Without getting into gender differences, most of us consider ourselves smart shoppers. And what is it that smart shoppers must know to shop smartly? How much does it cost and how good is it. Pretty simple right? But not so simple in healthcare. We individuals have been disintermediated from these basics of healthcare shopping for a number of reasons, the principal of which is that up until recently, someone else paid for it. Oh sure, we paid part or perhaps even all of the insurance premium, but once that payment was made to the insurer, we could choose without consequence. So we really didn’t demand much information about cost and quality. We didn’t shop.

Let’s assume that right now, that has changed, and we want to know about cost and quality. Our government is telling us to shop smartly for our healthcare, so as good citizens, we try to do so. And what happens? We cannot find out which providers are higher quality and better outcome. Virtually no one is measuring that yet. Yes, perhaps baby steps, but nothing we could use to shop with. And the cost? What a nightmare! I have a friend who recently had a knee replacement at a highly reputable hospital. He called and asked both his insurer and the hospital what the total cost would be and what might his share be. He could not get an answer. You’d think a hospital that does thousands of these a year could tell you what the probable cost would be barring complications. Noooo. He did ultimately find out he would pay a 10% coinsurance amount, but 10% of what?

The history of insurance financing tells us why it’s so difficult to find out costs. The fees XYZ Insurer negotiates with Hospital A are confidential and not to be disclosed. Why? Should other hospitals know what the insurer paid, and should that amount be higher than they’d agreed to with that insurer, they’d negotiate up next session, and costs would rise. Insurers don’t like that. And should Insurer ABC find out that Hospital A gave a lower fee to Insurer XYZ, that discloses a competitive advantage that Insurer XYZ has, and might lose next negotiating session. And on it goes.

Why? Because everything is based on the fee for service system which pays a fee for a service or a CPT Code. Do something and you get paid a negotiated fee. Do more and you are paid more. We get quantity, not quality. Thus it becomes all about the amount of the fee, and nothing about quality of care or outcomes. Should we move to a system that pays fees based upon quality of care, outcomes and costs, the need for secrecy of fee amounts dissipates.

My proposal? We move to a payment system that pays a hybrid of fees (or bundled fees), and quality of care and outcome bonuses. The fee portion is designed at best to break even. Financial success will depend on quality of care and outcome scores. Some third party must establish (with the medical community’s assistance) quality of care and outcome measures, and measure every provider every year, assigning each his or her score. Here’s the kicker: those scores must be published so that everyone, including our primary care physician and us, the shoppers, can use them to be smart shoppers.

Believe this to be impossible? I do not.


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