Carol Gentry of the Tampa Tribune has authored one of the more accessible pieces on the hows and whats of hospital price variation.
Carol’s piece illustrates two key issues – the data is available, and consumers aren’t using it.
It is not like the variations are so small as to be meaningless. Even those of us long aware of the wide cost disparities among hospitals may well be surprised to find that the cost for a (much-derided) carotid endarterectomy can range from $5000 to $30,000. Certainly enough to get someone’s attention.
But Gentry points out that even if consumers are aware of the cost differential, they have no reason to worry about it. Here’s why.
Using the carotid procedure as an example, and figuring the patient had a high-deductible HSA plan, the most they are going to spend out of pocket is about $5500. Regardless of which hospital they go to, they are going to spend that amount. That being the case, its no wonder patients aren’t concerned about finding the lowest-cost hospital. (we’ll leave the ‘quality’ issue for later)
Here’s why today’s version of consumer-directed plans doesn’t work. If CDHP sponsors spread the cost-share out in a copay instead of a deductible, the potential endarterectomy patient would be much more likely to get their procedure at the lower cost facility.
Which makes me wonder..why is it so hard for Humana, one of the leading sellers of CDHPs, to figure out why members don’t worry about hospital costs?
Is this that complicated?