It's Time for Hospitals to Put Patients First
By Sally C. Pipes
Many hospitals are refusing to comply with a Trump-era requirement that went into effect on January 1st of this year to publish the prices for more than 300 "shoppable" medical procedures.
This intransigence is alarming -- and expensive. The rule could save American patients and insurers up to $27 billion annually, but only if hospitals play ball.
Rates of noncompliance are extraordinarily high. Three-quarters of the highest-earning hospitals in the country aren't fully compliant with the rule, according to researchers at Harvard Medical School. A March analysis found that two-thirds of hospitals weren't complying.
When hospitals don't publish their prices, patients have no way of knowing if they're getting a good deal on elective surgeries and other procedures -- or getting ripped off.
Prices for identical services vary widely, depending on the location and provider. Even in the same city, there are major price discrepancies. The most expensive 5% of hospitals in metro areas containing over 3 million people receive almost $1,400 for each knee MRI, on average. The least expensive 5% of hospitals in those metro areas take in just $600 for the scan, according to Crowe, a consulting firm.
If a gas station or grocery store tried to slap a 133% premium on an identical product, they wouldn't get much business. Customers shopping for gas or food can easily compare prices and find a more competitive option.
That's why hospitals are so loathe to comply with the rule -- the lack of transparency makes it much easier to gouge patients and insurers.
Hospital groups have already lost two court challenges against the rule. Their attorneys claimed that patients would be unable to decipher byzantine pricing schedules and could not be trusted to make responsible financial and health decisions. They complained that publishing their prices would be an expensive regulatory burden.
But consumers make weighty financial and health decisions all the time. Transparent prices make that task easier, not harder.
Perhaps the best example is Lasik eye surgery. Because the procedure is optional, many insurers don't cover it. Patients must pay out of pocket. That incentivizes them to shop around and compare different providers.
It's no coincidence that Lasik has gotten cheaper since the turn of the century in inflation-adjusted dollars, while virtually every other hospital procedure has gotten dramatically more expensive.
The notion that publishing prices is some gargantuan regulatory burden is ridiculous. The Centers for Medicare and Medicaid Services estimates that the direct cost to hospitals in the first year would be around $12,000 -- far less than a single administrative worker's full-time salary, and a drop in the bucket for hospitals that bring in tens of millions of dollars each year.
The fight to make health care more affordable and accessible for ordinary Americans begins with price transparency. It's long past time for hospitals to publish their prices -- so that market competition can drive down costs and improve quality.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.
