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 Today in Health it. This story is The Wall Street Journal examines the results of price transparency. My name is Bill Russell. I'm a former CIO for a 16 hospital system and creator of this week in Health IT at channel dedicated to keeping health IT staff current. And engaged. We have no sponsor for the show today.

All right. Here's today's story. This is from the Wall Street Journal. How much does a C-section cost at one hospital? Anywhere from $6,241 to $60,584. Okay, here's what's going on. The nation's roughly 6,000 hospitals have begun to reveal the secret rates they negotiate with insurance. This is straight from the article.

Uh, the secret rates, they negotiate with insurers for a range of procedures. The data offer the first full look inside the confidential deals that set healthcare rates for insurers and employers covering more than 175 million Americans. The submissions also also illuminate how widely prices vary even for the same procedure.

Performed in the same facility depending on who is paying, uh, it is shining a light on the insanity of us. He healthcare pricing says NAL Brennan, chief Executive Off Officer of Healthcare Cost Institute, a nonprofit that analyzes medical costs is at the center of the affordability crisis in American healthcare.

This article's interesting. I'm gonna keep, I'm gonna read a bunch more from it because it analyzes some of the things that Sutter's done. It analyzes what health systems have decided to comply and which ones haven't. So I'm gonna go on, uh, under the Trump administration rule that took effect in January, nearly all hospitals must make their prices public a move the industry sued to block courts rejected the hospital's argument that their prices should remain under wraps.

Healthcare economists say. That these rates are a major driver of US medical costs, so that 300 shoppable services have to be put out on your website, and there are . Tools now where technologists, data scientists, whatever, have gone out and scoured all these websites and pulled the information in Other industries sometimes charge different rates.

Well, you know this, right? So Walmart will get a different rate than say a local store. It goes on to say, but the range ranges revealed in the Sutter data show how extreme the variations can be in medical services. Said Gerard Anderson, a healthcare economist at John Hopkins University. These price differentials are unique to healthcare and hospital industry.

He said, and are partly . Tied to the secrecy around the rates, which has prevented competition from knowing what others were paying. A Sutter Hospital in Modesta, California revealed rates for one billing code representing complex cardiac procedures in fragile patients that varied from 89,000 to $515,000 depending on the insurance plan.

This is what Transparency does, right? It's in the Wall Street Journal. We're talking about it here. It reveals what . Hospitals are actually charging for various services. So it, it gets it into the common vernacular. It does a couple other things. We're gonna talk about that in the, so what hospitals for their part set prices that can have little bearing on the actual cost.

I. Or value of a service. They often operate without knowing the cost of, uh, procedures, unlike other industries that closely track and manage expenses. Said David Cutler, an economist at Harvard University who studied healthcare spending hospitals and said step prices based on their own targets for overall margins and according to what the market will pay.

He said, pardon of my, so what's gonna be ? That is about to change when you reveal this kind of information that is about to change. So we will get to that in a minute, but I think we are gonna have to know our costs and know them well and start to price accordingly. Hospitals typically rely on privately insured patients.

For their margins. One study looked at the profit of more than 2,800 hospitals over a decade and found hospitals that boosted margins, didn't cut costs, but instead raised revenue by increasing the rates they charge to commercial insurers. Other studies found hospitals under revenue pressure do manage costs more tightly to protect margins.

But where hospitals have market power, they raise prices. All right. It actually goes on to talk about how mergers have not really helped that in any way, shape, or form. All right, let's talk about the health systems and what the health systems are doing. So they call out a handful of 'em. Common Spirit said it has been focused on the pandemic and is diligently working to

Complete the information. An HCA Healthcare spokesman said it will continue to post information as our teams work through additional contracts. Mayo Clinic said it planned to post negotiated rates for this spring. New York Presbyterian said in a statement that it will be working to improve and regularly update.

What is posted, including a definition of terms and a cost calculator. At least one hospital owner, Texas-based Christus Health said on its website that it didn't plan to publish its negotiated rates because it provides something that will only be useful for our competition. A spokeswoman for the nonprofit, which includes 50 hospitals, said it was offering a tool so consumers could look up pricing on 300 services and also.

Is providing data on prices paid by Medicare and Medicaid plans. Revealing the negotiated rates will not accurately inform patients of out-of-pocket costs, but rather will lead to confusion and encourage anti-competitive behavior. A Christus spokeswoman said, I dunno. I mean, to, to be honest with you, I think that's a load of crap.

I do believe it needs context. I don't believe that average person can understand DRG codes and, and, and costs and the sophistication right now of pricing for healthcare, but I think that's because . The, the pricing is way too freaking complex. It doesn't make any sense to the average American, and by providing print transparency, it will start to fall in line and start to make sense to the average American.

There is no other market in the world where transparency has hurt the market. In any way, shape, or form, it actually reveals and, and gives power back to the consumer in the case. So I, I, I really disagree with Christa's approach. I'm not even sure why they're worried about it. A fair amount of their revenue comes from South America, which isn't gonna fall into this at all.

So, uh, obviously they're gonna have to do that within the, uh, markets they serve within the United States and the penalties. So let's talk about this a little bit. The penalties for failing to meet the pricing disclosure requirements as much as $300 a day for each hospital may not be high enough to force large hospital systems into compliance.

Said Amanda Stark, an associate professor at Northwestern University's Kellogg School of Management. I'm gonna have to agree with Amanda. That is a amazingly low fine. For non-compliance to the price transparency. Maybe that was an accommodation. I don't know what it was. I, to be honest with you, I think what we're gonna see here is a little bit of public shaming of health systems that do not comply.

So maybe, maybe it is enough combined with articles like this from the Wall Street Journal that call out Common Spirit, Christus Mayo, New York Presbyterian, maybe that will sort of drive that behavior and maybe . To a certain extent. You don't provide your pricing. You're not on the price list. People go to do a search on, on a site for, you know, the cost for services in the market, and they will choose to go somewhere else because your price isn't on the list.

I don't know. We'll see. So what's the, so what, here's, here's what I think the, so what is how we operate hospitals is about to change pretty significantly, at least from a pricing standpoint and a go-to-market standpoint. Do this for me. Go to Turquoise Health. I'm on the site right now in my area. I just put in colonoscopy diagnostic.

Here's what I've found, 517 results. So in my market, well, it's a couple hundred miles, but any, regardless, 517 results, the cost range from $300 for a diagnostic colonoscopy to $14,000 for a diagnostic colonoscopy. How different are these procedures from the $300 range to the $14,000 range? . I don't know, but it must be a really special colonoscopy to be $14,000 versus $300.

How does this change healthcare? Well, it can change behavior once things are brought into the light, right? Context does matter, but right context are not. Health systems may be compelled to bring these rates in line with competitors. Patients may actually start to have tools like say, turquoise Health, that will help them to identify and select locations that will, will save them money.

Finally, I believe the, the biggest thing this will do is require health systems to start to manage and therefore measure the cost of service lines, practices, and procedures on their own. This will allow them to defend a $14,000. Colonoscopy. So I think, and I've talked to some health systems around this, managing your costs, understanding your costs.

We did a whole show with Rob Deha on this very topic of how can health systems get in front of their costs? And I've heard a lot of health systems tell me you can't do this. But Rob Deha talks about how they did it at UPMC, which happens to be a fairly large health system. And he said, by tracking those costs, it identified a world of opportunities to reduce costs within the delivery.

Of care and it actually prepares you for this kind of thing like price transparency. So if we see this continue to go down this market path of transparency, choice options, then you will need to understand and know your costs in order to be competitive. All right. That's all for today. If you know of someone that might benefit from our channel, please forward them a note.

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