Tuesday, February 12, 2013

Fwd: qotd: Important: Who needs to know what a hip replacement costs?

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-------- Original Message --------
Subject: qotd: Important: Who needs to know what a hip replacement costs?
Date: Tue, 12 Feb 2013 11:15:19 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>

JAMA Internal Medicine
February 11, 2013
Availability of Consumer Prices From US Hospitals for a Common Surgical
By Jaime A. Rosenthal; Xin Lu, MS; Peter Cram, MD, MBA

Objective - To examine whether we could obtain pricing data for a common
elective surgical procedure, total hip arthroplasty (THA).

We found it difficult to obtain price information for THA and observed
wide variation in the prices that were quoted. Many health care
providers cannot provide reasonable price estimates.

Comment (excerpts):

The results of this study provide insight into the availability of
pricing information for a common elective medical procedure, THA. We
found that only 16% of a randomly selected group of US hospitals were
able to provide a complete bundled price, though an additional 47% of
hospitals could provide a complete price when hospitals and health care
providers were contacted separately.

First and foremost, understanding our results requires an understanding
of the rationale behind calls for greater pricing transparency. The
desire for pricing transparency is based in fundamental principles of
economics; the assumption that if patients know the prices of medical
services, they will make rational decisions by avoiding high-cost health
care providers ceteris paribus.

Our results are somewhat remarkable considering the support expressed by
virtually all stakeholders for pricing transparency.

Irrespective of the reason for the variation we encountered, we would
actually view our results with a modicum of optimism. The nearly $100
000 range in pricing that we encountered suggests that a savvy and
determined customer may find opportunities for significant savings with
comparison shopping. Alternatively, it is equally possible to argue that
our results suggest that less-educated or less-savvy patients could pay
exorbitantly high prices.



JAMA Internal Medicine
February 11, 2013
What Does a Hip Replacement Cost?
Comment on "Availability of Consumer Prices From US Hospitals for a
Common Surgical Procedure"
By Andrew Steinmetz, BA; Ezekiel J. Emanuel, MD, PhD

As Rosenthal and colleagues write, there are many potential solutions
for reining in costs and improving quality in American health care, but
they require access to reliable information on price and quality for
patients to make informed decisions. Free markets need price and quality
transparency to function properly.

The history of the automobile industry shows that information asymmetry
is treatable. Health care will need to travel down a similar path. It is
time we stop forcing people to buy health care services blindfolded —
and then blame them for not seeing. The transparency imperative is here,
and one way or another the public will soon be empowered to choose their
health care based on reliable data on price and quality.


Comment: There is a terrible epidemic of a mental derangement that has
befouled the minds of not only those in the political, policy and
academic communities, but also the minds of the public at large. This
mass hysteria is exemplified by this statement extracted from the
Rosenthal et al article: "Our results are somewhat remarkable
considering the support expressed by virtually all stakeholders for
pricing transparency."

Almost everyone seems to be fixated on the concept that if we make
health care pricing transparent, we will be able to place every
individual in charge of getting the health care that they need while
eliminating excessive prices and unnecessary care. The massive shift
taking place to higher deductibles and other consumer-driven cost
sharing is based on this principle.

Implementation of the Affordable Care Act is pushing us towards
innovative changes in the way we pay for health care, such as this
article which implicitly supports "bundling" as a means of obtaining a
single price for complex services - to be used to shop around for
cheaper providers.

With our current budgetary problems on the state and local levels, let's
look how this might play out if we expand the concept from health care
to other social services.

Imagine creating price sensitivity for community fire services. Suppose
we bundle the payment for putting out a house fire. Not only would we
need competing fire services, but we would also need access, through a
911 call, for the various bundled prices. Or a car fire? You can be
transferred to the 911 car fire operator who has the car fire bundled
prices. Or a preventive fire safety inspection of your home - mandated
by the Affordable Fire Act? Instead of 911, you can access
eFireInspection providers for competitive fire inspection bundles, which
provide basic inspection services, with options such as purchasing a
place at the front of the queue in the event of multiple fires.

The police? Easy. Competing bundled prices on home invasion robberies.
Murder? No problem - bundled packages with or without conviction and
imprisonment of the murderer. Maintaining the peace? Are you kidding?
With price transparency who would waste their money on that unnecessary

Education bundles? Park and recreation bundles? Public street and
highway bundles? City sanitation bundles? How about bundles for
politicians? You could buy only the politicians that you need.

Of course all of this is totally ridiculous. So why have we separated
out our health care social services to be placed under the control of
price shoppers? Isn't there a better way?

Everyone recognizes the silliness of the examples above because we all
understand that such social services are financed through global budgets
established by the stewards of our taxes. With minor exceptions, the
services are provided automatically without the necessity of
establishing price sensitivity on accessing those services. Any
additional funding requirements are addressed through the budget process.

Likewise, as in Canada, our hospitals should be globally budgeted. To do
so would introduce administrative simplicity and lower costs due to
greater efficiency. Physicians' rates can be kept fair and reasonable
through negotiation with the single public payer. Most other nations
have shown that you can provide comprehensive care at much lower costs
without requiring price transparency for health care shoppers.

Look again at the authors' statement: "Our results are somewhat
remarkable considering the support expressed by virtually all
stakeholders for pricing transparency." Price transparency as a solution
for our outrageous health care costs? It's time to bury this terribly
unsound idea and move on with a system that works - a single payer
national health program.

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