OP-ED

Dropping the Price of Surgery

I would like to share a story about my son’s recent surgery that, while only one simple case, reveals the foundational problem with the U.S. health care system.

I write this story as a father of a 12 year old boy who has cerebral palsy. Jack is fortunate to be healthy and active with minor medical needs. As he has grown he experienced some issues with contractures in his right lower leg which recently required a minor 2 hour outpatient surgical procedure. That is where our saga begins.

When Jack’s surgery was scheduled I started the time consuming process of getting price estimates from the surgeon, anesthesiologist and the facility since we have a high deductible insurance plan. The physician fees were straight forward and relatively easy to obtain, not so with the facility. Jack’s surgery was scheduled at the local hospital’s outpatient surgical facility. I called the hospital to request a price for the surgery and they said they couldn’t really tell me. They offered to send the procedure codes to an external reviewer who would provide a general idea of the anticipated charges. Three days later the answer came back at $37,000. I reiterated that I had high deductible insurance and needed to know the actual price they would bill me after an insurance adjustment to the network fee schedule.

The hospital next referred me to my insurance company. The insurance company referred me to their PPO network. The PPO network said that they could not reveal the prices until after the case was performed. I called back to the hospital.

At this point the hospital said that they could not tell me how much the discounted price would be either and they also wouldn’t negotiate a cash price with me. They expected the discounted price to be in the range of $15,000 to $25,000. They also offered to limit my out of pocket portion to $10,000. I am now on day six with over a dozen phone calls; not the price I expected for a 2 hour outpatient procedure.

I asked my son’s surgeon if he ever operated at any independent Ambulatory Surgical Centers (ASC) and if so would that be an appropriate place to perform my son’s surgery. As it turns out there is an ASC in the ground floor of his office building and it would be no problem to do the surgery there. One phone call and 10 minutes later I have the exact price for his surgery- $1,515.

My son had his surgery and is doing well. We got a fair price because we demanded more of the system.

This simple surgery makes me pause to consider so many issues we face in our health care system. Why does it take days and dozens of phone calls to get pricing information from hospitals? Why can’t hospitals provide upfront prices for their services? Why do they expect to bill patients unknown amounts that they determine after patients have already received care? And what about the patients that don’t know the system. Would a patient facing a $40,000 bill delay or defer surgery when they might get the care they need if they were able to use the $1,500 center? Do they know to ask? No. Does anyone really help them? No.

And what about the healthcare providers. Why didn’t my son’s surgeon recommend the ASC in the first instance? Why hadn’t the surgeon done a single procedure in the ASC in over 2 years? At 10 cases per surgical day, at about $20,000 more per case; how much has this practice cost patients, employers and insurance companies? Millions each year for one surgeon and his patients?

It all goes back to our foundational problem with U.S. healthcare. The business model of our health care system is based on third-party payments from insurance and government. This has evolved to the point that many patients and providers don’t stop to consider why they shouldn’t spend $37,000 for something that could easily be delivered for $1,500.

It is not easy being a patient-consumer, but it can be done. Let’s hope the system moves in a direction that allows this to happen.

Jeffrey Rice, MD, JD, is CEO of www.healthcarebluebook.com.

Costs of Care (Twitter: @CostsOfCare), where this post was originally published, is a Boston-based nonprofit organization that collects anecdotes from doctors and patients. We feel these stories are poignant because they put a face on some of the known shortcomings of our system, and also because they unveil how commonplace and pervasive these types of stories happen.

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Peter1Ralph WeberKen Elek, MDDanielPtim Recent comment authors
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Peter1
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Peter1

“They are not afraid of the honesty that is associated with transparency.” Then where is the proof? You might also ask if a lower price is “negotiated” without a written (and understandable) standard of care for comparison where are the cuts going to be made to make up the difference. Your lawyer and your CPA “tell” you their hourly rate, do they negotiate it? How good are you at choosing a mechanic unless it’s through trial and error? How much error will you tolerate in your doctor/hospital? “Doctors are ready to stop being controlled by the union like mentality of… Read more »

Ralph Weber
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Most doctors are actually smarter than that Bob. They are not afraid of the honesty that is associated with transparency. You may feel that they are too egocentric believing they has “achieved professor-like status”, but most of them are not that conceited. My lawyer tells me his hourly rate, so does my CPA, and my actuary, and my mechanic. Doctors are ready to stop being controlled by the union like mentality of the AMA, the CMS and hidden fee schedules. We’ve been trying that for decades and we can see that it is not working and never will.

bob hertz
Guest

In my experience, many specialist MD’s feel that the posting of prices like a butcher shop is beneath their dignity. They feel that they have put 10-15 years of awesome preparation in order to get professor-like status. The posting of prices comes down to hustling for business. I remember reading an article in Harper’s a few years ago that followed a specialist around during one of his workdays at a major clinic.. He went from challenging case to challenging case,and no one ever brought up money, and certainly no patient treated him like a car salesman. I realize that there… Read more »

Peter1
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Peter1

You are exactly right bob. This is the absurdity of those who argue that “market forces” and “competition” (now coded as “patient centered care”) are the best way to lower/control prices.

Ralph Weber
Guest

You’re right, it is the same for insurance. Cash is still les costly to deal in.

