Healthcare Matters

I took a lot of flak for my post last week suggesting that the healthcare industry’s refusal to provide honest and comprehensive consumer pricing information amounts to a self-inflicted wound. So I figured I must have struck a useful nerve. Why in the world a provider in a competitive market wouldn’t seize the opportunity to distinguish itself by becoming known as the consumer-friendly choice –says what? Apparently, it says a lot about the value of not providing such information.

“Blue Books” have been used to support consumers shopping for goods and services in several industries. Most notably, the automotive industry has several versions of the Blue Book based on whether you’re a wholesale trader, retailer or auctioneer.

The Healthcare Blue Book is not a crock. Both uninsured and insured consumers are actually starting to use it; to the extent the media can bestow some legitimacy to an idea, it has done it; and yes, hospitals (including independent physician practices) are resigned to its existence. Next time you make a medical appointment, check out the Healthcare Blue Book. It’s a simple, intuitive online search utility that makes it easy for patients to know how much a procedure should cost.  Not only does it serve its purpose by providing patients with an accurate frame of reference –patients who would otherwise have no clue how much a procedure is going to cost them– but it offers a great starting point for patients who are actually comfortable negotiating fees. In addition, the Healthcare Blue Book offers practical tips for how to negotiate with providers and provides downloadable documents that can serve as contracts for services.

The Healthcare Blue Book isn’t just for cash buyers. If the industry didn’t have a reputation for treating many insured patients differently –for charging them different rates for the same routine procedures– then perhaps it wouldn’t make any difference. But providers are notorious for charging different prices for the same procedures; and payers are notorious for optimizing out of pocket patient expenses, etc. It’s one of the reasons your liberal friends want a single payer system.

SCM professionals focus on making sure the right products are at the finger-tips of users at that moment in time when they are needed. To a great extent, driving costs out of the system by negotiating better pricing from suppliers, building business cases that support product standardization and eliminate variance, defines the profession. It’s a handful. So it’s got to be tough for professionals who are doing everything possible to make a system more cost efficient to be painted with a similar brush. I mean, from a pricing perspective, the used car marketplace looks good when compared to how consumers are taken advantage of in healthcare.  It’s not right.

The industry has done a good job keeping the pricing transparency problem swept under the rug (e.g. the general public doesn’t even seem to relate to the need for utilities like The Healthcare Blue Book). But all of that is changing. And while the Affordable Care Act doesn’t address the need for pricing transparency (obviously, part of the deal the administration made with the industry) doesn’t help matters, there are far too many of us who have been burned to keep a good idea buried. The Healthcare Blue Book doesn’t solve the problem, but it’s  a good starting point. It’s a proven idea that has been successfully used to solve pretty much the same problem in other industries.

—Tom Finn