Dr Martin Makary Discusses Hospitals Being Required to Post Prices of Services Online

Martin Makary, MD, MPH, a surgical oncologist and chief of the Johns Hopkins Islet Transplant Center, dicscusses how hospitals have responded to having to post standard charges of their services online by uploading their chargemasters.

Transcript

As of January, hospitals are now required to make a list of standard charges for all of their services available online, but many hospitals have responded to this by uploading their chargemasters. How is this making it difficult for patients to interpret and understand these prices?

Chargemaster data is almost uninterpretable to the everyday American. But, it’s a first step toward price transparency that’s desperately needed right now. I think over time, technology groups and navigation apps will consolidate the data and provide it with an easy user interface so that you’ll be able to look up, when you need to deliver a baby, that Hospital A has an average markup of 2-fold Medicare allowable amount, which may be a reasonable amount given the quality of care. Markups should not be a negative term. People are happy to pay more for better quality. But, for the same quality of service, if Hospital A is offering it for a 2-fold markup and Hospital B is offering it for a 8-fold markup, if a technology company can consolidate and aggregate that data so it’s understandable to the everyday consumer shopping for care, it could be a very powerful tool in healthcare.

Some people would say consumers don’t use pricing information in healthcare and when they do, they just pick the more expensive service thinking it’s higher quality. That may be true for a small group of people who are not paying directly, but by in large, markets are driven by proxy shoppers, that’s the fraction of consumers who are shopping on price diligently. Some people at the grocery store will compare a lemon at Grocery Store A to a lemon at Grocery Store B and they are aware of an individual change in prices. People look at gas prices the same way sometimes. I like going to Place A because it’s 2 cents cheaper on the gallon. Now, I personally don’t really shop on a penny level when it comes to gas prices. But, those other proxy shoppers drive the market so that prices come down for everybody, including shoppers like me.

Health plans, employers, the out-of-network patients, these are proxy shoppers in healthcare that can have a powerful impact in healthcare even with chargemaster prices. Ultimately, I think medical centers are going to see the benefit of offering honest and fair prices. When I say honest and fair, I mean it doesn’t change 6-fold depending on who you are or where you live or who your employer is, but a standard, flat, all-encompassing price that doesn’t come with surprise bills that hit you 3, 6, and 10 months later, and the market will reward those disruptors. We’ve already seen it with bundles that are now sold on the market for services, we’ve seen it with The Surgery Center of Oklahoma, we’ve seen it with members of the Free Market Medical Association. People are hungry for honest and fair pricing.