Ralph Weber
Guest

Doctors cant make money off of medicare/medicaid rates because of all the administrative load required to bill/rebill them

Peter1
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Peter1

“all the administrative load required to bill/rebill them” No different than private insurance. If local market docs save so much with cash pay then you’d see signs in their waiting rooms that quoted price for cash pay to encourage it. My experience has been that it’s as hard as pulling teeth to get any doc to discuss/negotiate price, or even have a policy about it. There is one PCP doc in a local county that does nothing but cash pay and posts his prices – he’s the exception and probably the only one within more than a 100 miles. But… Read more »

Ralph Weber
Guest

“What type of discounts do you negotiate?”
About 40% to 50% less than insurance discounted rates through MediBid

Peter1
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Peter1

Really, what disciplines/services? In your own market? Why would you get those discounts off insurance rates when all we hear from docs is they can’t make money on Medicare/caid rates?

Peter1
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Peter1

“Actually 76% of insured Americans are covered under a self funded plan.” Well then why is there a problem if we’re already there? “The best way to achieve sustainable cost reduction is to introduce transparency” “may or may not involve leaving your local market” Ever used it? My local market is UNCH and Duke – no negotiating there. The last time this “solution” came up it showed you do indeed need to leave your local market. Works best with hospitals trying to fill in blank spaces in their treatment schedule that don’t want to get their local market to expect… Read more »

Ralph Weber
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Actually 76% of insured Americans are covered under a self funded plan. Right now they are already told which hospital to go to. This is an alternative where they are not told.
MediBid may or may not involve leaving your local market.
I pay for all of my medical care cash, and I have a catastrophic plan to cover the unexpected.

Ralph Weber
Guest

Peter, Healthcare Bluebook helps when the employer has an incentive for the employees to shop.
MediBid does not always involve leaving your home state.

Peter1
Guest
Peter1

“Healthcare Bluebook helps when the employer has an incentive for the employees to shop.” Self-funded, that would be about 50% of plans (I believe). What would you do about the rest? Just wonder if you’d like to be told which doctor and hospital you have to use? “MediBid does not always involve leaving your home state.” Maybe not, but it involves leaving your local market. My state (NC) is about 500 miles by 150 miles and mostly rural with little choice for hospital care. Still not an easy task, especially for people with limited means. Have you had direct experience… Read more »

Ralph Weber
Guest

The best way to achieve sustainable cost reduction is to introduce transparency, as http://www.HealthcareBluebook.com does, and allow doctors to compete across state lines as http://www.medibid.com does

Peter1
Guest
Peter1

Ralph, why would an insured person care about the price on HealthcareBluebook? Wouldn’t their insurance company already have negotiated the lowest price? The uninsured may find the prices listed helpful but they don’t have a contractual agreement with the provider. And if an uninsured wants to negotiate they’ll have to do separate negotiations with each discipline in the hospital. You call that a solution? As far as medibid is concerned is it really practical to get out-of-state care with the travel costs and distance from family support? Who’s going to do the follow-up care? Interested in how you are insured… Read more »

nate ogden
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nate ogden

this is opposite of what people think they are entitled to but might be a solution as good as any other.

In exchange for early Medicare the beneficiary would be enrolled in an alternate plan that forgoes transplants and some other benefits to reduce the 355K in expected claims. I would also limit providers to better performing ones and also make some major changes to address fraud.

If you want access to Medicare early you would have to make these sacrafices. Everyone under age X would only have this option.

Bob Hertz
Guest

Regarding the issue of people postponing care because they cannot afford it: – when it comes to young people I would tend to agree with you. They make a choice not to buy health insurance, but they put $1,000 into car repairs and think nothing of it. At older ages this is less simple. At my age, the best health insurance I can buy is $453 per month with a $5,000 deductible. (from the State of MN health plan, I have heart disease.) So I will pay $5,040 in premiums during a year and a $5,000 deductible betore insurance covers… Read more »

nate ogden
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nate ogden

Medicare is 40 trillion upside down already. We could cancel all defence spending and it wouldn’t make a dent in the existing debt. There is no way Medicare can afford to take on more people at a loss. If anything was to be done it would have to be Medicaid. Medicare beneficaries are already getting an unsustainable deal. They contribute 114K in premium and get 355K in benefits. Do you want to triple payroll taxes? And thats just to break even on the current system, if you want to lower the age that can buy in then what quadruple them?… Read more »

nate ogden
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nate ogden

Few thoughts Bob; In regards to Drug cost we need to differentitate between lifestyle Rx cost and necessary Drug Cost, and I’m not talking Viagra. I’ll defer to the doctors but I believe generics treat like 90% of all illness. Most expensive brand name drugs are modifications to frequency or combination with other drugs, not true new theraputic treatments. I see people every day filling Rx for ER versions of existing generic drugs that cost 10 times as much. Is it easier to take a pill once instead of 3 times a day sure. Is it cost effective, by no… Read more »

bob hertz
Guest

I am more on Nate’s side as the discussion progresses, but two points come to mind: 1. I agree that hospitals are more likely to forgive and/or adjust debts than the public may suspect. In several states (NY, Illinos, Cal, MN, Connecticut), there are legal limits on how much a hospital can bill the uninsured. Plus I suppose that hospitals do not want the general public to know how they really act, for obvious reasons. The number of medical bankruptcies has been a political football, exaggerated by some in the single payer movement and then minimized by others. We do… Read more »

nate ogden
Guest
nate ogden

one of the problems we have in this highly politized enviroment is you can’t have discussions like this. I don’t think the number of true medical BKs is anywhere close to 300,000. Hospitals just don’t drag people to court, receive judgements, then garnish wages. Without those steps you could go your entire life with unpaid medical bills. If they do then you file BK which is by no means the end of the world. Most great entrepenuers have done it at least once or twice. Yes we have a few horror stories here and there but I rather have a… Read more »