Day: October 23, 2011

     If airlines can charge differing fares for the same flight, why cant hospitals charge differing rates for the same services too?  It’s all about a free market economy.

If the price of an airline ticket is too high, there is nothing to stop you to shop around for a better one. Same goes for health care.

Editor’s Note: A total hysterectomy for $10,000, all incluesive? First quote received was for about $25,000. We negotiated a total incluesive fee of $10,000 with the assistance of a hospital administrator who put the package together for our client who was in need of immediate surgery. Patient’s group medical plan paid the $10,000 up front as a condition for the transaction. The surgery was successful.

“Prices charged by providers are a significant driver of premium increases and a factor in coinsurance amounts, but are even less transparent than health plan pricing structures. Individual providers and facilities deliver and price thousands

                                                  

of services and prescription drugs, and each may price those services and drugs differently. The same provider or facility may also charge different amounts by payer, including various carriers and the uninsured.” – exerpt from The Extended Health Exchange, July 2011 (www.extendhealth.com)

With the existing health care model, consumers are shielded from true health care costs. Little Suzi Secretary, whose group medical plan she relies on, has no clue that Hospital A is the best and lowest cost facility in her area. And, she doesnt care, after all, she has to pay the same deductible and co-insurance no matter which hospital she goes to that are in-network. And, Hospital A may be an out-of-network hospital so going there would cost Little Suzi more but her employer’s plan less. More for less……………………

And, Little Suzi’s employer has no clue either. The employer relies on group insurance premium rates as the benchmark on “the best deal”. The insurance plan with the lowest premium most certainly has the best provider pricing, right?

Editor’s Note: Hospital pricing differential between hospitals can be significant. We know. Recently we reviewed pricing at two hospitals located within the same city. One was, on average, 300% higher than the other. The higher cost hospital was “in-network” with a local political subdivision, while the less expensive hospital was not. The annual estimated cost differential to the political subdivision insuring approx. 300 employees was in excess of $1,000,000.00. In other words, if the less expensive hospital had been utilized during the past 12 months, the group self-funded benefit program would have enjoyed a healthy fund balance instead of a negative fund balance requiring more taxpayer infusion.

A decision to utilize the savings at the competing hospital was never made. East Texas politics intervened.