Can you really choose a hospital based on the best price?

Can you really choose a hospital based on the best price?

Consumerism in health care is coming to mean patients must shop around for the best price — for a doctor’s visit, Cipro, health insurance and maybe even your next operation. The marketplace gurus are telling us we can buy health care like TV sets and search for the lowest price tag.

But can you really choose a place for surgery based on the best price? And more importantly, should you? Considering that more states will have large data bases with health insurance claim data and prices, which in the future may guide people to the cheapest medical services, these are not rhetorical questions.

To help find answers, I explored the website of the Surgery Center of Oklahoma, a free-standing multispecialty facility in Oklahoma City owned and operated by what the website says are “approximately 40 of the top surgeons and anesthesiologists in central Oklahoma.”

The Center offers pricing packages that cover fees for the surgeon, anesthesiologist, and use of the facility “all included in one low price.” The website promises “no hidden costs, charges or surprises” adding this is no “bait-and-switch ploy.”

The Center’s marketing is aimed at people who will have to pay large out-of-pocket expenses because they are uninsured, have insurance with sky-high deductibles, or may be considering going out of the country for cheaper care. I can understand the need to shop for cheaper surgery if you have insurance with a $10,000 deductible.

If people who shop for health coverage in the new state insurance exchanges beginning this fall choose policies with high deductibles to keep their premiums affordable — and I believe many will — the idea of a low-cost hernia operation could be appealing. But while we might have a hankering for the latest flat screen HDTV, do we decide on our own that we want a hernia? What about your primary care doctor or the specialist to whom he or she sent you who may have recommended the surgery in the first place?

Are you going to say, “Hey, doc, I can’t afford the hospital you use, I’m going somewhere else?” What does that do for trust—that intangible thing that’s so important for healing? To me, the health care marketplace advocates have hardly considered that relationships and confidence might be as important as price.

Jumping into this non-traditional way of getting care also demands some consumer smarts gained by talking to others who have used the services of centers like the one in Oklahoma and reading the fine print.

For starters, there are a lot of costs not included. Diagnostic tests needed before surgery, consultations to determine risk management, physical therapy and rehabilitation, for example. Neither are overnight stays and costs arising from complications from the procedures covered. Hardware and implants aren’t covered either. You’ll need to know what these cost in deciding whether a surgery center is really offering you a good deal. To be absolutely sure, you’ll need the prices for the same services from the hospital your first doctor may have recommended. Getting them may not be so easy.

Then there’s the method of payment to consider. The Oklahoma Center tells prospective patients that its prices are not negotiable and are available only to those who pay the entire amount in advance. That could be hard for some families; some procedures carry a hefty price tag like the $6,495 for a type of bladder repair. Do you have that kind of cash on hand?

Sometimes though, even the most scrooge-like hospitals will let people make installment payments. But the Oklahoma facility accepts no credit cards and no personal checks. Cash or cashier’s checks are preferred in an attempt to “keep our prices as low as possible.”

With restrictions like these, are these kinds of facilities only for patients who have cash on the barrelhead to pay? Is that what the marketplace gurus have in mind?

Trudy Lieberman is a journalist and an adjunct associate professor of public health at Hunter College in New York City. She blogs regularly on the Prepared Patient Forum.

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  • http://twitter.com/NeuCare Dr. Neu

    Well, more and more people (and our nation as a whole) can’t afford the current system. Why be critical of any place providing true pricing transparency and truly lowering the actual costs of care? Is it better for a hospital to charge 5x the amount of OK Surgery Center just so the payment can be delayed a bit or divvied amongst various third-parties? That’s just a shell game.

