When you go to buy a car, you know that you probably aren't going to pay sticker price.
Health care is kind of like that, except that no one is sure what sticker price even is.
Dr. G. Keith Smith is running a different kind of dealership.
Smith is co-founder of the Surgery Center of Oklahoma, one of the few medical facilities in the nation that posts the prices of its surgeries on its website.
Smith has a theory as to what would happen if every hospital in the Oklahoma City metro posted its prices online tomorrow.
“(Prices) would be temporary, and then the market would do its magic,” Smith said. “And then people would say, ‘Wait a minute, this hysterectomy is $18,000 more than this one — is this one $18,000 better? Why is this one more?' ... They would say the Surgery Center of Oklahoma's hysterectomy is $8,000. This surgery center is charging $6,000, so why are you $2,000 better? I would be happy to have that conversation with them if someone undercut us. It's not just about price. It's about value. It's about quality.”
A debate has long stewed in the United States about whether the price of health care varies from one hospital to the other.
In May, Centers for Medicare & Medicaid Services, the federal government's agency that administers those programs, published data that lays out the average amount of money hospitals across the nation bill Medicare and the average amount Medicare pays them for the care they deliver.
During the announcement, Health and Human Services Secretary Kathleen Sebelius said the prices hospitals charge, as shown in the data, can vary dramatically, even within the same communities, in ways that cannot easily be explained.
“When consumers can easily compare the prices of goods and services, producers have strong incentives to keep those prices low,” she said. “That's really a market theory, and that's how markets work. But even basic information about health premiums or hospital charges has long been hidden from consumers.”
The data shows, for example, that the average total payment that a hospital receives for a laparoscopic gallbladder surgery without complications ranges from $6,065 to $13,011 throughout Oklahoma.
Different way to price
Meanwhile, the Surgery Center of Oklahoma advertises its price at $5,865.
Founded in 1997, the Surgery Center of Oklahoma is a 32,535-square-foot facility that provides several types of outpatient surgeries. The center is owned and operated by about 40 surgeons and anesthesiologists who have practices throughout central Oklahoma.
Smith said his opponents argue that the center “cherry picks” the surgeries that it performs and that it doesn't perform surgeries on people who are poor.
But Smith argues that they see several poor and middle class patients who can only get a surgery they need because of the prices at the surgery center.
“We've got poor people that come here because they're turned away from the pricing with the big hospitals, not withstanding what they say at the hospitals about, ‘We take all comers.' That's not true. A lot of them are here because of our pricing.”
The center's price disclaimer points out: “The prices listed are not negotiable and are available only to those who pay the entire amount in advance. We are able to offer these prices due to the lack of expense in processing the claims and the absence of risk for nonpayment.”
Some of the largest hospitals in Oklahoma don't offer a similar page on their sites. Although some have “donate” buttons or online access for patients to pay their bills, none have price listings.
Smith argues that the lack of pricing transparency in health care, not knowing what a surgery costs until a letter shows up in the mailbox, is one of the key factors in rising health care costs.
Hospitals generally have no motivation to lower prices because no one knows what they're charged until their bill shows up, Smith said.
“They'd rather employ a ‘Let's see what we can get away with' pricing, rather than what's mutually beneficial,” he said. “We just decided we wanted to be part of the solution and not part of the problem, and the pricing you see coming out of most hospitals nowadays — there are exceptions — is ‘What can we get away with?' rather than “What are our costs?' and ‘Let's build in a profit' like any other industry in the United States. And we decided we would do it a different way.”
Each patient is unique
Jon Vitiello, chief financial officer for Mercy in Oklahoma and Arkansas, said he applauds Surgery Center of Oklahoma for pushing for price transparency — but placing prices on a website can be misleading.
“Unlike the Surgery Center of Oklahoma, we believe every patient is unique,” he said. “While there will be similarities, there will be uniqueness with every patient, so we encourage our patients to call us.”
Vitiello said if people call and ask, regardless of whether they're a patient, a Mercy financial staff member will give them an answer.
Mercy Hospital Oklahoma City gets about 30 calls per week from people wondering about the price of services. If 30 patients were to call each week for a year, that would be 1,560 calls in a year. During the 2012 fiscal year, Mercy doctors performed 13,862 surgeries in Oklahoma City.
Health care and its pricing structure is complex, he said. It has been for decades because of how health care has evolved.
“So, because of that, when you hear something as simple as ‘They're posting their prices online,' I think people scratch their head and say, ‘Gosh, that sounds like a great idea,' but as you dig into it, there's a lot of caveats to those numbers online,” Vitiello said.
Vitiello said Mercy has plans to be more transparent about its surgery prices but couldn't be specific about anything the company is working on.
Consumer Price Line
Tim Johnsen, president of Integris Baptist Medical Center in OKC, said the accountability of health care pricing lies among health care providers to improve the process and ensure transparency.
Johnsen points to the Integris Priceline, a service Integris provides for its patients to call and obtain information about their charges.
Integris started the Consumer Price Line in 1996. About 1,000 calls per month are made from across the state to the service.
“It's my responsibility to make sure that our patients are fully apprised of what is expected at time of service, what we anticipate their charges will be, where deviations may occur because of a complication that was unexpected, like if we didn't know about a comorbidity that they had,” he said. “That responsibility does fall to the health care system. It falls to all of us.”
Johnsen said hospitals like Integris serve a larger population and offer a broader range of services than facilities like the Surgery Center of Oklahoma.
For example, Integris operates an emergency room and a burn center. Meanwhile, free-standing surgical centers “provide a great service to a niche market and particular diagnosis,” he said.
“It is a complete apples and oranges comparison, and neither fruit is bad,” Johnsen said. “It's just a different fruit.”