enabled by generous employer-based health plans, where any expectations that patients make cost-benefit decisions on their own behalf have been replaced with a sense of entitlement to any service they desire. In this climate, healthcare delivery has taken advantage of fair winds of ignorance. We see it play out every day on television with all those “talk to your doctor if such and such drug is right for you” commercials.
In a recent piece, I chronicled the almost 40 year saga of the nation’s largest payer, the Centers for Medicare and Medicaid Services (CMS). For decades, CMS has been trying to control rising healthcare costs, improve quality and demand greater accountability in healthcare delivery through a series of reforms. One of those reforms was requiring hospitals to publicly post their prices for 300 “shoppable services” that a healthcare consumer can schedule in advance. The goal is simple: to increase transparency, a key ingredient of getting to a market-based model.
Unfortunately, CMS has been faced with vehement resistance. The American Hospital Association (AHA) even fought the measure all the way to the Supreme Court. Although AHA lost the case, now, two years after the measure went into effect, a new report shows that the number of hospitals in full compliance still stands at a woeful 24.5%. And, while CMS has issued hundreds of warnings, they have only fined two hospitals for noncompliance.
This outcome was to be expected of an industry mired in old ways and historically slow to change. However, this leaves our beleaguered healthcare delivery system in a state of distress. Meanwhile, fearing legal and political backlash from hospital and physician lobby groups, CMS is left to pursue only cookie cutter reforms, leaving room for agents of change to take matters into their own hands.
I have written about retail industry disruptors extensively, as these companies move further into healthcare delivery by the day. CVS, which has been in the disruption game a long time, continues its forward march as they just announced the acquisition of Oak Street Health to expand and deepen their primary care footprint even further. More recently, companies like Walmart and Amazon have joined the ranks, chipping away at the traditional healthcare delivery market block to better serve the needs of their customers.
A majority of Americans say that the U.S. healthcare system’s condition is in bad shape, with 48% reporting it has major problems and another 20% that it is in a complete state of crisis. In this climate, these nontraditional actors are working to reimagine and deliver healthcare in a way that is more convenient, accessible, affordable and transparent. If you walk into any CVS Minute Clinic, those seeking care can usually find pricing easily displayed for a host of services, including tests/screenings/physicals, chronic condition management and vaccines, with prices ranging from $99-$139 depending on the type of care rendered. A visit to the Walmart website also shows pricing for an array of primary/urgent care, dental and counseling services. Many Americans, especially younger generations, believe this is the way of the future. But retail-based healthcare is not the only area where better results can be realized when the right economic conditions are in place.
Elective healthcare procedures provide another example of how a market-based model can and should work. As I’ve written about, LASIK eye surgery and cosmetic dermatology are procedures not covered by health insurance, meaning patients pay directly for these services – and, importantly, providers must compete for their business. Greater convenience, innovative services and lower prices have followed. Years ago, corrective eye surgery was approximately $8,000. Today, it is about half the cost. My book further explains how this kind of competition paves the way for a new transparent payment model tied to outcomes and creates an environment where providers are incentivized to deliver better care at lower cost, while engaging consumers in the process.
Getting to a new consumer-centric promised land is possible, and to realize what should be the norm in American healthcare, we can look to the Amish as a case study.
Due to their religious and customary beliefs, the Amish don’t participate in the U.S. healthcare system, Medicare or Medicaid, which makes this population especially conscientious shoppers of care. Often relying on “self-pay” type programs, they use collective community funds, doled out as needed, to pay for their healthcare. As one physician at an Amish- focused clinic said: “there’s very few rooms that I walk out of that we haven’t had some discussion about what the cost and what the estimated bill to the family and the church is going to be,” he says. “So you have to be willing to be very transparent, and that is a huge contrast to most health care systems.”
In addition, in a 2012 Heritage Foundation forum, physician and former U.S. Oklahoma Senator Tom Coburn explained how, because they have to shop around for providers, ask questions about which treatments are necessary and negotiate prices, the Amish in his community are experts at purchasing healthcare.
“They [Amish] buy their health care for about a third of what you pay because they go and find the best price. They go and work a deal and they actually are paying for it. Therefore they buy great quality at a lower price,” Coburn said in a 2017 MSNBC interview. “All we need to do is copy what they are doing and we can solve our problems and we can reward excellence, which we should be because if you have a price but you’re better, you’ll get a better price. If you’re worse, people won’t come to you, that’s the other problem.”
As the Amish experience teaches us, patients can actively participate in their healthcare decisions and wield significant bargaining power if they choose. For this to happen at scale, though, they need to flip the script entirely and start acting more like consumers, and less like passive patients. Taking physicians at their word is no longer sufficient, especially at a time when healthcare spending is still growing, consumers are being asked to shoulder more of those costs and a broken fee-for-service (FFS) model has collapsed under the weight of its own failures. It’s clearly time for a new healthcare strategy, especially in a post Covid world.
Whether providers like it or not, change is well underway, and we expect the drumbeat to continue. In fact, a Kaiser Family Foundation (KFF) poll found that when it comes to health care priorities for the new 118th Congress, passing a law to make health care costs more transparent to patients tops the list, with “a large majority (95%) of the public say[ing] it is important for Congress to pass a law to make health care costs more transparent to patients, including 60% who call this a top priority.” And, last year, a congressional committee asked the Government Accountability Office (GAO) to investigate hospitals over price transparency compliance. Some Capitol Hill lawmakers are getting the message.
Lifting up the hood to ask questions about a sputtering healthcare delivery engine isn’t pleasant, but necessary now more than ever. To quote the legendary reggae singer Bob Marley: “Get up, stand up. Stand up for your right.” If more patient-consumers start adopting this line of thinking, healthcare delivery organizations will have no choice but to start acting in their best interests. Pick up the phone and call your doctor today.