What would happen if both doctors and patients knew how much healthcare costs?

There has been a movement toward price transparency and consumerism in healthcare over the last decade or so. If people can get an accurate cost prior to receiving healthcare, the assumption is they’ll use healthcare more intelligently and cost-effectively. If they only knew that getting their hip replaced at a specialized hip replacement center was $54,000 versus $103,000 at a large academic hospital, they would choose the most bang for their buck.

But let’s analyze the actual process of healthcare delivery and see how the knowledge of cost applies to something as common as headaches from sinus pressure that’s been plaguing you for the last month.

So now it’s Monday. Your head hurts and you’re afraid there’s something really wrong. If you’re not that savvy with how to use the healthcare system, you might just make an appointment with your primary care doctor or go to an urgent care center. But those places don’t really have the deep expertise nor the time to truly evaluate your sinuses, so you’ll be referred to a specialist. If you’re super savvy, you know that you need an Ear/Nose/Throat doctor. Then, you need one close to your home or work who also takes your insurance. So what’s the typical next step?

  • Ask your real-life friends, family, or online friends for a recommendation
  • Go to google to search for an ENT near you
  • Go to your insurance company’s website to find an ENT specialist in your area

Great, one of your Facebook friends said she had a sinus problem and recommended this ENT, Dr. Blewitt, who happens to be relatively close to your work. He had an ok personality but really fixed her up about 3 years ago. You google this doctor and see that his Yelp rating is 4 stars with many one star and five star reviews. Seems ok. You give his office a call and ask if they take your insurance. They do! You try to make an appointment and are told it’s going to be 3 weeks from now. This guy must be good, he’s busy and in-demand, so you make the appointment. He’s relatively close. He’s recommended by a friend and the internet doesn’t seem to hate him. He takes your insurance. He’s associated with the academic medical center with the best reputation in your area. 

But what if you knew that it would cost you a baseline $300 for an office-visit with him but only $260 with a visit from another doctor you found via your insurance company’s website who was a few more miles from your home, did not come with a recommendation from a friend, had a Yelp rating of 3.5 peppered with reviews like “he was fine,” and graduated from residency last year.

This $300 only includes the actual visit fee. It doesn’t include any tests Dr. Blewitt may do in the office or orders he might make. Depending on what happens in the office, you could walk away with a simple $300 fee or the opposite could happen. Because of your unique situation and your story, Dr. Blewitt is concerned and wants to throw a full battery of tests at you to take a really good look at your sinuses. He whips out his endoscope and sticks it up your nose to look around (this is a diagnostic procedure and he later bills you $505 for it). He can’t get a perfect look, so he says “I need to order a CT scan of your sinuses to really understand what’s going on up there.” In your mind, Dr. Blewitt has a great personality, really seems to know what he’s doing, and he’s being very complete, covering all bases. He’s truly gained your trust.

He pulls out his pen. He orders you a CT scan of your sinuses. You don’t know this, but here’s what’s happening. Dr. Blewitt always refers CT scans to the in-house radiology group because that’s what he’s always done, he trusts their results and their state-of-the-art scanners, he knows he can give the radiologist a call on his mobile to ask any questions about the findings, and he knows they will turn this test around in no time. Plus, the radiologist is his friend from residency and his golfing buddy every single Saturday morning. He also has that particular radiology group’s paper requisition forms pre-printed in his office that he fills out and faxes over to his favorite radiology group. Keep in mind, they all have their own unique forms and processes for ordering tests. He orders radiology tests in the same way to the same group, every day, 5 to 10 times a day. You’ve already decided to trust Dr. Blewitt, so you assume he’s acting in your best interest. The problem here is Dr. Blewitt has no idea how much you’ll be charged for the CT scan. And, frankly, he’s too busy to care. At the point of his decision-making, he has absolutely no idea about how much his orders cost his patients. For him to find out how much you’ll be charged, he’d have to personally call the insurance company for you. The insurance company could tell him how much they typically reimburse for that test. But they couldn’t tell Dr. Blewitt how much the radiology group actually bills them because the test hasn’t been done. You’re only on the hook for the difference between what the radiology group bills and what your insurance company pays. He doesn’t have time to do that for every single one of his patients. He’s simply doing what’s medically indicated for you because he’s trying to do the best thing for you and he’s also trying to cover his butt and do the things that will protect him in court should there be some sort of bad outcome for you. Price is honestly not even on his radar because it’s not his problem. And he doesn’t think it should be his problem. It’s too complicated and his job is to do what’s medically right for you. Cost be damned. But the radiology group gets you in for the test right away (one main reason why Dr. Blewitt loves them!) and bills your insurance company $935. Your insurance company only pays $300 for the test, so it costs you $635.

