Cynthia Fisher: Hospital price disclosures reinforce importance of price transparency

The Biden administration has begun enforcing the hospital price transparency rule that took effect at the beginning of the year. Recent research published in Health Affairs finds that only about one-third of large hospitals are complying with the order.

The rule requires hospitals to post their real prices, including their discounted cash and secret negotiated rates, so patients can shop for the best care at the best prices and have financial certainty that their hospital visits won’t end in financial ruin. Armed with actual prices, informed consumers can spot massive price variations and lower costs through their consumer choices.

Compliant hospitals include MetroHealth in Cleveland, St. Clair in Pittsburgh and Dallas Medical Center in Texas. Patients can consult their price lists to compare prices and enjoy peace of mind that they won’t get blindsided with inflated, unknown bills weeks and months after care.When all hospitals around the country follow their lead, a functional, competitive health care marketplace will emerge, putting cost trends in reverse. Tech innovators like MDSave can aggregate this price information in easy-to-use mobile apps to provide consumers with shoppable comparisons as websites like Expedia and Kayak have done with airline prices.

Unfortunately, many hospitals are posting prices that are confusing, incomplete and consist of mere estimates, which doesn’t protect patients from being overcharged in the range of price variations. Some hospitals are actively information-blocking to continue their highway robbery of patients. The Wall Street Journal recently reported that many major hospital systems have prevented their price data from being indexed by Google Search, making it difficult for the average consumer to find.

Recently, Democratic and Republican leaders of the House Energy and Commerce Committee wrote a letter to Health and Human Services Secretary Xavier Becerra calling on him to robustly enforce the rule with stiffer penalties and more accountability.

Hospital price disclosures that do exist, including those from the most compliant hospitals, demonstrate once again why real prices are needed now. They reveal widespread price gouging and price discrepancies for the same services at the same locations — market failures that widespread price transparency can fix.

A study published last month by the Health Care Cost Insitute examines the prices at Sutter Health, Northern California’s largest hospital chain. Prices for some knee X-rays there vary by eight times, from $77 to $616, depending on the hospital and payer. For lower joint replacements, prices differ by $55,000. Even at the same hospital, GI biopsies vary by more than five times, from $1,800 to $9,500. The Wall Street Journal reports that the price of a C-section at one Sutter Health hospital varies by as much as 10 times ($6,241 to $60,584). At another Sutter location, the price for a complex cardiac procedure varies from $89,752 to $515,697.

When consumers can see prices and potential savings, they won’t tolerate being price gouged. They’ll have the knowledge needed to stand their ground. Shoppers at the grocery store won’t accept being charged 10 times more for a gallon of milk than the person ahead of them in line. Neither will health care consumers when they can access real prices.

Economic and anecdotal evidence suggests access to up-front, straight-up prices can save consumers 30% to 50% on their health care costs. A 2019 JAMA study estimates that 25% of annual U.S. health care spending is waste, led by pricing inefficiencies. Eliminating this waste can translate into $1 trillion in savings of the roughly $4 trillion the country spends on health care each year. Real prices will usher in an efficient health care system that resembles other consumer-friendly sectors of the economy, including the airline industry, whose prices fell by about half, while quality and access improved, after the Carter administration deregulated prices in 1978.

For too long, hospitals have kept patients in the dark about prices, allowing them to upcharge, price gouge and profiteer off patients. Almost everyone has a horror story of being victimized by this predatory health care system. The opportunity to revolutionize American health care lies in the medical culture of “first, do no harm.” This principle can be achieved through price transparency, which allows patients to control their physical and financial health by identifying the best care at the lowest possible price.

Cynthia Fisher is founder and chair of PatientRightsAdvocate.org and the founder and former CEO of ViaCord Inc.