We received an email today from 6 Degrees. The graph above caught our attention.
When we first entered the Reference Based Pricing space in 2007 one of our first hospital encounters involved one of our members pre-registering for a procedure at St. Davids Hospital in Austin.
“They won’t take my insurance!” yelled the member. “What kind of insurance is this!”
The plan she was covered through paid Medicare plus a 20% margin. “Not good enough” St. Davids told the patient. “We consider you a self-pay patient!”
So we got busy. I called St. Davids and after being on hold for a few minutes while the operator tried to figure out who to send my call to. “Hello, how can I help you?” said a voice on the other end of the phone.
“Yes, thank you for taking my call. I represent Ms. Smith (not her real name). She is trying to schedule a surgical procedure at your hospital as a cash pay patient. We would like to settle that now, before the surgery. The procedure is………………..”
By the end of the day St. Davids Hospital who initially refused 120% of Medicare agreed to a cash price equal to 89% of Medicare.
The patient paid nothing. “I really like this new insurance!” she told HR later.
We’ve been doing cash deals ever since as often as we can. And we’ve lowered the margin above Medicare to 5%.
