Yes, You Can Shop for Healthcare

Austin Frakt of the Partnered Evidence-Based Policy Resource Center at the VA Boston Healthcare System published a great article about why shopping for healthcare just doesn’t work.  It’s a must-read for anyone involved in healthcare economics or purchasing and a great read if you ever see a doctor.

Healthcare is a business. So it is not surprising that businesses are set up to direct their customers to buy their own products. And if you don’t need to show your prices and your consumer doesn’t ask, you can simply direct them where to go.  This model puts healthcare businesses in the catbird seat.

Let’s think of a way to fix it so people don’t have to shop.

Here’s what you could do:

At the outset, you can separate healthcare into two buckets:  that which can be scheduled and that which cannot be. If you can schedule it, you have a golden interval in which to defeat all the proposed impediments to shopping for health care.

First, build in an incentive to make people price conscious and willing to seek a better price. One price that everyone knows is “free.” If a shopper always knows the price is $0, the decision becomes binary: go here and pay nothing or go there and pay for something. Easy.

Second, recognize that providers work in a costly and inefficient system in which billing, collection, chasing down co-pays and deductibles, aging accounts and so forth eat up revenue.  Give providers the ability to contract directly and offer bundled services at a set price. Let that set price reflect the savings from all those efficiencies. And let the providers decide what bundles they want to do based on their own cost and proficiency concerns.

Third, recognize that the employer is likely to be paying much of the bill. So to get those employers involved, show them how much they can potentially save had they purchased health care from those efficient, bundling providers. If the savings are great enough, the employer can pay 100% of the bill and still come out ahead.

Fourth, create a marketplace by asking providers to offer those significantly lower bundled prices directly to employers, knowing that the employee/dependent consumers have the $0 incentive to use that marketplace.

Now, based on the above,  you have a system in which the patient has a terrific incentive to “shop,” but shopping is no more complicated than going to the right market. The provider has a willing market in which there’s no more chasing down co-pays, deductibles, and no more billing and collection expenses. The employer gets prices that are 30-50% lower.

Then mix in personal health assistants to help people navigate through this new market and make arranging healthcare an unexpectedly pleasant experience.

What a wonderful new system that would be. And it already exists and is called The Zero Card.

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