But, the private radiology group a few blocks away from the hospital offers the same service, the same quality equipment and only bills your insurance company $400 for the CT scan, leaving you to hypothetically pay $100 for the CT scan.

What if you had access to all of this price information? How would this change the process of healthcare delivery and the behaviors of all the players?

First, let’s start with you, the patient. Patients currently find doctors based on the following things:

  • Do they take my insurance? (a very blunt tool to estimate cost)
  • Are they recommended by a friend or family member? (trust)
  • Are they close? (convenience)
  • Do they have good online reviews? (trust)
  • Is there easy parking? (convenience)
  • Hypothetical future: How much is a baseline visit? (a baseline but doesn’t actually reflect what could happen during and after the visit)

You first have to ask yourself, is a cheaper doctor of the same quality? Why are they cheaper? Are their Field & Stream magazines in the waiting room a few years old? Do they hire horrible front office staff and pay them minimum wage? Or do they simply believe that healthcare should be more affordable and price their services accordingly? Once you’ve found a doctor and invested time, energy, and trust in them, you’ve gone down a long and winding road with them. Is the route you’ve taken with this one doctor 10%, 20% or 80% more than the cost of a route you would have taken with some other hypothetical doctor? You have no idea, nor is there any way you could know. Healthcare is an experience with a staggering number of variables that are horribly unpredictable, especially when it comes to cost. But say you did have access to local price information for that CT scan of your sinuses. Say you pulled up an app when Dr. Blewitt said he’s going to order you the test and you discovered that the private radiology group a few blocks away will only cost you $100. What next? You present Dr. Blewitt with your app and show him the price differential. It’s a $535 difference. With that profound of a difference, the way price information works in the human brain in a capitalist economy nowadays begs the question, “What’s the catch?” Would Dr. Blewitt then try to get you to purchase the more expensive test that he knows offers great quality or take a risk and go through the work to order the test at a new center he’s already skeptical of? Remember, the quality of the findings determines his quality as a physician. What does Dr. Blewitt say to you to justify his order? And patients would also have to give up their expectation that they get the best/most expensive care and decrease malpractice lawsuits en masse. If your doctor ordered you a cheaper test that wasn’t sensitive or specific enough to be able to pick up your diagnosis, you’d have to relinquish or limit your right to sue because you both agreed that cost was an issue when deciding together what testing route you wanted to take.

Now, let’s go back to how Dr. Blewitt would have to change to incorporate cost into how he practices. He’d have to eliminate all biases. For example, last month he missed a tumor in a patient’s ethmoid sinus so he’s been covering all his bases much more intensely since then. He doesn’t want to miss that again! He would have to order just the right amount of tests and nothing more than that despite his personal biases. He would have to feel safe from malpractice. If he orders the cheaper test that isn’t the gold standard, he would have to know that the non-gold standard holds up in court. He would have to have the technology to give him your actual cost information in real-time as he’s ordering the test. That price would have to be perfectly accurate. The price information available to him would have to span all local, competing for-profit hospital systems and independent health professionals. He would have to give up his personal network of specialists he knows, trusts, and relies on to practice his finest medicine and protect him in court. He would have to buy in to the concept that healthcare services are a commodity and aren’t loaded with real human relationships and complex social and financial issues. He would have to build the internal processes within his office to refer to new specialists and radiology centers each with their own unique requirements for referrals. He would have to know how to best communicate all of your options to you, provide general prices for a multitude of different routes forward, and then know that at any point in time, costs could spiral out of his control because he’s not the one deciding all of your care. Nor could he be held responsible for his recommendations. If his estimates were wrong due to unforeseen circumstances, you could not hold him accountable. He was simply trying to best predict your cost future.

