by Carol Dorn Sanders
For my 20+ years working in the healthcare industry, the actual cost of providing care has been a mystery. Hospitals and providers knew what they charged for care, and insurance companies knew what they paid in claims, but rarely were they the same number. And never did either reflect the actual cost of care.
For healthcare reform to succeed in shifting from fee-for-service to value-based care, all stakeholders—providers, insurers, patients and employers—must fully understand the complete financial picture. And for hospitals and providers to survive this payment model shift, that financial picture must include the true cost of care.
But how do we make this shift in an industry shrouded in mystery? I contend that the best drivers are price and outcomes transparency. I am not alone, of course. There is no shortage of coverage on this topic in our industry of late. In fact, a firestorm of activity is brewing on the transparency front, and here are few examples.
As part of its effort to make healthcare more affordable and accountable, the Centers for Medicare and Medicaid Services (CMS) recently released Medicare provider utilization and payment data. The information being released summarize the utilization and payments for procedures and services provided to Medicare fee-for service beneficiaries by specific inpatient and outpatient hospitals, physicians, and other suppliers. These data include information for the 100 most common inpatient services, 30 common outpatient services, and all physician and other supplier procedures and services performed on 11 or more Medicare beneficiaries.
The Healthcare Financial Management Association (HFMA) recently convened a task force to discuss this issue, and it released a report last month providing guiding principles and recommendations for improving price transparency in healthcare. The task force, which is made up of members from health plans, hospitals, consumer groups, employers, physician practices and others—feel that price transparency should:
- Empower patients and other care purchasers to make meaningful price comparisons prior to receiving care;
- Be easy to use and easy to communicate to stakeholders;
- Be paired with other information that defines the value of services for the care purchaser;
- Provide patients with the information they need to understand the total price of their care and what is included in that price;
- Require the commitment and active participation of all stakeholders.
While a survey published in the Journal of the American Medical Association indicates that only 36 percent of physicians believe that they have a “major responsibility” to help control costs of care, the attitudes of providers could be changing. Dr. Neel Shah, an obstetrician at Beth Israel Deaconess Medical Center, has launched a nonprofit—Costs of Care—to transform American healthcare delivery by empowering patients and their caregivers to deflate medical bills. Shah believes that it’s imperative for physicians to start weighing the costs of care against the benefit of expensive treatments and having those discussions with patients.
What I would have given if I had been afforded the opportunity to have such a discussion before my recent orthopedic surgery. While I certainly did my due diligence in finding the right surgeon after seeking opinions from two others, I never considered the associated costs of care.
The surgeon did share with me that his preferred product for cold therapy compression was different than the product offered in the hospital’s OR and suggested that I meet with the vendor sales rep to decide whether or not to order the equipment. I understood the extra costs associated and decided to pay the $350 out of pocket for what appeared—and was—a superior product.
What was not shared with me, however, were the costs associated with the other equipment ordered. For instance, my employer at the time had a durable medical equipment closet where I could have borrowed crutches for the four weeks needed. Instead, the crutches provided to me in recovery hit my pocketbook for $500 and now sit in my attic collecting dust. They are certainly state-of-the-art crutches but hardly worth $500.
Further, I was sent home with a continuous passive motion machine to the tune of $1,300 out of pocket. The doctor didn’t communicate until discharge that the CPM machine and my stationary bike at home would serve the same purpose. Had I known, I would have never signed the contract for the CPM machine, which was not covered at all by insurance.
While I am grateful for the excellent clinical care I received during and following my procedure, I am still left with a bad taste in my mouth once receiving the final bills. If the information had been shared with me in advance—in the spirit of full transparency—where I could have made decisions for myself, I would have felt the value of care was excellent.
Patients are being asked to take on a much more significant share of the costs of healthcare, and as a result, we are going to be asking for transparency and value—quality service at a fair price. As someone who has worked in this industry for the better part of two decades, I should have known better. I should have asked just as many questions about costs as I did about outcomes. I will not make that mistake again.