  • Alex Fraser

    Price transparency of common surgical procedures is a rarity at US hospitals. In research published this month in JAMA, researchers attempted to find the complete price of a total hip replacement, a surgery performed over 200,000 times annually in the US. In their national outreach only 16% of hospitals could immediately provide that figure. The JAMA article has received national news coverage by NBC News and their story has over 160 comments from both consumers and professionals. http://www.nbcnews.com/id/50748682/ns/health-health_care/#.USZSokLYb05

  • drg

    I have had a recent experience as a patient in an academic center physical therapy dept. I was seen for an evaluation only for 30 minutes. The amount billed was for an eval and 1 exercise 1-15 minutes. The charge billed is $862. The PT manager openly told me–you know how it is with hospitals as a physician. They increase the bill several times to get about 20 percent of the billed from the insurance. He said this as if this was not unethical or illegal but just the facts. The service I got was not a thorough eval at all and I was charged as much as if it was an hour eval. This the PT manager also defended. Oh and if you pay cash for the visit–it’s a 40 percent discount–only $517. What a bargain!!

    • Suzi Q 38

      The PT departments are notorious for over-billing, then billing really late. Why do they bill late?
      I think they do so because they do not want you to see how much they charge for one 10-15 minute visit.
      I was seen for the first time for 30 minutes, then for 10 or 15 minutes for each trip thereafter.

      After a few treatments of only 10 minutes, I asked the PT person if he could take a bit more time with me, as it took me 20 minutes, to get there and then 15 minutes to park, then 15 minutes to check in and wait for my appointment each time. He ended up charging me for double visits!
      He was also annoyed that I only wanted to come in once a week.
      Well, if I thought that he was thorough, and doing anything truly helpful and special, I would. I felt I was better off learning from him once a week, then practicing at home the other days. I felt this was a better use of my time.

      This is at a nationally recognized rehabilitation hospital..the kind that people come out of state for. Most of the hospitals refer their patients to this rehab hospital for long term and outpatient treatment. I felt lucky that it was located in our city.

      I will need PT again soon, but i think that I will request another PT therapist, and ask the director for a recommendation.

      Maybe I am expecting to much.
      Are PT visits only 10-15 minutes? They receive about $250.00 per visit. That is about $1K an hour.

  • drg

    you hit the nail on the head!!! but then the ceo’s in UK don’t make 20 million a year.

  • http://www.nuehealth.com/index.html sandra miller

    HI Dr. Kevin. These are excellent questions. While the Oklahoma facility you mention is demanding 100% cash pay up front, this is not a required trade-off for transparent pricing. They obviously don’t want to hassle with credit card surcharges or waiting to schedule procedures until after checks cleared, and yes, that will likely rule out a number of self-paying patients.

    This facility is following the lead of most international hospitals that cater to an international patient clientele – that is bundled or single-point-pricing that is all-inclusive of diagnostic tests, hospital stay, surgical time, medical device cost and all fees associated with doctor, nursing and anesthesia. It’s a model that works well if a hospital has high volumes of the same type of patient and the surgeons are good at estimating OR time – by far the most variable part of the cost.

    I personally believe that this is a wonderful practice. It doesn’t mean that patients are choosing on the basis of price, though. It just means that patients are finally able to make an actually informed decision about their care that includes price – and certainly, price is a huge issue for a very large sector of the population. As transparency in pricing becomes more common, I believe that trust and relationship will actually become more important, not less, as patients rely on this to make their final decision.

    Many patients assume – wrongly – that the higher priced the treatment, the higher quality it is. This has been debunked time and again, but it is nevertheless a belief that many hold dear…many people believe, in fact that treatment in the US is somehow better than any and all treatment abroad because our costs are so much higher, seemingly unaware that the insurance industry that is driving up the self-payer cost so dramatically. Isn’t it time that patients were set free from the tyranny of to expensive healthcare that is not necessarily better?

  • http://twitter.com/ykhmelev Yevgeniy Khmelev

    I think that this is a great concept. Patients should be able to choose their hospital or doctor based on price. Ideally you would want to choose a hospital based on best overall value, but how would you do that in practice? Today average patient has no idea what surgery cost, nor is there a reliable way to predict the outcome before the procedure. Why not providepatients with at least one side of the equasion. This is much better than what we have today.