Remember, this is only about the cost of analyzing your sinus headaches as a super savvy healthy young person. Now let’s imagine you are an 85 year old with diabetes, heart failure, obesity, coronary artery disease and you’re taking 8 medications a day undergoing procedures every few months. 

Both doctors and patients would have to give up so much of what healthcare stands for— real human relationships that power both the doctor-patient relationship and the doctor’s real life human network of other healthcare professionals Dr. Blewitt knows and trusts to help him be the best doctor he can be.

Price information in healthcare is theoretically profoundly important. But practically, it’s fraught with massive human behavior changes and closely held cultural and professional practices.

Keep in mind I’m a huge supporter of price information in healthcare and often error on the side of more information is best. But, it’s a long slog forward. And all changes in healthcare aren’t changes, they’re slogs.

I’ve never really been called normal. I’ve always looked at the world, asked questions, and, often thought that there has to be a better way to do things. But sometimes normal is normal because there’s simply no better way to do things to complete the task at hand. Asynchronous text communication is a great example. It solves the problem of communicating with others when a response can be delayed longer than a typical face-to-face conversation. Back in 2012, I had this theory that this kind of asynchronous communication, when applied to doctor-patient relationships, could solve the majority of acute health problems. With this theory, we started Sherpaa. And 3 years later, I’m happy that this theory has proved true.

But what about all these new startups that have popped up recently that promises a video visit with a doctor? Sounds awesome, right? Like the future, right? This is what they’ve been predicting will happen since Star Trek! 

Why doesn’t Sherpaa use video?

First, and most importantly, not a single patient out of thousands and thousands of interactions over the last 3 years has ever asked for a video chat.

That’s because people don’t, and won’t, actually choose video over email or phone to communicate with strangers or acquaintances.

Secure, asynchronous messaging to solve health problems is convenient, private, effective, and, by far, the most normal form of everyday communication. And we believe that a wonderful healthcare experience doesn’t ask you to create new behaviors. The best healthcare experience should fit seamlessly into your life and mimic how we all naturally behave.

Sherpaa’s killer feature is asynchronous, email-like secure messaging between patients and doctors to diagnose and treat health problems as efficiently and effectively as possible. We use this for a few very important reasons.  

Email is a cultural behavior standard. Asynchronous messaging is something we all know all too well. Email is an ingrained behavior with its own set of established rules and etiquette. It is a cultural standard and nobody has to be trained how, why, and when to use it.

Time delays between messaging allows people to multitask and gather insights. Email allows our doctors to carry on multiple conversations with multiple people and still get our work done efficiently. When we can wait on our response to brush up on our knowledge or think about the most ideal response, we can communicate far more effectively than winging it with limited information. Given today’s complex medical science, no doctor can be expected to know everything in real-time. And patients can also thoughtfully consider questions and look up terms they don’t understand and respond without a time-sensitive feeling of pressure.

Asynchronous messaging enables a consolidated activity stream for issues that persist over time. The vast majority of health issues persist over the course of hours, weeks, months, and years. Just because a doctor visit only lasts for 10 minutes doesn’t mean that the issue is over. It persists and needs occasional updates. Some updates to an issue are quick and easy and others are long and in-depth. Having the ability to fire off an update to an issue quickly and easily or in a more involved and complete way paints a much better picture of an issue.

Asynchronous messaging removes the need to schedule time for people to connect. We’re all busy and time is our most precious commodity. Being able to communicate on our own time and terms allows us to solve problems from anywhere at any time.

