Transparency for Consumers

Will EHRs improve the quality and decrease the cost of care for consumers?

The research done to date is mixed: some studies find improved care, others to not. As far as cost, EHRs should theoretically reduce waste, reducing overall healthcare costs. Since many physicians and hospitals still aren’t using advanced systems, it’s probably too early to many generalizations about cost reduction.

Here’s another more difficult question: could the widespread adoption of EHRs result in the ability to provide consumers with more information about prices for medical procedures?

The lack of transparency in medical billing today was carefully set-out in a story in today’s New York Times. The paper reports

Hospital care tends to be the most confounding, and experts say the charges you see on your bill are usually completely unrelated to the cost of providing the services (at hospitals, these list prices are called the “charge master file”). “The charges have no rhyme or reason at all,” Gerard Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins Bloomberg School of Public Health. “Why is 30 minutes in the operating room $2,000 and not $1,500? There is absolutely no basis for setting that charge. It is not based upon the cost, and it’s not based upon the market forces, other than the whim of the C.F.O. of the hospital.”

That is a little harsh. Hospital CFOs do not base prices on whims, but rather on very complex financial analyses. Then they must bargain with insurance companies. If they represent a “four star” hospital like Cedars-Sinai or The Mayo Clinic, they are going to be able to negotiate

higher rates than lesser known facilities.

Some help is on the way for consmers. The PPACA (Obamacare) law (if it is upheld by the Supreme Court) will bring new information to consumers through its new make improvements HealthCare.gov Web site, a one-stop shop that lists all of your insurance options in one place. The new site focuses on insurance plans and benefits and does not specifically address individual medical services like surgery or tests.

A four-year old California law states that uninsured patients (but not those with insurance) have the right to contact hospitals and receive a price estimate. The law also states that if a patient is low-income the price estimate cannot exceed what the hospital is paid for the procedure by Medicare or Medi-Cal (California’s version of Medicaid).

A recent  RAND study found the law is widely ignored. The study found that only 28% of the hospitals responded as required by state law and the responses varied widely in content and price. Most included a price quote for hospital services only, the remainder included both hospital and physician costs or did not specify what was covered.

The individual prices for procedures varied widely. For example, estimates for a hysterectomy ranged from $5,569 to $15,950, while the estimates for a colonoscopy varied from $216 to $1,748. Many hospitals also offered discounts for actions such as payment in full at the time of care.

Maybe EHRs, digitization of medical information and new demands by consumers will bring about the needed transparency.

Today when you buy a new car, you can compare prices online between different dealers, even negotiate a better price online. You can also get an estimate from dealers on the value of your trade-in vehicle.

Ten years ago, before the rise of car-pricing sites, you had to drive from dealer to dealer, getting price quotes.  Car dealers initially opposed the concept of posting prices online, but eventually they all gave in.

Medical care is more complex than a Toyota Camry. The skill of the surgeon, the hospital facilities can vary widely, however, that could be factored into the posted price. Most, but not all, consumers would pay more to have their heart surgery done by a veteran surgeon in a top-notch hospital.

It is possible to imagine a day when consumers can go online and compare prices for various procedures from local hospitals for CABG surgery, appendectomies and MRIs.

For the time being your best bet is to have a good health insurance plan. Even better is to work for a large employer who is willing to advocate for you and who will have clout with the insurance company.

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