  • http://cognovant.com/ W Joseph Ketcherside, MD

    This is only half of the equation. You can only have a rational free market when you have BOTH price transparency and quality transparency. Once we have both, you can make a meaningful choice. It is a fantastic irony that our medical industry has decided to foist high-deductible plans on patients so they will “have some skin in the game and then make better choices”, but then deny patients any rational way to make these choices.

    As more people are stuck paying the bill, they will have no choice but to make decisions based on price. Doctors and hospitals need to recognize this. The ones that provide information will reap the benefits. I just hope we can get the quality information in advance, not from the newspapers after the bargain-basement disaster happens.

  • http://www.mightycasey.com/ MightyCasey

    Cost is an important part of decision-making, but it should NOT be the prevailing one when it comes to surgical procedures. Medicare’s Hospital Compare site has outcomes metrics on hospitals across the US, for a start. Stand-alone surgical centers like the OKC one used in the post are not, however, included in that group.

    For stand-alone outpatient centers like that, working with your PCP to determine what their infection rates, fail-rates, and general outcome metrics would be a critical part of determining VALUE, not just price, when it comes to their surgical services. Price is important, but outcome metrics should come first. That’s the only way to make a truly informed decision.

    • Suzi Q 38

      One PT tried to tell me that price and ability to pay has nothing to do with treatment, if a patient needs it.
      I beg to differ.
      My friend’s husband has pancreatic cancer, with mets to the liver.
      They are having difficulty getting treatment, because their insurance company won’t pay for certain treatments. They started at a teaching cancer hospital, then moved on to the huge university, and finally settled at a large private hospital. It has taken 11 weeks to wait for approval so far. They have HMO insurance.

      I am so scared that that is not the whole story. I fear that the real reason he was declined was that they do not feel that further treatment would help him. That he needs to go home and just find a beach somewhere in the Pacific and enjoy his wife and family.

      I pray that there is still hope for him.

  • Suzi Q 38

    I have tried to get the costs of any given operation or procedure, and people at the other end of the phone at the hospital are always incredulous as to why I want to know.
    One time I called 3 facilities to find out the cost of an MRI for my knee.
    I wanted to do so because the HMO insurance company that I had was refusing to allow the MRI after 6 months of severe pain and PT.

    I was going to get it anyway, and pay out of pocket for the MRI.
    If I am paying, you can bet I will be “shopping” the price. It was only my knee, not brain cancer.

    Anyway, the information was hard to get, but after a lot of explaining, facilities gave me their prices.

    They ranged at the time from $1K-$2K (1995).

    I called the insurance company and told them that I was getting the MRI anyway. They were dumbfounded and annoyed.
    I told them I was getting it done tomorrow at hospital P, and once it showed that I had huge problems, I was going to get the much needed knee surgery, then sue them in small claims court for the cost of the MRI, plus pain and suffering for the last 6 months.
    If it showed that I did not have any problems, I would have to admit defeat and pay for the MRI.
    They asked me to wait for further approval, but I refused.
    I told them that I had waited long enough.

    They finally called me a couple of hours later and told me that I could get it done at that very same hospital and that they would pay for it. Their cost was only $700.00.

    It turned out that my injury involved my meniscus and ACL.

    • http://twitter.com/jagnationexpat Jag Nation Expat

      That’s about right, insurance companies pay a fraction of what out of pocket patients pay. I believe they do this so they can write off a larger amount when the bill isn’t paid, but it’s a real problem for those patients who really do need or want to pay for their own procedures.

  • http://www.facebook.com/people/Wayne-Caswell/1113005314 Wayne Caswell

    As Steven Bill found out while researching for his 38-page TIME magazine special report, “Bitter Pill: Why Medical Bills are Killing Us”, patients often have no choice of hospital. They go where the doctor or insurance company sends them, and they don’t drive around to emergency rooms to check out prices for their appendectomy. Brill dives into our health care system to understand why things cost so much and avoids the more traditional question of who pays for what. What he found was both disturbing and telling. I posted a summary of his article and his video introduction at http://www.mhealthtalk.com/2013/02/why-high-medical-bills-are-killing-us/

  • leslie fay

    Hmmmm, do you really want the lowest bidder to do your vasectomy???

