For anyone still laboring under the myth that insurance carriers are motivated to hold down costs in healthcare OR that health insurance is expensive BECAUSE health-care is expensive OR that insurance helps PROTECT us from high billed charges, consider the following facts and figures presented in this common Gynecologic surgery example.
Let’s compare a not-for-profit hospital-owned facility that has in-network insurance agreements with that of a physician-owned private facility that does NOT have any insurance contracts for payment such as Surgery Center of Oklahoma.
A broker consulted me on cost-containment strategies on behalf of a client/patient who needed a hysterectomy (CPT codes provided). She has a high deductible indemnity plan and a faith-based health share plan. The surgeon’s (Gyn physician) fee was $7,000. The hospital facility charge for O/R suite was estimated at $30,000 and they required $15,000 payment upfront.
Based on analysis of claims payment, it would be reasonable to assume the reimbursement would be around 60% of billed charges (+/- 10%). So the final payout could easily be between $18K – 26K. That total does NOT include anesthesia and may not include surgeon’s fee. What a fantastic discount! In some markets, we see hysterectomy reimbursement as high as $54K.
The all-inclusive fee at SCO is $8,000 and includes an over-night stay if needed. That price includes everything needed to perform the surgery, including professional fees.
All of the effort, time and resources at SCO go to medical care; not buying practices or employing physicians or 7 figure CEO salaries! And no fake discounts designed to foster dependence on the same products that keeps prices higher than they need to be.
That is how you reduce the cost of healthcare!
By Robert Nelson, MD
Honest price-transparent markets allow value propositions to surface and to be discovered.
Contrary to the outcries of many academics, intellectuals and utopian collectivist, free markets don’t create wide-spread abuses or anarchy in peaceful law-abiding Societies. The anti-market narrative attempts to impune the term “free” in free-markets by equating it with lawlessness and all manner of fraudulent activity; rather than acknowledging that “free” means maximal freedom from unnecessary economic distortions. One only has to look at the litany of government scandals (VA comes to mind) to conclude that vice is not intrinsic to, or a consequence of, the exercise of free commerce, but rather a malevolent side of human behavior.
Markets not only provide a functional platform for innovation and creative destruction, but can help suppress waste, fraud and abuse by aligning incentives such that mutually beneficial outcomes are the rule, not the exception. Markets that are willing to operate in the light of transparency are in stark contrast to systems where avarice and other human foibles seek cover behind complex non-transparent systems or within unaccountable bureaucratic hierarchies.
In healthcare, the behemoth we call the 3rd party payment apparatus (and regulatory morass that supports it) often creates an environment which, unlike a more transparent market-oriented approach, allows bad behavior to go unchecked longer.
To the extent that we view market transparency, and all the downstream benefits that result from full disclosure, as the best chance of uncovering AND discouraging human vice, then many of the bad actors and bad behavior will be found out more readily. This approach benefits all stakeholders in healthcare.
Also, transparent pricing & markets naturally lends to transparency in quality measures, and thus better value propositions.
We should embrace changes which incorporate as many intrinsic disincentives to bad behavior as possible, as well as maximize the correct incentives – which helps healthy & sustainable endeavors to thrive.
The Indiana Policy Review recently compared the bill for a hernia operation at an Indianapolis hospital with the price for the same procedure advertised online by a small entrepreneurial surgery center in Oklahoma. The Indiana hospital received $21,112.81 from the patient and his insurance company. The surgery could have been performed for 85 percent less in Oklahoma. What’s more, the patient would have been guaranteed the price before surgery.
via Mega-hospitals contribute to high health costs – Reporter.net: Opinion.
One of my kids needed to have their adenoids removed. Before, we would have blithely gotten the procedure done oblivious to the costs. Instead, I tried mightily to get a price ahead of time so I could negotiate a cash price. Only the surgeon was willing to give me a price for his services. I paid him out of my HSA prior to the surgery and we both came out ahead. Unfortunately, the hospital was unwilling to give me this information. The final bill was close to $10,000. In contrast, the surgery centers such as the one outlined below would have charged $2,695 for the entire procedure.
via VP HR & Benefits Should Get Big Bonuses for Saving 50-90% on Big Ticket Healthcare.