Someday soon the power of the Internet is going to allow Americans with their voracious appetites for health care and shopping to do both simultaneously – shop on the Internet for expensive, nonurgent health care procedures they need, and choose where to have these done based on Internet-available information about price and quality. When that happens, it will transform American health care.
Want a new hip? You will be able to go to an Internet surgical procedure search engine, enter the name of the procedure you want and how far you are willing to travel to get it, and Shazzzammm! You will get a listing of which hospitals and doctors offer that treatment and at what cost to the patient. Adjacent to the price listing will be information about the quality of the care offered by those doctors and hospitals. Patients will then be able to compare prices, compare quality, and choose where they want to have their surgery done as though they are choosing the best deal for a flight to Disneyworld. Travelocity, meet “Surgilocity.”
If you think I am several turns shy of tight screws, look at the Web site www.dhmc.org of Dartmouth-Hitchcock Medical Center (DHMC) in Hanover, N.H., a fine regional medical center that publishes all of its prices online. On its site, DHMC offers its “Out-of-Pocket Estimator,” an on-line calculator into which you put the surgical procedure or test you are having, and your insurance information (including your deductible and co-pay). It then calculates how much you are likely to have to pay out of your own pocket to have the procedure done at DHMC. When other hospitals do the same – which they will – you will be able to price-shop for surgery and tests on the Internet.
This kind of Internet information is finally worth more than teats on a bull because a lot more of your health care costs are coming out of your pockets through employee share of costs. That means more Americans finally have an incentive to shop for health care bargains.
How will it work? Say you need a hip replaced, and have health insurance with a $2,000 deductible, your employer pays 80 percent of your bills after that up to an annual maximum for you of $10,000 (above that your employer pays 100 percent). If the price for that procedure at DHMC, including physician and hospital charges, is $45,300 (which it is, according to their Web site, your share of that procedure done at DHMC will be about $9,900. Being a smart Mainer, however, you shop around and find that We Love Mainers Hospital in Noflatlanders, Maine charges only $31,800 for that hip replacement. Your share there will be $7,900 – about $2,000 less than at DHMC.
Assuming quality was equal at both places, would $2,000 out of your pocket make a difference in where you had your hip replaced? Darn straight it would. Prices for procedures as simple as a colonoscopy vary tremendously from hospital to hospital, and physician to physician, sometimes by thousands of dollars. Once the Internet is able to show those differences to health care consumers looking for bargains, the market for expensive procedures will break wide open. Hospitals will no longer be able to afford to have prices that stick out from the rest of the market like a hot gallbladder.
Still think I’m several cows shy of a full herd? Go to www.medicineonline.com, where this California Web site allows you to list the plastic or dental surgery procedure you need, and then wait for physicians to bid to do the job. The Web site says it will soon allow you to put x-ray procedures you need out to bid, too.
Got no insurance and are willing to go to Thailand to have your hip replaced? If so, go to www.healthbase.com or other Web sites promoting this “medical tourism.” They claim you can get a hip replacement there so much less expensively than here you can save money even after hotel and travel costs. Some big employers in this country have already surveyed employees to see if they would be willing to do just that for expensive surgeries.
When this all happens, patients who have employer-based insurance with high out-of -pocket costs will be headed out of town to the hospital and surgeons with the best price for the procedure they need. Hospitals will no longer be able to charge well above any other hospital or outpatient center in the region for a procedure that can be done on an elective basis. Surgeons in one town who charge $4,000 to fix your hip will have a tough time competing with surgeons in the next town over who charge $2,000, as long as both are competent.
That will drive down hospital prices for procedures to an average around the price of the lowest cost provider of the service in the region, a potential disaster for hospitals but an economic benefit to consumers and employers. Procedures are the best-paying part of hospital business, and keep hospitals in business.
It will take only a few large hospitals in every region becoming Internet-transparent on price and quality to drive the rest of the market in that direction. The arcane world of hospital pricing will then be turned on its head by the price transparency required to compete, real price competition will have come to health care, and Walmart-like hip replacement hospitals may not be far behind. Smaller, general services hospitals may have to find new missions in order to survive.
There are bugs to be worked out of all this Internet health care market, of course. Relatively few hospitals are posting their prices, so it is still difficult for patients to do comparison-shopping, quality at one hospital or for one surgeon is still hard to compare to others, surgery far away from home means your family may not be able to visit, etc. Purists will claim patients will not leave their hometown physicians for the scalpels of strangers just to save some money, though there is evidence to the contrary.
These are just bumps in the road, however. Driven by growing patient shares of health care costs, the juggernaut of patients using the information power of the Internet to shop for the best price on expensive procedures and tests is gathering speed. American hospitals and physicians that fail to adapt to this new market will be the General Motors of health care.
Erik Steele, D.O., a physician in Bangor, is chief medical officer of Eastern Maine Healthcare Systems and is on the staff of several hospital emergency rooms in the region.
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