  • Hank

    Typical left wing snobbism at play here. This explains their assault on fast food and Walmarts.

  • http://twitter.com/jagnationexpat Jag Nation Expat

    “Are you going to say, “Hey, doc, I can’t afford the hospital you use, I’m going somewhere else?” What does that do for trust—that intangible thing that’s so important for healing?”

    Why yes, I’ve done exactly that several times, for different reasons (not just cost) with my primary doctor, and somehow she and I maintained our trust level just fine – and of course my healing was not impacted one bit. I wonder, do you believe in healing crystals? Magnets? Maybe sleep under a pyramid? I mean… seriously.

    Oh, and my insurance company provides me with a handy cost comparison between hospitals and providers, along with an outcome rating (which you can, of course, verify with other sources if you don’t trust the insurance company). It’s truly amazing how little relation there is between the price and the quality of care.

  • http://www.facebook.com/people/Shawn-Eng/1795677861 Shawn Eng

    I have a suggestion to the emergency managers that will be running certain states after they enter bankruptcy: Refuse to pay providers until they publish their prices on a public website, similar to Priceline or Travelocity. There will no doubt be providers that won’t be able to stay in business under such competition. Let them go bankrupt and then absorb them into more efficient providers. Then apply the Singapore model of Health Savings Accounts and use insurance for catastrophic conditions only. To expand physician access, the state should recognize out of state and foreign accreditation and loosen scope of practice laws. This would normally not be achievable due to medical guild lobbying but in a fiscal emergency, their influence can be overridden.

  • Jeff Johnson

    Seems like this person, while she may be a professor of public health, failed economics 101. All things being equal, I’ll have my surgery done where it’s less expensive. She’s assuming that people shop solely based upon price, and that’s just not correct.

    Additionally, when you have the prices out in public for everyone to view, it’s more likely to be remotely competitive, rather than $15 for a Tylenol (for example)

    But I’m sure this will be infinitely better once the government takes over healthcare, right?

  • http://giantsgiantsgiants.blogspot.com/ David Malbuff

    Miss Lieberman, you’re just an angry little crybaby. The Oklahoma surgery center delivers exactly what it promises and addresses a specific need. They should be applauded and emulated, not criticized. If the cost, including travel, were low enough, I certainly would consider going there for treatment. Better still, I hope someone here in Virginia emulates them, and soon.

    And yes, medical care indeed is a commodity, just like big-screen TVs and automobiles and everything else. Doctors are not slaves, which is what you “health-care-is-a-right” trolls are proposing. They’re entitled to cut out all the expensive middlemen and deliver the service straight to the patient.

    Don’t you know that the cost of medical care is driven up by the number of people involved in approval and delivery and regulation and processing and billing of each procedure? Don’t you know that most of them are non-medical people? Don’t you know that each one of those people draws a salary and must be paid? Don’t you even know that? Of course, you don’t.

    How it must annoy you to see average people with the good sense to make their own decisions on whether, how, and when to buy medical services. Go back to watching “House” reruns and dreaming of Obamacare. The rest of us have a free America to save.

  • http://www.facebook.com/JasonBudd06 Jason Budd

    How dare we have price information before agreeing to pay for services. That’s just silly. I would much prefer to find out the cost after the fact, then be forced to bankruptcy because I can’t afford it.

    What really bothers Trudy, and other communists like her, is that the poor might actually get access to medical care without government. That’s the bottom line. Once the poor figure out that they don’t need Trudy and her government overlords, well, Trudy can’t play master of the universe anymore.

  • handgunnar

    ‘Trudy Lieberman is a journalist and an adjunct associate professor of public health at Hunter College in New York City.’
    Proof positive that she’s unqualified to have an opinion worth anyone’s time.