Here’s my editorial from today’s issue of Fiercehealthcare:
We’ve been hearing a great deal about price transparency in health care. California has a new law mandating that hospitals release their chargemaster billing data. The Administration’s advisors are demanding that hospitals and doctors reveal pricing, and one health plan (Aetna) has revealed its negotiated rates with physicians in one market (Cincinnati, OH). The theory is that pricing transparency will increase competition and make it easier for consumers to shop around. Proponents point to the reduction in the advertised price of LASIK surgery as an example of what might happen.
Speaking before Congress, Paul Ginsburg sounded several warnings about this trend. First, health care is in no way prepared to deliver pricing information. Several studies have shown that hospitals and physician groups do not know their costs or prices per service, and hence there is wide variation in what, if anything, they can tell consumers. Secondly, most health care is purchased not by consumers directly but by insurers. Ginsburg gave evidence that where contracted rates of insurers are exposed by regulation, prices tend to rise. Thirdly, there’s still little agreement on what we should be pricing. Each service? Each episode? Care per month? All care per year? Finally, apparently in the LASIK market, there’s less transparency than meets the eye, so to speak, and advertised low prices are in some respects come-ons like those cheap air-fares that aren’t really available. Transparency in health care is needed, but we need to think carefully what that really means in practice.