HCI3 Update From the Field: The Big Deal about Price Transparency

Submitted by francois.debrantes@hci3.org on Friday, March 28, 2014 - 01:40

What's the big deal about price transparency? After all, is it that important in helping consumers choose providers? This seems like a dumb question, but given how few states in the US provide information on the price of health care services to their residents, one wonders. And it's not just inaction that causes this opacity, it's direct action. For example, Florida's Governor, the ex-HCA CEO, recently failed to include a budget for the State Agency responsible for shedding light on health care prices, even though their modest request of $5 million would have been an easy putt. Perhaps Rick Scott is more interested in protecting his old company's egregious pricing habits than Floridians' pocketbooks. However, the other States' Governors aren't ex-CEOs of large health systems, so why in the world aren't they paying more attention to this critical issue? Have the providers or payers convinced them that their contract clauses are secret and deserved to stay so? Have they convinced them that after all it's much ado about nothing? Perhaps. Or perhaps we simply haven't done a good enough job at laying out the facts. So here goes, in one chart.

What this means to you – I've been doing these bubble charts for a decade and the story hasn't changed much. The difference today is that we can actually tell which providers offer value and which don't because we can count the frequency and costs of avoidable complications. This chart has real data and the Y axis represents the actual average costs of complications for the episode. The X axis has typical costs. So the high value providers have total episode costs of about $10,500 while the low value providers (with lots of complications) have total episode costs of about $19,000. Then there are the expensive providers who have low complication costs, but high typical costs. Their episodes total $13,000 or 25% more than the high value providers. This is true for every single episode we've analyzed. So here's my question to every Governor of all the F-rated States: Why are you so interested in wasting tax payer money by having State employees and other residents of the state pay $1.25 to $2.00 for something you can get for $1? Because that's the real price you're paying to shield the public from the price of health care services.