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.