Comparison Shopping and Consumer Driven Health Care
Comparison Shopping in Gibberish
By Richard L. Reece, M.D., for HealthLeaders News, March
The whole idea of consumer-driven healthcare rests on
consumers being able to make informed choices on their care based on price and
quality. Much emphasis has already been placed on developing consumer-driven
health plan products. Somewhere along the line, a key ingredient has mostly been
What good is consumer-driven healthcare when consumers
can't understand a hospital bill?
For realistic comparison shopping between hospitals,
consumers would need to know in advance what the sticker price would be for an
all-inclusive bill, including hospital and physician fees.
This would be particularly important for costly elective
procedures, such as knee replacements, cardiac procedures, hysterectomies, or
breast biopsies, for which patients have time, discretion, and information to
compare prices and outcomes in different hospitals. Elective procedures often
comprise a significant portion of hospitals income stream.
At this point, nobody knows how consumer driven health
plans (CDHPs) will affect hospitals. The data isn't there. These plans are just
hitting the market - with a 2-3 percent share right now. But some analysts
project these new plans will grab 25 percent share by the end of 2006. Major
insurers - including
The eventual goal is for savvy healthcare consumers to shop
comparative prices. But the "apples to apples" comparison that
consumers use to make choices at the grocery store or the car lot is useless
when a four-page hospital bill comes in the mail. Consumer Reports
recently surveyed 21,000 consumers for satisfaction with hospitals, and 11,000
complained about incomprehensibility of hospital bills. Five percent of those
complaining found major hospital billing errors, including inaccurate dates of
service, incorrect or duplicate charges, overstatements of operating time, and
fraudulent claims. Surely a better way must exist for hospitals to bill.
One healthcare leader person who personally dealt with the
Byzantine complexity of hospital bills was Richard Clarke, CEO and president of
the Healthcare Management Financing Association. Clarke, perhaps uniquely
qualified to understand hospital billing statements, was bewildered by his
84-year-old mother's hospital bill in
Few substantiated reports of CDHPs' impact on hospitals are
around,, One such report, an
Now, to increase hospitals' uncertainties and anxieties,
the Bush administration is talking of the ownership society, health savings
accounts, consumer-driven health plans, transparency, hospital/physician joint
ventures, and electronic medical records.
The ownership society concept assumes if you have your own
skin in the game - in IRAs, flexible savings accounts, Social Security accounts,
or HSAs, you will act prudently. You might even make your own healthcare
decisions. And you may complain and switch vendors, including hospitals, if
things go wrong.
Transparency: A powerful word
"Transparency" is a popular buzzword of the new
healthcare consumer lexicon. "Transparency" is
"accountability" in drag. For hospitals, transparency is a very
dangerous game. It says: reveal your finances, your outcomes, your quality and
your safety measures to the world. One
To help achieve transparency,
Consumer driven health plans may force hospitals and
doctors, both hurting financially, to cooperate to build facilities and programs
to please demanding consumers. This is happening in some markets as hospitals
and doctor partners mobilize to construct Big MACCs (multispecialty ambulatory
care centers), and as doctors, hospitals, and real estate firms work together
build ambulatory centers.
What do all these converging events forbode for hospitals?
In the near term, the most contentious issue may come on the billing side. Major
insurers are encouraging consumer plan members to comparison shop for price.
Their "transparent" Web sites contain some information on comparative
prices for hospital procedures, but it is sketchy and does not usually include
One factor glossed over in these Web sites is that hospital
prices usually consists of a multitude of separate hospital and doctors fees for
common diseases or procedures. This sequence of separate bills for isolated
services results in a bewildering bill. This bill may list scores to hundreds of
separate items. The main hospital bill is followed by bills from attending
physicians, anesthesiologists, pathologists, radiologists, and individual
specialists who may be called in for consultations should complications occur.
Many of these bills come from doctors the patient has never seen. Medicare, of
course, has partially addressed this bewilderment on its own through DRGs, but
DRGs are arcane and irrelevant to most consumers.
Michael Blau, a senior partner at the McDermott, Will, and
Emery law firm, believes consumer demands for simplified and understandable
billing may lead to some form of a clinically integrated bill. One of the main
reasons of this integration might be to address consumer complaints by producing
a packaged or bundled bill listing in advance all hospital and doctor
components, which could be an ideal instrument for comparison-shopping. This has
been done, of course, for cardiovascular procedures at such places as the Texas
Heart Institute and for other major procedures by other integrated health
institutions. But packaging or bundling of hospital and doctor bills is rare at
Most attempts at forming organizations dealing with
functional clinical integration, such as physician hospital organizations, have
a spotty track record. Recent data indicates the number of hospital sponsored
physician organizations has declined from 6,043 to 4,659, a decline of 33
percent. On the human level, the basic problem of these organizations, from the
physician point of view, has been that PHOs become HPOs, with hospitals
controlling and leading the enterprises.
One way around this very human leadership dilemma is to
have the hospital leadership and various physician groups meet separately and
then together to decide what would be acceptable fees, and to arrive at a
hospital discount (usually in 10 percent range), and physician discount (usually
3 to 5 percent), and contract with a reinsurance firm should there be an
expensive outlier case. This process, of course, must not violate Stark Rules,
but that is possible if the hospitals and physicians arrive at their fees
independently before pooling the results.
About 10 years ago, I was working with the PHO in a 200-bed
community hospital in
L. Reece, M.D., is
a pathologist, writer and editor. He is the author of a new book Hello Health
Consumer: The Transformation of the Doctor-Patient Relationship. (www.practicesupport.com).
He also serves as editor of Physician Practice Options and The Quality
Indicator, two nationally distributed newsletters for physicians. He lives
in Old Saybrook,