Tacit collusion is ONE concern, but it’s not the only one. On (1) Hospitals have a “decent” idea of what others are doing is by no means the same as knowing with certainty, because the prices are posted. On (2) insurers are happy to raise rates if they presume that regulators will jack up the premiums. These prices are not set independen…
Tacit collusion is ONE concern, but it’s not the only one. On (1) Hospitals have a “decent” idea of what others are doing is by no means the same as knowing with certainty, because the prices are posted. On (2) insurers are happy to raise rates if they presume that regulators will jack up the premiums. These prices are not set independently. Plus, Medicare and Medicaid play a monster role in setting prices. (3) My good friend Greg Scandlen wrote a wonderful piece on why restaurant pricing has almost zero applicability to the healthcare market: https://www.healthworkscollective.com/gawande-s-kitchen/. Keith Smith of Surgery Center of Oklahoma is transparent because he WANTS patients to know his prices. He also knows that the big hospitals and insurers do NOT want patients to know their prices. So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations. You’re asking the government to solve a problem that the government created.
1) Fair enough. Since you seem to know this area pretty well, how big would you estimate the margin of error typically is on their "decent idea" guesses?
2) Yeah, this is why I've seen other analysts say it would be a good idea to implement restaurant pricing: if we can get the typical 70-80% price reduction across the board, the claim goes, that alone would fix the massive problems we have with Medicare and Medicaid costs blowing up our federal budget. (And yes, that "if" is doing a lot of heavy lifting. While I'm skeptical that we'd achieve quite that much, I do believe we'd get a fair amount of the way there.)
3) That doesn't appear to be an article on applying restaurant pricing to health care, but rather on applying principles of restaurant *operation*. And for the record, I agree with the points Greg makes there.
> So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations.
Perhaps. This is the standard "regulatory capture" argument, and it holds true in a lot of cases, but I feel I have to counter with the words of computer science pioneer Tony Hoare: "There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies."
This really feels like a "so simple there are obviously no deficiencies" plan. If the price on the menu says "this procedure costs $300," and the number on my bank statement doesn't say $300, it's obvious that something's wrong. That's simple enough that your average John Q. Citizen can immediately see the problem and raise a stink about it. (And yes, I am talking about numbers on your personal bank statement that can be easily checked. A big part of the goal is to make insurance far less relevant by driving down the costs of most medical care to the point where you can afford to pay for it yourself, rather than through an intermediary with all the monopsony and principal/agent issues inherent to such a model.)
> You’re asking the government to solve a problem that the government created.
Yes. Or in other words, to clean up their own mess. I'd ask the same of anyone who makes messes. (See also: Dobbs vs Jackson Women's Health.)
2) 70%-80% off of what? I'm skeptical that mandatory transparency would save anything. My assumption is that it would likely increase unit costs and perhaps overall costs.
3) I don't think this would be simple at all. What is to be transparent? 600,000 codes for individual slices of each procedure? Price for a suture? Price for a minute of RN time? Price for the bed? Or are you going to bundle--as most transparency folks suggest? In that case, you effectively build a system of tying arrangement, allowing providers to further jack up prices. Keith Smith can price as he does because the particular services he offers are relatively predictable in cost. He can absorb the variances from that price. (This is a conjecture. You'd have to ask him whether he agrees.) But what about services that can vary widely in cost, depending on dozens of factors? Are you going to give ONE single price for such a procedure, knowing that the provider might be forced to absorb huge residual risks? Or in such services, will you charge by the hour? Which creates a whole different set of transparency problems.
I don't see any real possibility that transparency mandates would clean up the government's mess. They would add an extra layer of complexity atop the mess that is already there. Sounds like a good idea, but ...
In the classic film, “The Magnificent Seven.” Vin (Steve McQueen) was a gunslinger hired to defend an impoverished village. After a pivotal battle, he was captured by the bandit Calvera (Eli Wallach), who asked him why he had accepted such a hopeless job. Vin responded, “It’s like a fellow I once knew in El Paso. One day, he just took all his clothes off and jumped in a mess of cactus. I asked him that same question, ‘Why?’” Stunned, Calvera asked why the man had done so. Vin responded, “He said, ‘It seemed to be a good idea at the time.’”
