Guess Where Fair and Transparent Hospital Prices Exist?

Britain has long had an active cash market for medical care provided by private hospitals, which helps people get around the long waits in the National Health Service, and also serve people from abroad.

Nuffield Hospitals advertises firm, fixed, all-inclusive prices good for 60 days after an initial consultation. For more complex procedures, one pays for the initial consultation and the hospital develops the price from that. The Nuffield price generally includes post-operative care, rehab, and required readmissions.

Like Walmart, Nuffield will match competitor prices under reasonable conditions — “If you find an alternative private hospital in your local area offering a better price for the same surgical intervention, sold with the same service conditions, we’ll lower our price to equal it.” The conditions require the other private hospital be within 15 miles of the Nuffield hospital, exclude NHS private patient prices and require a written quote.

Bupa offers private insurance, elder care, and private hospitalization. Beneficiaries of its Health Cash Plan pay providers, send Bupa the bill and receive the Bupa contract amount in cash. Bupa advertises no pre-authorizations to see specialists and 24/7 phone consultation with nurses and GPs.

The Hospital Corporation of America (HCA) operates hospitals in both the US and UK. It offers a price list for self-pay UK residents. The table below compares the cash prices for three procedures from HCA in Britain with cash prices posted for the same procedures by the Surgery Center of Oklahoma.

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The stunning similarity between the cash prices suggest markets for common surgeries are generally efficient, transparent and less complex when patients and providers are free to negotiate mutually agreeable prices for care.

In the US, Obamacare, Medicare and Medicaid set arbitrary prices. Medicare outlaws price negotiation, short-circuiting the pricing mechanism that transmits vital information about what customers want and what suppliers can provide. Without that information, even the most well-intentioned regulators will fail in their quest for price transparency and efficient service bundles.

Britain also has regional price variation in its cash market. The BMI Healthcare private hospital network lists its hospital cash prices separately by hospital. The entering page is here. As of January 2014, the cost of an open inguinal hernia repair was £2,695 at BMI Bishops Wood Hospital about 17 miles northwest of London. At BMI Ross Hall Hospital just west of Glasgow, Scotland, the price quoted is £2,300 ($3,351).

And, subject to terms and conditions, you can charge your care on your BMI Card.

Comments (4)

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  1. charlie Bond says:

    Hello Linda:
    An excellent post. It goes to the heart of the health care crisis, which is the absence of cost-based pricing in health care. I have posted numerous times on this site about that fundamental flaw from which most other problems in our system stem.
    If one defines a bubble as a sector of the economy to which there is no tether of economic reality, health care represents the biggest bubble in history, dwarfing all prior bubbles.
    Because of demographic pressures, that bubble is bursting–and we are all in it. The bubble grew and grew over the last 70 years as health care pricing became farther and farther divorced from real market forces. Now we must face an enormous readjustment which will radically disrupt nearly one in five dollars in our economy.
    With deductibles and co-pays rising and coverage diminishing, patients are becoming more and more responsible for paying the price of the care they receive and thus more vulnerable to bubble pricing. As awareness of this pricing irrationality increases, the average American will insist on change. Perhaps then we can look forward to health care reform from the bottom up, not the top down.
    Cheers,
    Charlie Bond

  2. James R Chaillet, Jr MD says:

    Great article. What struck me was the need for additional or alternative payment mechanisms as price transparency evolves and grows and as an alternative or parallel delivery systems develops. Currently, those offering this alternative, broadly speaking, are catering to those patients who will pay cash either because of lack of insurance, high deductible which hasn’t been met or impatience with the wait.

    In other countries (or for citizens of other countries) there may be insurance to help cover the costs, likely indemnity type. In the US the problem is that health insurance ( I know it’s not really insurance) has to meet the coverage requirements of Obamacare, and it thus very expensive. Also, most comes with bureaucratic baggage like pre-authorization.

    This would be a great opportunity for the return of indemnity coverage if allowed. Also, if this movement takes off, look for critical care or major illness coverage to grow. It’s closest thing to indemnity coverage.

  3. Floccina says:

    It might be better to have Government provide slow minimal evidence based medical care for free than what we have.
    Then let the middle class and above go to the market like in the UK.

  4. Michael Cadger says:

    Monocle Health Data was named finalist for the Intel Innovation Award for its ability to rank all US providers on price efficiency (paid amounts) and quality (300+QIs) for every diagnosis (7,000+ in the form of bundled payments for both episodic procedures and chronic illness) in every US market. All providers are ranked and sorted on a simple use platform requiring only a few clicks — complete with full supporting documentation (no black box).

    Monocle is both a transparency and referral optimization solution that can prove that changing just 20% of referrals will yield a 30% reduction in cost due to price disparities.

    Monocle was founded by a former hospital and insurer CFO/CEO and PwC Healthcare Benefits Practice Partner with 30+ years of experience.