How much will it cost to make the pain go away? This is a huge question for the entire US Healthcare System. For 70% of Americans shopping around starts as easily as picking up their smartphone. That’s not quite the case with healthcare. This raises billion dollar questions on matters of healthcare price transparency. Healthcare is a $3 trillion dollar issue representing over 17% of GDP. It will pay to find some good answers – and mHealth apps are likely to play a part.
In healthcare, everyone shares the pain – patients, healthcare providers, insurance companies, government agencies, businesses, and taxpayers. The Affordable Healthcare Act of 2014 aimed to make healthcare insurance more affordable for the uninsured. Launching with 395 insurers, by April of 2016 only 287 remained. Obviously, something is not working as intended.
Trump’s Plan for Healthcare Price Transparency.
Unlike televisions, cars or houses, healthcare prices are not readily available to the public. Setting aside all politics to focus on policy, the fifth point in Trump’s proposed healthcare plan is to,
Require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.
Don’t shoot the messenger. People want transparency in healthcare prices for very good reasons:
- The price of an MRI using the same machine can vary from $700 to $3,000.
- The cost of a knee replacement can vary from $33,000 to over $100,000.
- Over half of Americans depend on credit to pay unexpected expenses over $400.
- Average deductibles run $1478, many ACA Bronze Plan deductibles start at $5,000.
- Medical expenses account for 62% of bankruptcies according to Harvard University.
The healthcare provider’s price is only part of the equation. Insurance coverage plays a major part, too.
Insurance Policy “Ease of Use”?
Ultimately, it is the policyholder who is responsible for understanding their insurance policy, paying their premiums and deductibles. What are deductibles, copays, co-insurance, out-of-pocket maximums, or in-network providers? Reports vary but indicate between 50% and 86% of Americans do not understand these basics of their insurance policies.
How people come by their insurance policy is explanation enough. It boils down to being given an insurance package consisting of several forms, brochures, and booklets. Insurance company representatives along with a company’s HR team call employees in, hand out packets, perform a quick review and take a few questions. Insurance policies are about as engaging as IRS Form 1040 instructions, only more difficult and conditional.
As it stands, we have situations where patients may see a doctor not knowing the price. Sometimes they find the procedure is not covered or the doctor is not in their network.
The Cost of No Healthcare Price Transparency
Healthcare in the United States is presently a process with ample opportunities to make costly mistakes. Everyone ends up paying the costs of those mistakes. These equate to at least $40 billion in unpaid bills, over $20 billion in excess reliance on emergency departments and untold billions more in out of network expenses. Estimating the total inefficiency at just $70 billion puts it on par with the GDP of the entire State of West Virginia, or $212 for every man, woman, and child in the country.
There exists no method now to determine how much people may be overpaying for different procedures. But, we can look at price differentials, and for this purpose, we’ll draw upon our MRI example from above:
|# of MRI’s in 2013*
|Total Cost @ $700 ea.
|Total Cost @ $3000 ea.
* Based on 107 per 1,000 per OECD figures with a population of 316 million for the USA in 2013.
In researching deeper, I came across research by the University of Washington. It indicated hospitals average a loss of $120,000 in revenue per scanner due to “patient movement during an MRI.” With over 5,600 hospitals, that alone equates to $672 million. The sales of medical imaging equipment alone is a $30 billion market, just to provide some extra context.
This $78 billion is simply the potential difference as a consequence of people not being able to compare prices on just one procedure – an MRI exam. MRI’s are just one very small component of the overall $3 Trillion US Healthcare market.
Mobile App Solutions?
Many people and companies are trying to come up with solutions for many aspects of the US Healthcare System. While plenty of attempts have and continue to be made, all fall short in addressing perhaps 2-3 of the data points required for an effective solution.
A complete Healthcare Price Transparency solution would likely include:
- List of available healthcare facilities available by a user-defined geographical radius.
- Automatic collation of those facilities on availability of user-defined treatment or procedure basis.
- The price of the medical procedure by each facility, on an in and out-of-network basis.
- A price comparison to emergency departments vs. urgent care facilities, etc.
- Determining whether the medical procedure is covered by and/or approved by the user’s health insurance company.
- Determining whether the provider of the procedure is part or not part of the user’s insurance network.
- Enable policyholders to know what their likely out of pocket cost will be before receiving treatment.
- The ability for the policyholder to get this information on-demand, OR
- The ability for health providers to provide a price reference showing the starting “out of pocket” price to the policyholder referencing their insurance policy.
Nearly all of this information already exists along with the technology to do it. It is available, it is simply not tied together in a format readily available to end-users – patients and policyholders.
Granted, there are complexities involved, but even Pokemon Go provides geo-located augmented reality. The business case for Mobile Games concerns a global $100 billion market. US Healthcare is a $3 trillion market. Throughout the rest of the business world, problems are the basis for opportunities.