Can price transparency actually lower health care costs?

The only hospital in the town of Carlsbad, N.M., population 29,000, has filed roughly 3,000 lawsuits against patients over the last four years, sometimes suing patients multiple times and in some cases garnishing their wages. 

At the same time, the hospital—Carlsbad Medical Center—was charging private insurers five times what Medicare would charge (and twice as much as what other hospitals in the state charged), according to The New York Times. 

It’s stories like these, about instances of surprise billing, price gouging, and wage garnishment, that are facing close scrutiny from the media and lawmakers this year. And in Dr. Marty Makary’s new book, “The Price We Pay,” it’s no different. The surgeon and his research team at Johns Hopkins Hospital have studied similar stories in Montana, Texas and Virginia. 

“It's a money game,” Makary told me this week. “Those sticker prices are inflated to create discounts for insurance companies. It's been going on for a long time. It's a system we inherited. It's a terrible system, and it doesn't show prices ahead of time.”

In recent weeks, there has been a lot of activity around this issue. A class action lawsuit alleging that Sutter Health, a major health system in Northern California, overcharged patients is expected to kick off later this month. The University of Virginia Medical Center said it will halt some lawsuits and develop a debt collection policy after an investigation published this week by Kaiser Health News and The Washington Post found that the health system sued patients 36,000 times during a six-year period.

Also this week, CMS administrator Seema Verma said in prepared remarks, "We are learning the lengths to which certain not-for-profit hospitals go to collect the full list price from uninsured patients...This is unacceptable."

While these are extreme examples of price gouging and aggressive forms of debt collection, the question of how American health care goods and services are priced (and what those prices are) still hasn’t been answered. Anyone facing an elective procedure of sorts has faced the dilemma of not quite understanding exactly what it will cost him or her. 

The other thing to remember is that the majority of bankruptcies in the U.S. are tied to medical debt. (A study published earlier this year in the American Journal of Public Health found that 66% of all bankruptcies cite medical bills as a cause.) 

Here’s the solution that Makary is offering up. He wants to see a website, similar to a Google Flights or Skyscanner, that lists all medical prices. “There's no one silver bullet in health care,” he said. “Let's not fool ourselves. But price transparency is an important next step to get where we want to today.”

What’s your take? Is a price transparency site the key to lowering health care costs?

News I’m Watching

BUSINESS | Nursing homes face cycle of drug-resistance bacteria. A combination of understaffing and poor care offers an explanation into the reasons why skilled nursing facilities are struggling with infections of the drug-resistant germ Candida auris, according to The New York Times. The bacteria is an issue globally; however, in the U.S., efforts to move high-risk patients out of hospitals may put American patients at higher risk. A hospital in Tokyo first identified the bacteria in 2009.

Editor's Pick: “An often overlooked aspect of drug-resistant fungal infections: understaffed and ill-equipped nursing homes, which continuously cycle patients infected with a deadly fungus (Candida auris) into hospitals and back again. We need to better integrate clinical research with health care and education!” - Tim Tucey, microbiologist 

TECH | Apple doubles down on medical research. Apple Watch data will be used in a trio of medical studies examining hearing, menstrual cycles, and mobility in partnership with well-known research organizations like Brigham and Women’s Hospital and the University of Michigan. These aren’t the first medical studies for Apple; the company launched ResearchKit in 2015. However, the studies signal the tech giant’s growing interest in gathering health data tracked by the wearable device. 

Editor’s Pick: “Apple clearly sees a business opportunity in the fragmented digital health care delivery system. The irony...their entrance only further fragments care in the name of aggregating.” - Dr. R. Henry Capps, Novant Health 

CAREERS | When it comes to medical school, some doctors want change. A growing chorus of physicians is calling for wide-reaching changes to medical education, including a stronger focus on racism and how to care for patients of color, how to treat pain in the wake of the opioid epidemic, and prioritizing the mental health of medical students. Some medical schools are already testing out new areas of focus, like evaluating empathy and offering courses that teach the health impact of climate change.

Editor’s Pick: “One hour of training in opioids at med school! These sorts of epistemological gaps cost lives and prevent patients from having access to opioids for medical use.” - Katherine Pettus, International Association for Hospice and Palliative Care

*Comments have been edited. 

What’s your take? Is a price transparency site the key to lowering health care costs? Share your thoughts in the comments, using #TheCheckup.