HCI3 Update from the Field: The Cost of Hope

Submitted by francois.debrantes@hci3.org on Friday, February 1, 2013 - 12:25

Newtown, CT – February 1, 2013

In her poignant book on her husband's fight with cancer, The Cost of Hope, Amanda Bennett reflects on the complete lack of price transparency in health care – It's a theme that we also often reflect upon and puzzles everyone outside of the industry. We're told that it's too complicated, that so many different things can happen to a patient, that the frequency and costs of services fluctuate, and on and on and on – excuses to maintain opacity. And of course there are also the anti-competitive behaviors of payers and providers that lead to gag clauses in contracts, so that neither party is allowed to disclose the price of negotiated services. And yet, one would think that providers who can deliver a comprehensive set of services for, say, a knee replacement surgery, at a negotiated price (like those participating in the BPCI – click here to see who's in), would relish the notion of having that price fully disclosed, and of having payers encourage plan members to seek them out if they offer a better value than the competition. And one would be right to think that. Because providers who contract for care in that manner, for the most part, do want to have that price, and the value of their care, widely publicized to plan members. And yet we don't see that offer of price disclosure taken up by many payers. Certainly, some have tools that provide ballpark estimates, but it's rarely specific. Why? Are there complex technical issues that prevent a sophisticated multi-billion dollar organization from accomplishing such a task? Are there regulatory impediments? Are there human and social impediments? Based on this Boston Globe article, the answers would be no, no, and no.

What this means to you – As we've said in the past related to other seemingly intractable problems in health care, it's not about "can't", it's about "won't". In Massachusetts, the payers and providers don't have a choice. The legislation that passed in the fall of 2012 compels market transparency. Of course, now they all seem to have found religion and the Globe article quotes one payer executive after another extolling the virtues of price transparency and the "rights of the member to have this information". Didn't the member always have that right? Wasn't it a moral and ethical obligation for these plans to offer that information prior to the legislation? Apparently not, and therein lies a lesson for all those who want to see change take hold. Sometimes, barring legislation to compel folks to do the right thing, they simply won't because they don't want to. For further proof, consider this new report from Booz and Co on consumer perception of bundles. Unsurprisingly to us, consumers love the concept. Why? Because it's one price for a common procedure, or a year's worth of chronic illness, and that's how they want to shop. In fact, that's how they shop for everything else. Transparent prices on bundles would set up a true competitive market for health care services, a market that the monopolists don't want to see emerge. And a market that those who prefer to get along with the network rather than creating a real health care value chain would also rather not see emerge. But that's the market we need, and that's the market consumers want. It took legislation in Massachusetts to make it happen. It might take legislation in other states as well.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org