What Things Cost
Recent data from a large New York health insurer show that 85 percent of colonoscopies (about 26,000 procedures) for metro New York consumers were performed in physicians’ offices. The cost for these procedures averaged $450 each, with no additional facility fee. In contrast, a Chicago insurer found that 78 percent of its colonoscopy procedures were performed in hospital outpatient facilities. While the average physician fee for this service was just $330, the facility charge for each procedure ranged from $2,000 to $6,000. Thus even though the professional fee was $120 more expensive in New York, the total cost for Chicago consumers was dramatically higher due to the facility component of the charge.
Full editorial by Bobbi Coluni on U.S. healthcare spending in Thomson Reuters.
Regional variation in prices, procedures and how they are performed is an example of what can occur when providers are not competing on price. If insurers and Medicare were able to selectively contract, much of this variation would go away.
This article is interesting, but somewhat misguided. Transparency is not an end in and of itself. Rather, the lack of price transparency it’s a symptom of a bigger problem. That problem is: providers not competing on price because patients are not price sensitive. Patients are not price sensitive; and do not act like consumers because they are not paying their own medical bills and controlling their own medical dollars. Third parties pay about 89% of all medical bills. Forcing price transparency is not likely to make patients care about the cost any more than transparency will help payers force patients to seek care at cheaper hospitals.
Seems like the facility component might be the major cause or one of the major causes of the dramatic difference in price for a number of procedures and treatments.