What if you could save more than $600 on a purchase by driving across town? Would you do that?
Given the number of people I know who will bypass half a dozen gas stations to save 10 cents a gallon — less than $2 total savings to fill up most cars — I’d guess many people would answer, “Are you joking?”
Now, what if I told you that purchase was a CT scan of your head?
If you’re suddenly feeling a little uneasy, it may be because meaningful price comparisons for health care have long been nigh impossible. The lack of price transparency among doctors and hospitals is one reason we don’t have a true market for health care.
“What people don’t understand is that, just by making the decision to stay in-network, you haven’t done your due diligence,” said Dr. Jennifer Schneider. “There’s a huge price difference even within those networks.”
Schneider is vice president of strategic analytics for Castlight Health, a San Francisco-based company trying to shed light on the real cost of health care.
Castlight collects health-spending data from companies that are large enough to “self-insure” under federal law (and which subscribe to its service). It then gives these subscribing companies in-network pricing data for thousands of procedures within their markets. The idea: Insured workers can use this information, along with quality ratings, to be more informed consumers.
And, most likely, they and their employer will save some money.
“For the first time for the commercially insured population, we’ve shown the negotiated rates,” Schneider told me by phone recently. “Not the charged rate, the Monopoly fun money” price you often see on health bills, “but the real rates.”
Castlight makes pricing data for four procedures in about 60 markets available to everyone on its website, which I stumbled upon last month. The numbers are eye-popping.
In Atlanta, the prices for a lipid panel of blood tests ranges from $15 to $267, with an average of $53. For a head or brain CT scan, the range is $218 to $1,489, with an average of $884.
For the mathematically challenged, that means even the average Atlantan getting a CT scan of his noggin is paying $666 more than he might have. Some people are paying almost seven times more.
For those who worry about the risk of malpractice by a cut-rate doctor, Schneider said Castlight has found “really no correlation” between prices and quality ratings (which incorporate objective factors as well as patients’ opinions).
“The concept of ‘you get what you pay for’ has not really been borne out in medical care,” she said. “In large part, because there’s never been a free market. You (might) pay a high price without knowing how many sponges did that doctor leave in patients, how many patients died on the operating table.”
Often, she added, providers charge higher prices simply because they have high marketing expenses, not because they’re better at what they do.
Price discrepancies have been a “known unknown” in health care for some time: More than four years ago, I wrote about a Georgia company that was trying (ultimately unsuccessfully) to do what Castlight and others are doing now. Without something like this to bring prices into the open, other efforts to reform health care are bound to fall short.
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