Healthcare Price Transparency: Should Georgia follow Florida?

Jack Bernard, a retired SVP with a large national healthcare firm, has worked extensively with hospitals across the nation regarding cost containment and insurance. He was also the first Director of Health Planning for the state of Georgia.

Florida recently passed legislation mandating healthcare price transparency for patients as part of the effort to instill competition into the healthcare field. As the former Director of Health Planning for the state of Georgia, I fully support Florida’s efforts at health care price transparency as a first step. Georgia should consider following the same course. However, I would caution consumers in both states regarding the impact of this move.
Our oft-confused President said, “nobody knew that healthcare could be so complicated.” Health professionals know, Mr. President, just ask them.
A report from the respected Commonwealth Fund lists all of the impediments regarding pricing transparency, including: “determining in advance the health services any given patient will need. The wide variety of insurance benefit structures, a lack of standard formatting for reporting prices, and the difficulty of determining prices when charges originate from multiple providers.”
Plus, quality considerations must be accounted for. Three years ago, I was living in a rural area (Jasper County) with a county-subsidized (very, very heavily) hospital.
When my wife became seriously ill with stage 4 cancer, I did not check hospital prices. I moved to a suburb of Atlanta, Fayette County, with a larger, more sophisticated hospital and specialists. And, I’m glad that I did.
The other aspect to pricing transparency is the provider end. As a VP and SVP with large national firms, I supervised over a hundred major pricing studies of hospital and physician medical supplier and pharmaceutical pricing. These studies were done with major providers all over the nation, including in Florida.
I found tremendous variation, so much so that the process reminded me of buying a used car. Everyone is told that they are getting the best deal and that it is good for today only and don’t shop elsewhere. If you buy today, you get a free trip to the World Series (literally, in some cases, with hospital system purchasing VPs).
Medical suppliers and pharmaceutical firms tell every hospital (and physician) that they are getting the best pricing on every article. Obviously, they are all not. Generally, the providers who join large purchasing groups with thousands of members have more buying power and can drive much lower pricing. Standalone hospitals get much worse prices, even though they are told the opposite by vendors.
Then there is the political game. I was tactfully told by the VP of Purchasing of one very large Georgia hospital that he did not want a study done. When pushed, the reason he gave was that he knew that their pricing was not very good, but some of his board members and physicians had vendor/distributor ties.
The same is true for physician’s offices. For example, I ran a $52 million vaccine study for Kentucky Chapter of the American Academy for Pediatrics, consisting of all the pediatricians in the state.
Usually an office manager was in charge of purchasing in each practice and often was wined and dined by vendors. We gathered data from all of their practices. Not surprisingly, each of them was told by their very friendly suppliers that their practice had the lowest pricing.
What we found was much different. Prices varied tremendously, and, surprisingly, the smallest practices sometimes had the best pricing. We implemented a statewide group purchasing effort through the Kentucky Chapter and immediately pricing dropped 10-20 percent. Unfortunately, due primarily to local physician politics, other chapters failed to do the same.
If the states of Florida and Georgia really want pricing transparency, and lower pricing, they need to work on the supply chain for providers as well as consumers. The same is true for the USA as a whole. Congress, whose leaders preach to us about competition and the free market, has prohibited Medicare from negotiating prices.
Of course, the problem is much greater than just price transparency. As another report from the Commonwealth Fund (10-15) reveals, our system costs much more than in other nations.
For example, annual per capita health care costs in Canada (with Medicare for All and better mortality and morbidity than the USA) are $4,569, versus $9086 here. Per that report: “Higher spending appeared to be largely driven by greater use of medical technology and higher health care prices.”
That is a much larger subject, possibly to be covered in a future commentary.

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