Shared from the 2016-02-12 The Miami Herald eEdition

We must cure what ails our healthcare system

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KATHY HAGEDORN TNS

I became interim president of a Miami hospital when its founder, my friend and client of 35 years, died. I quickly got an insider’s view of the healthcare system, and once you see how it works, it’s sickening. Risking long-standing relationships, I’m going public:

PREDATORY PRICING

This is not about the familiar subject of price transparency. Rather it’s about a deeper problem, which is that the industry has entirely eliminated real prices and, therefore, price competition.

Ask the price of anything and you invariably receive the same answer: “What insurance do you have?” Prices should be determined by the fair-market value of the medical services provided; not by how the patient’s bill is paid.

It’s no coincidence that the only industry claiming to be too complicated to have prices, is causing widespread financial misery and havoc.

Real prices would eliminate 90 percent of healthcare’s complexity, including eliminating insurance networks. This would give patients the freedom to patronize any provider without being penalized for being “out of network.” Price competition will make costs plummet.

Imagine you are in line at Macy’s, and three people in front of you each are charged $19 for a particular shirt. But the same cashier charges you $190 for that shirt. Anyone would reject the inflated price as outrageous. Yet, for life-or-death health services, the law permits a provider to prey like a wolf on a wounded human, varying its charges by 1,000 percent or more.

A simple blood test for cholesterol can range from $10 to $400 or more at the same lab. Hospitalization for chest pain can result in a bill from the same hospital for the same services ranging anywhere from $3,000 to more than $25,000. Transparency under the current system would simply expose widely varying charges by the same provider for each service it offers. A provider offering 200 different medical services might need to publish 10,000 different prices (50 different prices for each of the 200 services). This wouldn’t make it easy for patients to shop or realistically subject physicians, hospitals and labs to widespread price competition.

COST CONTROL

Perversely, the Affordable Care Act’s requirement that insurers spend roughly 80 percent of premiums on patient care, has legally enshrined higher medical costs as the only means for the insurance industry to keep growing profits. The higher medical bills climb, the higher premiums rise and the higher the insurance industry’s 20-percent share goes. Insurers, on whom the system relies to negotiate deals with providers, actually benefit from higher costs, while consumers can’t protect themselves because of the lack of real prices. Nobody is watching the store.

FRAUDULENT “LIST PRICE”

Providers routinely mislead patients by presenting admission and treatment authorization forms falsely stating that their “list prices” (also referred to as “charge-master” prices), are their usual, customary or ordinary charges. In fact, “list prices” are generally 300 percent or more of usual charges and are only billed to the roughly 15 percent of patients who are out of network, uninsured or otherwise not covered.

Healthcare reform is difficult because the industry spends more on lobbying than the defense, aerospace, and the oil and gas industries combined.

To fix the system, providers must be required to bill all patients, insured and uninsured (other than where rates are fixed by law) the same amount for the same service.

Hospitals, physicians and labs should have continued freedom to set their own prices, but predatory pricing — a different rate for each patient — must be prohibited.

With real prices, patients would be empowered to shop for value and never face punitive out-of-network charges. Health providers would be forced to compete based on price, quality and service.

Health insurance premiums, which are a direct function of charges, would plummet.

A Change.Org Petition (End Predatory Healthcare Pricing) has been created to express support for the idea that to end skyrocketing health costs, real prices are essential. With enough signatures, perhaps politicians will hear us over the voices of industry lobbyists.

Steven I. Weissman, an attorney, was interim president of Palm Springs General Hospital in Hialeah in 2013.

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