Tacit collusion is ONE concern, but it’s not the only one. On (1) Hospitals have a “decent” idea of what others are doing is by no means the same as knowing with certainty, because the prices are posted. On (2) insurers are happy to raise rates if they presume that regulators will jack up the premiums. These prices are not set independently. Plus, Medicare and Medicaid play a monster role in setting prices. (3) My good friend Greg Scandlen wrote a wonderful piece on why restaurant pricing has almost zero applicability to the healthcare market: https://www.healthworkscollective.com/gawande-s-kitchen/. Keith Smith of Surgery Center of Oklahoma is transparent because he WANTS patients to know his prices. He also knows that the big hospitals and insurers do NOT want patients to know their prices. So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations. You’re asking the government to solve a problem that the government created.
1) Fair enough. Since you seem to know this area pretty well, how big would you estimate the margin of error typically is on their "decent idea" guesses?
2) Yeah, this is why I've seen other analysts say it would be a good idea to implement restaurant pricing: if we can get the typical 70-80% price reduction across the board, the claim goes, that alone would fix the massive problems we have with Medicare and Medicaid costs blowing up our federal budget. (And yes, that "if" is doing a lot of heavy lifting. While I'm skeptical that we'd achieve quite that much, I do believe we'd get a fair amount of the way there.)
3) That doesn't appear to be an article on applying restaurant pricing to health care, but rather on applying principles of restaurant *operation*. And for the record, I agree with the points Greg makes there.
> So, the big hospitals and insurers will spend big bucks on lobbyists to write transparency-in-name-only regulations that will wreck Keith’s business but sail smoothly though big organizations that have sufficient capital to pay lots of accounts to bury the truth beneath an avalanche of paperwork, as per the regulations.
Perhaps. This is the standard "regulatory capture" argument, and it holds true in a lot of cases, but I feel I have to counter with the words of computer science pioneer Tony Hoare: "There are two ways of constructing a software design: One way is to make it so simple that there are obviously no deficiencies, and the other way is to make it so complicated that there are no obvious deficiencies."
This really feels like a "so simple there are obviously no deficiencies" plan. If the price on the menu says "this procedure costs $300," and the number on my bank statement doesn't say $300, it's obvious that something's wrong. That's simple enough that your average John Q. Citizen can immediately see the problem and raise a stink about it. (And yes, I am talking about numbers on your personal bank statement that can be easily checked. A big part of the goal is to make insurance far less relevant by driving down the costs of most medical care to the point where you can afford to pay for it yourself, rather than through an intermediary with all the monopsony and principal/agent issues inherent to such a model.)
> You’re asking the government to solve a problem that the government created.
Yes. Or in other words, to clean up their own mess. I'd ask the same of anyone who makes messes. (See also: Dobbs vs Jackson Women's Health.)
I, for one, would like to be able to 'shop' my health care purchases by seeing listed prices.
Nice if you can, but I'm skeptical of governments imposing requirements of this sort.
Me, too. But no way it will happen without many other unlikely changes.
1) No idea
2) 70%-80% off of what? I'm skeptical that mandatory transparency would save anything. My assumption is that it would likely increase unit costs and perhaps overall costs.
3) I don't think this would be simple at all. What is to be transparent? 600,000 codes for individual slices of each procedure? Price for a suture? Price for a minute of RN time? Price for the bed? Or are you going to bundle--as most transparency folks suggest? In that case, you effectively build a system of tying arrangement, allowing providers to further jack up prices. Keith Smith can price as he does because the particular services he offers are relatively predictable in cost. He can absorb the variances from that price. (This is a conjecture. You'd have to ask him whether he agrees.) But what about services that can vary widely in cost, depending on dozens of factors? Are you going to give ONE single price for such a procedure, knowing that the provider might be forced to absorb huge residual risks? Or in such services, will you charge by the hour? Which creates a whole different set of transparency problems.
I don't see any real possibility that transparency mandates would clean up the government's mess. They would add an extra layer of complexity atop the mess that is already there. Sounds like a good idea, but ...
In the classic film, “The Magnificent Seven.” Vin (Steve McQueen) was a gunslinger hired to defend an impoverished village. After a pivotal battle, he was captured by the bandit Calvera (Eli Wallach), who asked him why he had accepted such a hopeless job. Vin responded, “It’s like a fellow I once knew in El Paso. One day, he just took all his clothes off and jumped in a mess of cactus. I asked him that same question, ‘Why?’” Stunned, Calvera asked why the man had done so. Vin responded, “He said, ‘It seemed to be a good idea at the time.’”