Asynchronous messaging allows team collaboration over time and space. At any point in time, one or a few of our doctors can jump into a communication thread and see the entire communication stream to provide insights and simply bring a fresh perspective to your issue. Our doctors get to work as a team and each one has access to the exact same information because the entire conversation is in the thread.

Asynchronous messaging allows for continuity. Both in-depth ongoing conversations and quick updates can be done within a messaging thread. All parties involved can see the interactions and appropriately respond and be up to date. In fact, there is nothing more and nothing less than what you see written in the thread. All parties are equally and fully in the know.

Asynchronous messaging provides easily analyzable data. Imagine what we could know if the 3 billion doctor office visits that happen every year could be analyzed to understand the efficacy of certain treatments? We are the only space in healthcare where the entire conversation between doctors and patients is perfectly transcribed and analyzable. This is unprecedented in healthcare. Our goal is to leverage this data to provide the most data-driven care that gets the best outcomes for our patients.

When synchronous communication is necessary, we simply jump on the phone with our patients. The phone is ubiquitous and everyone knows how to use it. It’s not weird. Synchronous communication is only necessary in real life between our doctors and patients about 2% of the time. We have seen this rate remain consistent for the last 3 years of our existence. Keep in mind, our rate of referral for an in-person visit is roughly 30%.

Video chat is not a natural, ingrained, everyday behavior for the vast majority of people. There is far more time and effort spent each day in the world leveraging asynchronicity than video chatting. How many times have you used FaceTime or Skype versus an email, text, an iMessage, an instagram, a Snapchat, a Whatsapp, etc.? Webcams are embedded in almost all our phones and computers, yet they are rarely used. Skype is arguably the most popular video chat application with only 4.9 million daily users worldwide. You can compare this to billions of users of gMail, Facebook, Whatsapp, and other asynchronous messaging services. Apple has sold over 1 billion iPhones and iPads with Facetime, yet only 15-20 million Facetime calls are made per day worldwide while there are over 40 billion iMessages sent per day.

Video must be scheduled, time-restricted, and intense. Scheduling is a pain. And if your issue consumes more time than allotted, the entire schedule of the day must be rearranged. Also, some issues only need 10 second updates vs. 15 minute intense conversations. Not everything needs an intense social cue suggesting deep conversations.

Video chats are less private than asynchronous messaging. When video chatting with someone, if you want privacy, you must shield your screen, find a private space, and conceal your voice. This is often difficult, if not impossible, in the office or social settings.

Video chats are not an industry standard in any industry. Healthcare is rarely an industry leader in customer service and is typically decades behind consumer industry and behavioral trends. If other consumer industries have tried and failed with video chatting, why would healthcare be any different? If video chatting was a good and desired form of consumer communication, wouldn’t other consumer-facing industries rise up and meet that demand?

Video adds very little to the conversation compared to telephone. Watching a stranger who isn’t a friend, family member, or coworker uncomfortably stare at a webcam is, well, uncomfortable. Video chatting is special when it’s with your grand daughter, but weird when it’s with a customer service representative from Meineke.

Most people are a little bit vain. Let’s face it, we all have a little vanity. When we video chat, we have to get dressed, put some makeup on, our toupees, our prostheses, do our hair, etc. If we talk on the phone or send an email, both communicators can be doing almost anything they want and look their absolute worst.

Doctors shouldn’t be paid for time slots, they should be paid for effective communication. Healthcare is a conversation, not a transaction. Doctors shouldn’t be paid for how much time they spend with you. They shouldn’t be paid for the number of visits they can do a day. They should be paid a flat yearly salary to do the the most appropriate and effective thing you need to optimize your health each and every day. And most health issues don’t always need intense conversations, they need quick and easy occasional updates.

Futurists have been predicting that video phones will become normal for decades. David Foster Wallace writes about how videophones never took off in Infinite Jest. We all have access to the technology, but we choose to use it almost never. And when we do choose it, we use it for communicating with family and friends, not strangers or customer service agents.

The drawing above is by Fritz Kahn from 1939 entitled “The doctor of the future using radio and television to give a consultation to his patient aboard the ship ‘India’ in the South Seas.”