A Bill You Can Understand: One Page, One Line, One Price

At the recent Health Datapalooza conferenceSylvia Burwell, the HHS Secretary announced a new initiative, A Bill you Can Understand, :

a challenge to encourage health care organizations, designers, developers, digital tech companies and other innovators to design a medical bill that’s simpler, cleaner, and easier for patients to understand, and to improve patients’ experience of the overall medical billing process.

This is a laudable if perhaps slightly misdirected effort.

Why are we looking to create an extra layer of service to explain a very poor function, which will inevitably increase system costs? Because this is healthcare’s typical way of adding more layers and costs to an already bloated system, instead of fixing the underlying problem.

When you buy a car do you receive separate bills for the labor, motor, body, tires, glass, oil and gas, carpet, electronics, air conditioning?  I know, there are a few lines – base price, options, transportation fees, dealer fees – but it’s just a few and there are not multiple bills coming from all the components.

Furthermore, this simplification greatly reduces the number of people and systems that a dealer and its suppliers need to staff for the billing and collection process.

What healthcare needs is to simplify and combine the entire billing process and function. We need to bundle pricing that is all-inclusive in advance, just like everything else we buy.

It’s really not that hard. For an example we can look no further than a nearby offshore facility, Health City Cayman Islands.  I wrote about this hospital before, but the gist is they offer surgery services for a number of specialties with a price that’s all-inclusive:Screen Shot 2016-06-12 at 8.52.17 AM

There are no surprises, it’s all in and you know before you go how much it is. Here’s an example of a bill for a major joint replacement.  One Page, One Line, One Price. Now what could be more simple than that?

Screen Shot 2016-06-12 at 8.55.07 AM

We applaud HHS for trying to help all of us who have to deal with billing in the current health care system. But the simple solution is more effective, efficient, and transparent published pricing that creates competition and lowers costs.

Brian Klepper is a consultant based in Florida. Fred Goldstein is the CEO of Accountable Health! 

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6 replies »

  1. Klepper and Goldstein nail it, IMJ. While sound-byte sexy, and consistent with more intermediary upside (think ‘collaborators’ in BPCI), this is a well intended, though ‘putting lipstick on a pig’ effort by Burwell et al. There simply is no incremental tweaking solution for the complexity in our ‘calcified hairball’ healthcare borg.

    There are too many pigs at the trough (from regionally delegated FI’s (fiscal intermediaries) to legion’s of ‘me too’ RCMs (revenue cycle management companies) who benefit from the over-expressed and intentional complexity built into our dysfunctional healthcare ecosystem. We must simplify the beast, and dis-intermediate the hell out of this house of cards destined to collapse on itself. Absent Zeitgeist re-engineering and essentially abandoning our current ‘tapeworm non-system’ including all ‘parties in interest’ nothing changes. Watch for continued (drip, drip to tsunami) exits to direct practice or worse yet concierge medicine as rational responses to irrational incentives. Pretty simple there, prepayment, or limited pass throughs for higher acuity or complex services. Bundled, baby bundle but Zeitgeist shift first!

    For some further conversation around this offshore (Cayman Islands) innovator, checkout: http://www.blogtalkradio.com/pophealth-week/2016/06/08/medical-tourism-health-economics-and-the-continuing-theranos-drama

  2. This will dovetail perfectly with my new initiative: HHS Regulation You Can Understand.

  3. “A federal system would be a horror because Congress would inject politics into the science. Maybe a state size would do, but I’d prefer a hospital district or a county to run the system.”

    Like the way it’s done in Scandinavia. See Bradley and Taylor, “The American Health Care Paradox: Why Spending More is Getting Us Less.” National funding, local administration. Reviewed on my KHIT blog: http://regionalextensioncenter.blogspot.com/2014/04/im-seriously-overbooked.html

  4. I wish we could run it without any bills. No financial paperwork at all. Hospital care would be a public good. Forget ambulatory care (and let people do whatever they want therein.) A federal system would be a horror because Congress would inject politics into the science. Maybe a state size would do, but I’d prefer a hospital district or a county to run the system. Everyone on salaries. Funding from multiple sources including businesses, state, up to federal. Laws forbidding any quid pro- anything from funders. It would be a non-touchable service like running the CIA. Providers purchase input factors including drugs and are allowed to create purchasing cooperatives so that monopsonies bring down drugs costs.
    Hospitals triage and accept only medical conditions that might kill, disable, or bankrupt a patient. Eg no treatment offered for psoriasis, but treatment is offered for psoriatic arthritis. Probably many exceptions would develop here. It would appear on its surface as suberb, beefed-up county hospitals, locally run, but supported from multiple sources, (all we can think of.) Tell the feds and states: “you’ll get your health care run more economically than ever, but we have to run it our way.” We do the science and the purchasing. You do the funding.”

  5. Of course the doctors and hospitals would ask what about complications, multiple comorbidities, old and frail patients vs. younger otherwise healthy patients, morbidly obese vs. normal weight, etc.? I also note that if I take my car in for an oil change and the mechanic comes out and tells me I need new brakes or new tires, or whatever, he will tell me how much it will cost but I will pay a much higher price than I expected when I went to him assuming I agree to have the work done. Of course, cars that become too expensive to repair can be scrapped and a replacement car purchased. We can’t do that with people.

    That all said, I think hospitals could take some risk under some circumstances. For example, if a typical gall bladder removal takes 45 minutes but some can be done in 30 minutes and others take over an hour, they could offer a single price that reflects that variance. For services that cut across many procedures, they could do something like the following: a day in a regular inpatient room costs X, a day in the intensive care unit costs Y, operating room time costs Z per hour or per 15 minutes, monitoring equipment costs B per half day or per full day, anti-biotics costs C if you need them. Routine products and services like tissues and meals would be included in room rates as could common prescription drugs up to the first $100 or so.

    For ER care, there could be a price for a base visit and prices for common tests such as ECG, blood tests, X-rays, CT scans, etc. However, I’ve long thought that there needs to be separate rules for how much can be billed, probably in relation to Medicare rates, for care that must be delivered under emergency conditions when, by definition, there is no opportunity for either price shopping or a calm, dispassionate meeting of the minds on price.