Can Nashville find the cure for price blindness in health care?
Local company leads the way
This month, local price transparency company Healthcare Bluebook launched its price comparison tool for residents of Middle Tennessee and Southern Kentucky.
In providing its full database, Healthcare Bluebook has created an opportunity for Nashville consumers to cure what the company has coined as “price blindness,” or the inability to evaluate what a medical procedure will cost before receiving it.
With the free tool, consumers in Nashville and the surrounding regions can easily search for common medical procedures and find fair prices as well as rankings of area hospitals and other provider sites to see how they compare on price and quality.
This is the first time any community has been able to access the company’s comprehensive database of pricing and provider information, which was previously only available through employers as a workplace benefit.
“Price blindness,” or a lack of price transparency, affects healthcare consumers across the U.S. Pricing is so opaque that even many doctors and hospitals can’t estimate what a service might cost, leaving patients no options to compare or price-shop.
How much does it cost?
This problem is unique to healthcare — can you imagine driving a car off the dealer’s lot and getting a bill in the mail later? Would you buy a television at Best Buy without a quick Amazon search? Most of us would not, but until recently, there just wasn’t a way for consumers to easily compare costs in healthcare.
But Nashville companies like Healthcare Bluebook and MD Save are trying to change that, especially as consumers pick up more of the costs of their care. With higher deductibles and more cost-sharing, patients are starting to ask questions about how much services cost, and if they can be provided at a lower price elsewhere.
Here’s an example: How much does a total knee replacement cost in Nashville? According to Healthcare Bluebook, the “fair price,” or what you might reasonably expect to pay, is $34,357, but costs in the area range more than $20,000 — from $22,044 to $54,545.
Because there is so much variation in cost depending on your insurance plan and other individual factors, Healthcare Bluebook doesn’t publish the specific cost estimates at each Nashville hospital. But the company does rank the facilities, based on how much more or less than the fair price the service is expected to cost there. This can be very enlightening.
For example, for our knee replacement, only Saint Thomas Midtown is expected to cost at or below the fair price. Not even a mile away, Vanderbilt University is “in the red,” or expected to have the highest price.
Here’s another procedure. How much would you expect a rotator cuff repair surgery to cost? Here, Healthcare Bluebook shows that all the local hospitals — Saint Thomas, Vanderbilt and TriStar — are the highest-priced sites of care. But outpatient facilities, like Nashville Surgery Center, Baptist Plaza Surgicare, Centennial Surgery Center and St. Thomas SurgiCare are all at or below the fair price of $8,296.
Let’s look at one more example, an MRI. It’s particularly smart to price shop imaging services, because there can be massive cost variations for something that many regard as being relatively straightforward. As with the shoulder surgery, a chest MRI is far more expensive in the hospital than at an outpatient site. Heritage Medical Associates, Premier Radiology and the Outpatient Diagnostic Center of Nashville are all expected to be at or below the fair price of $900.
Why are hospitals more expensive than outpatient settings? Generally speaking, it’s because they have more overhead. Outpatient sites are typically smaller facilities with fewer staff and less expensive equipment. Often, the higher cost of a basic MRI at a hospital is actually subsidizing much more expensive technology.
This is also why some hospitals are more expensive than others. Hospitals with more robust or advanced services, like pediatric cancer treatment or state-of-the-art cardiac care, have more leverage with insurers and can negotiate higher payments for all services.
This leverage is largely driven by the employer-based group insurance market. Because employers want to provide employees with access to cutting-edge treatment, they demand insurers include them in their plan networks. Because providers know the insurers won’t exclude them, these hospitals are able to negotiate higher payments.
Eventually, this all trickles down to you via your out-of-pocket costs. Many insurers and employers hope that consumers will soon become more comfortable comparing healthcare costs, and begin choosing less expensive options.
Healthcare Bluebook is a great tool for Nashville consumers to do that. By getting a sense of “fair prices,” consumers can cut through those complicated negotiations and get to the heart of the matter — how much will it cost?
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