Wait, Expensive Hospitals Aren’t The Best Choice?

Dave Chase

When patients choose a hospital or other provider, they don’t really know what they’re getting………..The reality is that status quo health benefits are a horrible value proposition for employers and individuals……………

By Dave Chase

Published on November 27, 2018

In healthcare, one of the most persistent myths is that high cost equals high quality. Every year, tens of thousands of patients go to expensive, low-quality medical facilities. They’re being directed by their primary care doctors (who often spend a mere 10 minutes with them during appointments), their friends and family, and the media. They are under an illusion that many of us believe — that more expensive care is better. It’s simply not true.

When patients choose a hospital or other provider, they don’t really know what they’re getting. Not every hospital is safe, let alone high quality, which can put patients at risk. And hospital rankings often are not an accurate measure of quality as they’re based on past reputation rather than current data on safety and quality measures, such as hospital-acquired infections.

Moreover, hospitals often charge widely different prices for the same procedures, independent of variations in quality or even the severity of the patient’s condition. Research has found huge price differences for the same procedures at different hospitals — sometimes, prices can vary within the same hospital. Even after accounting for the gravity of the illness, we still see drastic differences. For example, at one expensive hospital, prices ranged from less than $15,000 to nearly $69,000 for the same major bowel surgery.

Not to mention, we might not even need some of these procedures. Another huge part of costly hospitals and providers is the fact we are being recommended totally unnecessary procedures. Musculoskeletal (MSK) procedures (e.g. some knee procedures and spinal fusions) typically account for a whopping 20 percent of healthcare spending, but only half of MSK procedures are considered appropriate, or are backed by evidence demonstrating their likely success.

This can add up in a big way: benefits expert Brian Klepper, former CEO of the National Alliance of Health Care Purchaser Coalitions, estimates that two percent of the entire U.S. economy (not just health care) is wasted on non-evidence-based MSK procedures that add no value — technically, all the waste means these procedures end up subtracting value.

Sometimes, patients who have good insurance don’t have to worry about cost differences or agreeing to unproven procedures because their plan picks up the slack. They can remain blissfully unaware of what goes on behind the scenes, making their healthcare decisions based on their insurance company’s choice when it comes to “valuable” hospitals and doctors. But with high deductible plans becoming more common, these procedures can start to take a toll on the wallets of even the most well-off. Not only that, but the more insurance companies have to pay, the more they will increase premiums for individuals driving continued wage suppression due to escalating healthcare costs. It’s a lose-lose situation all around.

There’s at least one upside to this difficult scenario, however: With more and more of the financial burden placed on greater numbers of individuals, more are clamoring for increased transparency when it comes to out of pocket costs and procedure quality.

Americans lead the world in healthcare costs (healthcare spending is nearly 20 percent of the national economy), yet the United States ranks twenty-sixth in the world for life expectancy. The current system is fraught with low-value options and costs us billions of dollars a year in fraud, waste, and abuse.

We need to get to the root of the issue.

The first step is replacing our current fee-for-service model, which incentivizes low-quality, high-cost care, with a value-based primary care system. Unfortunately, primary care has been turned into healthcare’s primary loss-leader, like milk in the back of the grocery store. Although it will cause short-term financial pain to transition to a new model, the payback is there within a year for high quality primary care organizations — some who guarantee this will happen. Focusing on patient outcomes, not service value, means a better experience for everyone involved. Instead of thinking, “This surgery costs $10,000 so it must be the best choice,” patients will begin to follow a pattern of, “This hospital’s patients are experiencing huge success, lower risk, and more satisfaction after their procedures; this is where I should go.” Doctors will be rewarded for being more careful in their prescribing, spending more time with patients and creating trustworthy relationships.

The reality is that status quo health benefits are a horrible value proposition for employers and individuals. They cause catastrophic waste and devastation, costing employers huge sums to keep up with hyper-inflating costs. In reality, improving care will require big changes — but it will bring down costs for employers and employees alike. Not only that, but when employers better understand what they’re paying for, and which providers are best for their employees, they can become better healthcare resources for their workforce. If employers turn a discerning eye toward the insurance policies available to them and locate where the value lies among the providers in their community, they can make more informed benefits decisions that lead to better outcomes and lower costs. Once we identify where the true value lies, the illusion of more expensive care meaning higher quality will no longer hold strong.

The full op-ed was published originally in Chicago Now.


Dave Chase is the co-founder of the Health Rosetta (a LEED-like organization for healthcare), and author of the book, “The Opioid Crisis Wake-up Call: Health Care is Stealing the American Dream. Here’s How We Take it Back.” Follow the link to the book for a free download of the book. Chase’s TEDx talk was entitled “Healthcare stole the American Dream — here’s how we take it back.” See the Health Rosetta website for how to get involved, resources and how to join others to support its mission.

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