Lack of Transparent Pricing in Healthcare is Killing US
In response to a request for an assessment of the roof on your home, imagine a roofer saying, "Yes, there is some damage, and this roof needs to be replaced." For most people, their next question would be, "How much will it cost and when will you be available to do the work?"
What if the roofer said, "I'll do the work next Wednesday and send you a bill after I am finished. Don't worry, it probably won't cost you much because you have insurance. But I can't tell you our cost now because it will vary based on the type of insurance you have, as well anything out of the ordinary we uncover while performing the work."
How many of you would hire this roofer?
Imagine you do hire this roofer, they perform the work, and four weeks later you receive a bill for significantly more than you expected that contains itemized costs for the following:
General planning time
Time to measure the roof
Tape measure usage
Time to determine the number of shingles needed
Transportation of plywood, shingles, nails, and roofing felt to your home
Unloading the plywood, shingles, nails and felt fee
Hammer usage time
Ladder usage time
Truck usage time
Gas for the work trucks
Workers travel time to and from your home
Extra cost to take the felt and shingles up to the roof (this is difficult work, hence an extra charge)
Roofer assistants' fees
Worker suntan lotion fee (spring, summer, and fall only)
Cost to take off the old roof
Overtime cost for work after 5:00 pm
Cost to clean up your yard after the roofing is completed
Cost to haul old shingles to the landfill
Bill preparation time
...and so forth
The bill's level of detail is absurd, the cost is a shocker, and when you ask why it was so expensive, you find out (after the third call) it is because some of the workers hired were outside of the insurance coverage plan. This alone would be bad enough, but then you find out a neighbor down the street had a similar job completed by the same roofer for 40% less cost than yours. The former is irritating, but the latter is just infuriating.
How would you feel? How long do you think this roofer would be able to stay in business? Could any company or any industry survive with such unknown pricing?
The answer is no -- except for healthcare. In healthcare, this happens thousands of times a day.
And the healthcare industry gets away with it because consumers allow it. And we’ve allowed it for years because we’ve heard, "Oh don't worry about it, insurance (or Medicare for those over 65) will pay for it. It won't cost you anything."
This lack of price transparency, along with healthcare being insulated from normal market forces, has allowed healthcare costs to skyrocket 250 percent over the last 20 years, while inflation has only risen 50 percent (which is bad enough).
This needs to stop. The nation cannot afford healthcare costs to go up another 250 percent over the next 20 years.
In our book, Healthcare is Killing US: The Power of Disruptive Innovation to Create a System that Cares More and Costs Less, we show how a lack of price transparency is hurting all of US and how the healthcare industry can improve.