- On May 12, 2017
Health care cost transparency will continue to play a larger role to the many consumers who are now bearing a much larger share of health care costs, but how will this all improve health care consumption and overall spend for the future?
Many experts speculate we could save billions on health care this year alone. And it would be as simple as getting people to utilize services in one place versus another.
It is all about changing patient health care consumption, and while changing patient behavior is difficult, we don’t need a substantial overhaul to get there. We just need people to think different about how they shop for some basic common procedures.
According to data from SmartShopper (cost and quality transparency service), when people shop for a CT scan based on cost, they save about $507 on average. With 80 million CTs performed each year, the potential savings is a whopping $41 billion. The savings for shopped MRIs is $20 billion; colonoscopies, $17 billion; mammograms, $2 billion; hip replacements, $2.6 million; hernia repairs, $3.3 billion and bariatric surgeries, $3.2 billion. With these huge dollar savings in the system, ultimately, the goal is to begin to displace high cost providers.
Many in high deductible plans have had the experience of being surprised by a $4,000 bill for an MRI. But in a competitive marketplace, providers would no longer be able to set prices that are not easily understood or explainable. High-cost providers would be obvious and stand out like a sore thumb.
There are many preventative procedures and exams, as well as scheduled surgeries, where people can compare price. In fact, The American Journal for Managed Care reports that about 43 percent of the health care services in health insurance plans are able to be ‘shopped’ .
Health care needs to play by the same economic rules as other business where market pressures (competition) keep costs in check.
Unjustifiably high prices — just one form of waste in health care — has led to rising premiums for businesses. In the 4th quarter of 2016, the cost of providing health coverage to the average U.S. employee spiked $500 over the previous year. For a company with 500 workers, that’s a $250,000 increase. For a larger company with 5,000 workers, that’s $2.5 million more on health expenditures.
Those soaring health insurance premiums impact more than the company’s bottom line. They also reduce employees’ take-home pay and consumer spending as a downstream effect.
We are approaching a true public health crisis if not already there. People are delaying the care they need now, making it more costly later. Comparison shopping (and actual price competition) in health care — could make taking better care of ourselves more affordable, impacting overall population health.
Think about it. If we align incentives to prioritize shopping among consumers, we can make companies — and more importantly the people within them — healthier and more financially sound.
By Chris Elvidge, Director of Account Management