Pittsburgh Technical Council

Op-Ed: Medical Cost Savings Via Cost Transparency is Here

Op-Ed: Medical Cost Savings Via Cost Transparency is Here

Article Published: March 24, 2016

Bill Hennessey, M.D., CEO and Founder, Pratter, Inc. 

Pittsburgh is known for its medical care and Internet technology-based companies. These two industries have combined here to provide the solution to our nation’s #1 financial problem – the lack of affordable health care for all working Americans.  For most businesses, health care is the #2 expense after salaries and therefore it prevents salary growth.

Over the past 20 years, health insurance costs for a family have skyrocketed 400% to $17,000 yet no one is getting a raise to pay for it.  Out-of-pocket deductibles have risen 300% over the same time frame, now averaging $5,000. 80% of working America has a high deductible plan.  Combine these numbers and it’s a staggering $22,000 for family health care annually.  It’s as expensive as buying a new car every year.

Screen Shot 2016 03 24 At 13253 PMMedical cost transparency solves the problem of unaffordable health care.  First, it creates smart shopping by revealing the huge differences in pricing for the same care in your neighborhood. Second, it creates competition among health care providers, and with competition, the consumer wins every time with lower prices.  Medical cost transparency enables employers to create incentivized solutions and design health plans to lower health care costs for the first time ever.

An IT platform has been created where every single self-insured company can submit its medical claims. The medical costs each employer contributes are shared to create a robust medical cost database. The billing codes are used to decipher the hospital charges and insurance company payments and publish them with a zip code search engine. As a bonus, every self-insured company receives a medical cost savings report letting them know exactly which medical tests and procedures their money was spent on last year.

We became consumers when the insurance companies sold us high deductible plans, meaning we had to spend $1,000s out of our own pockets before the insurance company contributes $1 toward our health care. As consumers, we have the right to know the cost of our medical care before we buy it.

Key messaging has evolved with healthcare consumerism.  There are five places to receive health care, including hospitals, independent surgery centers, freestanding MRI/CT centers and blood work centers and these are listed in the order of most to least expensive for care.

We have also learned that in network pricing does NOT mean that there is one same low price for the same medical care in network.  In fact, the cost of the same care in network can and does vary by $1,000s!  These are the types of things we learn quickly as consumers. Trust your doctor with your life – not your wallet.  In fact, a hospital-employed physician is told to send you to the most expensive place for care – his or her hospital.  Step up to the plate and ask for known pricing options.

Outpatient care, such as blood work, MRIs, CTs, carpal tunnel surgery and cataract surgery is a fixed commodity, and should be priced with little variability.  It involves a fixed amount of time, a fixed amount of the same machinery and in the case of blood work, MRIs and CTs, there’s not even a doctor involved.  Just look at what known pricing did for cars on the Internet.  Look at how little variation there is in gas prices with their lit up signs. Outpatient medical care is headed there. 

Price tags are being placed on the fixed commodity market outpatient care items to accelerate the pathway to true medical cost transparency for the PTC and our community.  This is the next revolution in health care.  Knowing the price is the first step.  Using that knowledge to save big money is the critical step for employers.

Here’s to your good health! Learn more about health care cost transparency and Pratter here.



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